Earlier this year, President Obama issued an executive order that requires the improvement of energy efficiency in federal government buildings and an increase in power from renewable sources.¹ 

The move means significant upgrades and retrofitting to buildings across the country. While a major project, improving government buildings (including schools, government health care facilities, offices, and other federal entities) isn’t a new idea.

Over the past 20 years, Energy Savings Performance Contracts (ESPCs) have played a key role in the ability of federal and state agencies to complete critical upgrades to aging building systems and reduce energy costs without large capital improvement budgets.

Though not specifically referenced for this particular effort by President Obama, his administration has supported the roles of ESPCs at the federal level by committing $2 billion to the Department of Energy’s ESPC programs through 2016.

Additionally, he has encouraged the use of ESPCs at the state and local levels through the Better Buildings Challenge initiative. Through the program, 60 CEOs, mayors, university presidents, and labor leaders have committed to invest nearly $2 billion of private capital into energy efficiency projects.

They have also committed to upgrade energy performance by a minimum of 20% by 2020 in 1.6 billion square feet of office, industrial, municipal, hospital, university, community college, and school buildings.2 These are an important mechanism to funding energy improvements.