MEMORANDUM 

DATE: July 29, 2015

TO: Clean Power Plan for Existing Power Plants; Docket Id: OAR–2013-0602

FROM: Lora Strine, EPA

SUBJECT: July 29, 2015 Phone Call Regarding Proposed Clean Power Plan for Existing 

Power Plants

SUMMARY

A phone call was held between EPA and Chris Hessler, AJW on July 29, 2015 to discuss the 

proposed Clean Power Plan for Existing Power Plants. The Clean Power Plan for Existing Power 

Plants was proposed on June 2, 2014.

Materials attached

ATTENDEES

AJW

Chris Hessler

US EPA

Lora Strine

Angie Shatas
From: Chris Hessler [mailto:CHessler@ajw-inc.com] 

Sent: Tuesday, July 28, 2015 5:47 PM

To: Strine, Lora (Strine.Lora@epa.gov) <Strine.Lora@epa.gov>

Cc: Chris Miller <cmiller@ajw-inc.com>; Ted Michaels <TMichaels@ajw-inc.com>; Mona Sheth 

<msheth@ajw-inc.com>

Subject: per our discussion

Lora,

Per our discussion yesterday, attached is pair of PowerPoint slides that illustrate how GHG savings from 

PC projects can be totaled and included in state plans. The chart shows how to get a snapshot in 2018 

of all the savings that can be counted on by the state because it has or will come from projects covered 

by guaranteed contracts as of 2018. States should be able to take 100% credit for these planned GHG 

reductions because of the guarantee.

In addition, we believe that reasonable estimates can be made for future projects that are not under 

contract, and progress toward those additional "estimated goals" could be checked in subsequent 

progress reports as additional projects were contracted. (One example of an estimated goal would be 

the President's Executive Order calling for $4billion investment in EE through performance contracts.) 

States would want to be more conservative including projections of "estimated" GHG savings when the 

projects are not under contract. We would recommend that in projections for state plans, states use no 

more than 50% of any estimated - but not contracted - EE project-related GHG savings.

Lastly, industrial projects are not included in this graphic. We will work on another one that illustrates 

the inclusion of EE from industrial projects.

Tomorrow I will have some suggested regulatory language that could dovetail with the language 

proposed by MJ Bradley. I think it is fairly easy to drop in some EE components.

Chris

[image001]

Christopher J. Hessler | Partner | AJW, Inc.

2200 Wilson Blvd, Suite 310, Arlington, VA 22201

O: 202.296.8086 ext.101 / C: 202.460.0945 Chessler@ajw-inc.com<mailto:Chessler@ajw-inc.com>

@AjwHessler

Enhancing market opportunities for innovative technologies.
Predictability of CO2 Savings from Performance Contract (PC) Project Pipeline 

Key Highlights: 

• PC project lead times (up to two years) provide visibility 

on future-year contributions from projects (indicated by 

blue boxes)

• Once built, PC projects provide states with clarity on how 

long the savings will persist (indicated by yellow boxes)

• GHG savings persist beyond the guaranteed period of the 

contract due to long-term, useful life of the equipment 

(indicated in orange boxes)

• Future savings could be utilized through a credit system to 

buffer state plans to make them more robust 

State Planning Activities: 

• Analyze existing market by taking into account past 

programs and policies in place to deploy PC projects by a 

third party

• Identify target buildings for PC (e.g. all public buildings 

above a minimum energy-using threshold)

• Use conservative forecast of GHG savings from existing 

and reasonably anticipated PC projects

• Track total emissions avoided from the prior year using 

M&V reporting provided by ESCOs, a registry, or other 

appropriate source

• Include PC in Executive Orders, legislation, regulations, 

and EERS programs 

The chart above illustrates the GHG savings that can be anticipated in a sample state.

 111(d) Compliance Year 

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

1 267,612 267,612 267,612 267,612 267,612 267,612 267,612 267,612 267,612 267,612 267,612 267,612 267,612 267,612 267,612 267,612 267,612

2 Construction 289,824 289,824 289,824 289,824 289,824 289,824 289,824 289,824 289,824 289,824 289,824 289,824 289,824 289,824 289,824 289,824

3 Construction Construction 313,879 313,879 313,879 313,879 313,879 313,879 313,879 313,879 313,879 313,879 313,879 313,879 313,879 313,879 313,879

4 Construction Construction 339,931 339,931 339,931 339,931 339,931 339,931 339,931 339,931 339,931 339,931 339,931 339,931 339,931 339,931

5 Construction Construction 368,146 368,146 368,146 368,146 368,146 368,146 368,146 368,146 368,146 368,146 368,146 368,146 368,146

6 Construction Construction 398,702 398,702 398,702 398,702 398,702 398,702 398,702 398,702 398,702 398,702 398,702 398,702

