White House Announces Increased Opportunities for Public Private Partnerships in Energy Efficiency

Last Friday, the Office of the Press Secretary for the White House released a statement about President Obama’s new commitments and executive actions to advance solar deployment and energy efficiency, which continues the Administration’s broader energy initiatives, including energy security at government installations, utility privatizations, and utilization of power purchase agreements and enhanced use leasing.  The President’s proposed actions will result in new opportunities for industry.  Among other things, the statement discussed new executive actions that will lead to an “additional $2 billion goal in federal energy efficiency upgrades to Federal buildings over the next 3 years.”  Agencies will meet this goal by partnering with industry through energy efficiency performance contracts – also known as energy savings performance contracts (ESPCs).  Under an ESPC, an energy service company funds the design and construction of the agency’s energy facilities to improve energy efficiency, and guarantees that the cost savings will pay for the project over the term of contract, which can be up to 25 years.  The statement also noted that “the General Services Administration is identifying opportunities for potential Federal Aggregated Solar Procurements in both the National Capital Region and Northern California. The effort seeks to bring together multiple Federal agencies to capitalize on economies of scale with the goal of lower electricity bills for individual sites, and increased renewable energy production, while reducing internal agency overhead costs by sharing procurement and project management resources.”  Finally, the statement indicated that “the Treasury Department and IRS will shortly clarify how certain investment rules relate to renewable energy installations. This is important because real estate investment trusts (REITs), a key component of many retail investors’ portfolios, generally hold only real property. The new guidance will provide clarity regarding the treatment of renewable energy installations in REITs, thereby helping to promote investment in the sector.”