[1] ESPCs allow Federal agencies to accomplish energy savings projects without up-front capital costs and without special Congressional appropriations.
The ESCO guarantees that the improvements will generate energy cost savings sufficient to pay for the project over the term of the contract.
[2] The savings must be guaranteed and the Federal agencies may enter into a multiyear contract for a period not to exceed 25 years.
As of March 2010 more than 550 ESPC projects worth $3.6 billion were awarded to 25 Federal Agencies and organizations in 49 states and the District of Columbia (D.C.).
[4][citation needed] The initial program was started by John Rogers working for the Naval Facilities Engineering Command.
Additionally, with interest charges over as many as 25 years per contract, the projects are actually costing a lot more than if Congress would just appropriate funding for them rather than financing them over long periods of time.
A DOE internal study found that with many contracts, it was impossible to tell if performance goals, and thus, dollar savings, were actually being achieved.
The current FEMP M&V Guidelines (version 4.0 as of 2024) require contractors to provide IMPVP compliant measurement and verification activities with limited or no stipulated savings.
[7] The United States Department of the Army (DOA) use of ESPCs is focused on the reduction of energy and water consumption, with ancillary benefits of achieving facility improvements, improving the quality of life in the Army, and ultimately reducing the overall energy costs of the Installations.