7 Construction Construction 431,794 431,794 431,794 431,794 431,794 431,794 431,794 431,794 431,794 431,794 431,794

8 Construction Construction 467,457 467,457 467,457 467,457 467,457 467,457 467,457 467,457 467,457 431,794

9 Construction Construction 506,256 506,256 506,256 506,256 506,256 506,256 506,256 506,256 467,457

10 Construction Construction 548,275 548,275 548,275 548,275 548,275 548,275 548,275 506,256

11 Key: Construction Construction 593,782 593,782 593,782 593,782 593,782 593,782 548,275

12 Construction Contracted Project under Construction Construction Construction 643,065 643,065 643,065 643,065 643,065 593,782

13 267,612 Electricity-related CO2 Savings from Measures Operating under PC Guarantee Construction Construction 696,440 696,440 696,440 696,440 643,065

14 267,612 Electricity-related CO2 Savings from Measures Operating without PC Guarantee Construction Construction 754,244 754,244 754,244 696,440

15 Construction Construction 816,547 816,547 754,244

16 For purposes of this chart, 1 MWh saved equals 0.5 tons of CO2 avoided Construction Construction 884,645 816,547

17 Construction Construction 958,071

267,612 557,436 871,315 1,211,246 1,579,392 1,978,094 2,409,888 2,877,345 3,383,601 3,931,876 4,525,658 5,168,723 5,865,163 6,619,407 7,435,954 8,320,599 8,825,819

CO2 Avoided from Performance Contracting (by State)

Cumulative CO2 Tons 

Saved Annually Year PC Project Signed
Guaranteed PC Savings Available in a Sample Planning Year

Planning Scenario for 2018:

• Estimated growth of the PC market between 2014-2018 would generate a 

universe of guaranteed savings approximating 26,776,380 tons of avoided CO2 

• Note: A state may include PC Savings generated after the proposed rule was 

released (2014) and before compliance period begins (2020) if EPA allows states 

to take credit for early action 

2014 2015 2016 2017

2018 

(Planning Year) 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

2014 267,612 267,612 267,612 267,612 267,612 267,612 267,612 267,612 267,612 267,612 267,612 267,612

2015 Construction 289,824 289,824 289,824 289,824 289,824 289,824 289,824 289,824 289,824 289,824 289,824

2016 Construction Construction 313,879 313,879 313,879 313,879 313,879 313,879 313,879 313,879 313,879 313,879 313,879

2017 Construction Construction 339,931 339,931 339,931 339,931 339,931 339,931 339,931 339,931 339,931 339,931 339,931

2018 Construction Construction 368,146 368,146 368,146 368,146 368,146 368,146 368,146 368,146 368,146 368,146 368,146

2019 Construction Construction 398,702 398,702 398,702 398,702 398,702 398,702 398,702 398,702 398,702 398,702 398,702

2020 Construction Construction 431,794 431,794 431,794 431,794 431,794 431,794 431,794 431,794 431,794 431,794 431,794

2021 Construction Construction 467,457 467,457 467,457 467,457 467,457 467,457 467,457 467,457 467,457 431,794

2022 Construction Construction 506,256 506,256 506,256 506,256 506,256 506,256 506,256 506,256 467,457

2023 Construction Construction 548,275 548,275 548,275 548,275 548,275 548,275 548,275 506,256

2024 Key: Construction Construction 593,782 593,782 593,782 593,782 593,782 593,782 548,275

2025 Construction Contracted Project under Construction Construction Construction 643,065 643,065 643,065 643,065 643,065 593,782

2026 267,612 Electricity-related CO2 Savings from Measures Operating under PC Guarantee Construction Construction 696,440 696,440 696,440 696,440 643,065

2027 267,612 Electricity-related CO2 Savings from Measures Operating without PC Guarantee Construction Construction 754,244 754,244 754,244 696,440

2028 431,794 Universe of PC Savings Available to a State in Planning Year 2018 Construction Construction 816,547 816,547 754,244

2029 For purposes of this chart, 1 MWh saved equals 0.5 tons of CO2 avoided Construction Construction 884,645 816,547

2030 For purposes of this chart, states can count interim period energy savings Construction Construction 958,071

9,852,077 13,591,318 17,640,924 22,026,646 26,776,380

2018 Sample Planning Chart: Universe of Guaranteed PC Savings Available for State Compliance

Year Delivered and 

Guaranteed CO2 

Savings Available for 

Planning Year (tons)

111(d) Compliance Year

2014-2030 Total Delivered and Guaranteed CO2 Savings known in 2018: 26,776,380
Success of the President’s Performance Contracting Challenge

July 29, 2014

Energy Performance Contracts allow Federal agencies to partner with private energy service companies and 

utilities to implement energy efficiency improvements at Federal facilities by paying for the investment over 

time from guaranteed savings. In 2011, the President issued a Performance Contracting Challenge (PPCC) that 

asked Federal agencies to commit $2 billion in energy savings performance contracts (ESPCs) and utility 

energy savings contracts (UESCs) through 2013. In May 2014 the President announced the expansion and 

extension of the PPCC to $4 billion by 2016. As of June 2014, nearly $1.5 billion in energy performance 

contracts were awarded. 

