The federal government is the largest energy consumer in the United States, and it is one of the largest energy consumers in the world. Policymakers have highlighted the role of energy efficiency improvement in the federal sector as a mechanism to reduce energy consumption and its associated costs. Many Members of Congress have expressed a continuing interest in improving energy efficiency and increasing the use of renewable energy. One barrier to federal agencies making such investments relates to the availability of capital given the constrained fiscal environment. As a result, agency projects that could reduce federal energy usage, expand the use of renewable energy, and reduce federal energy costs may not be pursued. To address this challenge, Congress established alternative financing methods that utilize private sector resources and capabilities to facilitate federal energy projects. Two such alternative financing methods are energy savings performance contracts (ESPCs) and utility energy service contracts (UESCs). An ESPC is a multiyear contract between a federal agency and an energy service company. In general, under an ESPC, a federal agency agrees to pay an amount not to exceed the current annual utility costs for a fixed period of time (up to 25 years) to an energy service company, which finances and installs facility improvements. In return, the contractor assumes the performance risks of energy conservation measures during the contract period and guarantees that the improvements will generate energy cost savings sufficient to pay for the improvements over the length of the contract, as well as providing the energy services company a return on the investment. After the end of the contract, the agency benefits from reduced energy costs as a result of the improvements. A UESC is a contract between a federal agency and the serving utility. Under a UESC, the utility arranges financing for efficiency projects and renewable energy projects, and the costs are repaid by the agency over the length of the contract. The Energy Policy Act of 1992 (EPACT, P.L. 102-486 ) amended the National Energy Conservation Policy Act (NECPA, P.L. 95-619 ) and authorized alternative financing methods for federal energy projects, among other provisions. Section 155 of EPACT (42 U.S.C. §§8287 et seq.) defined the term "energy savings performance contract" and authorized federal agencies to incur obligations through ESPCs to finance energy conservation measures, provided certain conditions were met. Section 152 of EPACT authorized "utility incentive programs" (codified as 42 U.S.C. §8256) and encouraged agencies to participate in programs to increase energy efficiency, conserve water, or manage energy demand. ESPCs and UESCs were devised as part of a strategy to help meet federal energy and emissions reduction goals by improving the energy efficiency of federal facilities. They offer the financial resources needed to make efficiency improvements to aging buildings and facilities. For ESPCs, in return for privately financing and installing conservation measures, a contractor—referred to as an energy service company (ESCO)—would receive a specified share of any resulting cost savings. The ESCO typically guarantees a fixed amount of energy savings and cost savings throughout the term of the contract, bearing the risk of the improvement's failure to produce a projected amount of energy savings and cost savings. The efficiency improvement provided by the ESPC is referred to as an "energy or water conservation measure," and includes improvements such as energy- and water-saving equipment, energy savings measures such as better insulation or windows, and renewable energy systems such as solar energy panels. In the case of UESCs, the federal agency contracts with the utility that is providing services to finance and install energy conservation measures and to provide energy demand-reduction services. The authority for UESCs does not require utilities to guarantee savings; the repayment is based on estimated cost savings. ESPCs and UESCs are seen as having tangible benefits for ESCOs and utilities. For an ESCO, the contract includes a guarantee of a specified amount of annual energy savings and cost savings that is sufficient to pay back the installation and financing costs. When improvements yield savings in excess of the guarantee, the agency benefits and depending upon the contract, the ESCO may also benefit. For utilities, the contracts do not require a savings guarantee although efficiency improvements can provide benefits such as reduction in demand, which can lead to cost savings for the utility. Local, state, or federal tax incentives may also be available to the contractors. The Department of Energy's Federal Energy Management Program (FEMP) is the lead organization responsible for providing implementing rules and policies for ESPCs. FEMP also provides training, guidance, and technical assistance to assist federal agencies in achieving energy goals including cost or use reduction or renewable use, greenhouse gas reduction goals, and water conservation goals as directed through legislation or executive orders. Federal agencies are required to document progress toward energy saving