Making Shared Energy Savings Work

Shared energy savings (SES) is a low investment, low risk contracting procedure that can significantly increase energy efficiency at DoD installations. By decreasing installations' energy use by only 10 percent, SES can save some $300 million a year. Under SES, contractors finance and implement efficiency measures and share the resulting dollar savings with DoD. Notwithstanding its low risk and low investment, however, SES faces several obstacles: Establishing prior energy use - 'baselines' - in DoD buildings in order to measure savings is difficult since (1) very few buildings are individually metered, and (2) most energy service companies have no confidence in computer-simulated baselines; Installation managers are unwilling to implement SES without the guarantee they will receive a portion of DoD's share of savings; Uncertainties regarding the applicability of law and regulation to SES contracting are slowing implementation; The Military Departments have not agreed upon the appropriate economic criteria to be used in the competitive award of SES contracts.