Under energy performance contracts, utilities or energy service companies identify energy saving 

improvements, design a cost-effective project to meet agency needs, arrange for financing, and ensure that 

sufficient energy and energy-related cost savings are available to pay the project costs up to a 25-year term, 

after which all cost savings accrue to the agency. Projects may include lighting and HVAC upgrades, energy 

management infrastructure, water conservation improvements, and construction of renewable power generation 

such as solar photovoltaics and combined heat and power.

Energy Savings Performance Contract (ESPC) Energy, Cost, and GHG Savings 

ESPCs awarded by the Federal government under the PPCC should result in significant energy savings and

GHG emissions reductions. Based on the awarded value of ESPCs through December 2013, planned projects 

will achieve an estimated energy savings of approximately 3.34 trillion BTUs annually, which is equivalent to 

the annual energy consumption of 37,100 homes1and 320,000 metric tons of CO2 emissions. The average 

ESPC is anticipated to deliver energy savings of 859 billion BTU over the life of the contract, which is 

equivalent to GHG reductions of 82,000 metric tons of CO2.

2 These ESPCs at Federal facilities should result in 

energy and related savings of approximately $93 million annually. These savings are then used to pay off the 

contracts that enabled the government to make these capital improvements.

Economic Impact and Jobs Creation

Energy performance contracts provide Energy Service Companies (ESCOs) with the ability to create and 

sustain new technical expertise, manufacturing capacity, and skilled jobs as a result of the new opportunities for 

private investment brought about by energy performance contracting projects. According to the Council of 

Economic Advisors (2009), the current awarded value of investments for energy performance contracts ($1.5

billion) from the President’s Performance Contracting Challenge will create approximately 16,045 new jobyears in the private sector.

3

In all, it is estimated that achieving the initial goal of $2 billion in awarded energy 

projects will create 21,739 new job-years (one job for one year). Achieving the expanded goal of $4 billion in 

awarded investment by 2016 will result in a total of 43,478 job-years created by private industry through energy 

performance contract projects. 

Geographic Distribution

Energy performance contracts have been deployed at Federal facilities nationwide. Because energy 

performance contracts cover any number of applications from renewable energy generation, to improving water 

and energy infrastructure and heating and cooling systems, they can respond effectively to the energy efficiency 

needs of a wide geographic range of Federal facilities and are found in almost every state.4
Conclusion

Energy performance contracts provide Federal agencies with the opportunity to achieve their energy efficiency 

goals while supporting a clean energy economy and domestic job growth. These public-private partnerships 

enable Federal agencies to engage private sector funding and expertise while creating domestic jobs and 

reducing monthly energy costs for Federal agencies and the taxpayer. By improving the efficiency of existing 

infrastructure and reducing energy intensity, energy performance contracts also provide opportunities for 

renewable energy production and ultimately contribute to reductions of Federal agency greenhouse gas 

emissions.

1

“2009 RECS Survey Data.” Energy Information Administration. December 2012. Average household consumes 90 million BTUs 

per year.

2

“Emission Factors for Greenhouse Gas Inventories.” Environmental Protection Agency. April 2014 

http://www.epa.gov/climateleadership/documents/emission-factors.pdf.

3

“Estimates of Job Creation from the American Recovery and Reinvestment Act of 2009.” Executive Office of the President, Council 

of Economic Advisors. May 2009.

4

“Improving Federal Energy Savings through Performance Contracting.” National Association of Manufacturers.

 
From: Chris Hessler [mailto:CHessler@ajw-inc.com] 

Sent: Tuesday, July 28, 2015 6:09 PM

To: Strine, Lora (Strine.Lora@epa.gov) <Strine.Lora@epa.gov>

Subject: GHG reductions from PC projects

http://ofee.gov/Resources/Guidance_reports/Success-of-the-President's-Performance-ContractingChallenge.pdf

Lora,

This document cites a GHG reduction number from the President's ESPC initiative. It is for projects 

under contract - not a projection going forward. We may be able to get a similar one from DOE for the 

industrial SEP reductions achieved to date. Will get back to you on that.

Chris

[image001]

Christopher J. Hessler | Partner | AJW, Inc.

2200 Wilson Blvd, Suite 310, Arlington, VA 22201

O: 202.296.8086 ext.101 / C: 202.460.0945 Chessler@ajw-inc.com<mailto:Chessler@ajw-inc.com>

@AjwHessler

Enhancing market opportunities for innovative technologies.