goals through annual reporting to the President and Congress; FEMP compiles these data annually. ESPCs and UESCs apply to energy use at federal facilities—not to vehicles and equipment. In FY2017, FEMP reports that federal agencies used 915 trillion British thermal units (Btu) of delivered electrical and thermal energy across all end-use sectors. Figure 1 shows the end-use sectors for energy consumption—62% of the energy consumed is from vehicles and equipment such as aircraft, ships, and on-road vehicle fleets. In FY2017, federal facilities used over 347 trillion Btu of delivered electrical and thermal energy. As part of annual reporting, FEMP compiles data on federal government investment in energy efficiency and renewable energy through ESPCs, UESCs, and direct obligations. Figure 2 depicts annual investments between FY2005 and FY2017 and shows that investments in ESPCs have fluctuated during that time period. As shown in Table 1 , investment in federal facility energy efficiency improvements during that period totaled nearly $21.7 billion (in constant 2017 dollars): direct obligations funded $14.5 billion, ESPCs funded $5.7 billion, and UESCs funded $1.5 billion. Investment in ESPCs has been supported by executive branch actions. In 2007, the George W. Bush Administration issued Executive Order (E.O.) 13423, which established goals for agencies including to "improve energy efficiency and reduce greenhouse gas emissions of the agency, through reduction of energy intensity." The implementing instructions for E.O. 13423 reference several instruments—including ESPCs and UESCs—that "should be utilized to the maximum extent practical to implement energy efficiency management projects, water management projects, and renewable energy projects with energy conservation measures (ECMs) having long- and short-term payback periods that can be incorporated into life-cycle cost effective contracts." In 2011, the Obama Administration directed agencies to complete $2 billion in ESPCs within two years. In 2015, the goal was increased to $4 billion in ESPCs by 2016. In 2018, the Trump Administration issued E.O. 13834, which established goals for agencies including to "utilize performance contracting to achieve energy, water, building modernization, and infrastructure goals." By 2014, federal buildings reportedly accounted for nearly $1.1 billion in revenue for the ESCO industry (nearly 21% of total ESCO industry revenue). ESCOs that earned more than $300 million in annual revenue in 2014 account for 66% of federal market revenues although their overall market share is 51%. Collectively, 85% of the industry revenue in 2014 came from federal, state, and local government facilities; educational facilities such as universities, colleges, and K-12 schools; and healthcare facilities. Agencies document contracts in different ways. This inconsistency makes it challenging to report the number of contracts in the same manner that dollars are tracked and reported in Table 1 . The number of contracts by mechanism is not aggregated in the same manner. According to FEMP's compliance tracking system, nearly 2,800 projects have been initiated at covered facilities to achieve energy and water savings; however, the financing mechanisms for specific projects are not identified. FEMP separately publishes information for Indefinite-Delivery, Indefinite-Quantity (IDIQ) ESPCs—or "umbrella contracts." These contracts were developed by FEMP to facilitate the use of ESPCs by federal agencies. Since the IDIQ ESPCs were established in 1998, FEMP has awarded approximately 400 projects. FEMP also states that it "has collected data on more than 2,100 UESC projects dating back to 1992 to help demonstrate the value, importance, and impact of the utility energy service contract (UESC) program, but it has kept individual details of the information agencies provided confidential." According to the Government Accountability Office (GAO), a review of the federal use of ESPCs that focused on seven selected agencies, those with the highest energy usage and greatest facility square footage, identified over $12 billion (in 2014 dollars) in awards "to more than 500 ESPCs for projects in fiscal years 1995 through 2014." A separate GAO report focused on alternatively financed energy projects for the Department of Defense. The report indicates that from FY2005 to FY2016, military services entered into 245 UESC contracts and 201 ESPC contracts. The contribution to energy and water conservation from investments in ESPCs and UESCs is difficult to quantify. In describing the energy and cost savings for an ESPC project, FEMP states, "On average, comprehensive ESPC projects result in about a 19-20% reduction in energy use—and energy and energy-related costs. The average length of the contract period is 17 years, and the average project investment is about $15 million." CRS was unable to determine the cost savings achieved solely from ESPCs and UESCs across the federal government. However, FEMP provides data that may provide insight into broad trends in federal energy water consumption. Between FY2003 and FY2017, the annual total site-delivered energy use declined by more than 19% (a savings of 217 trillion British thermal units).