Federal Advocacy Update

Federal Issues

NAESCO serves as the national voice of the ESCO industry through its national and regional advocacy efforts that support the strategic interests of its members. We are proud that our industry and our members serve as a vanguard in leading the economy by providing the investment, the jobs, and the infrastructure improvements needed to rebuild America.

NAESCO’s advocacy work has been built around growing market opportunities for ESCOS and their key providers and partners and we continue to build on this effort in 2017.  

Performance Contracting Challenge

NAESCO continues to work with the FPCC to ensure the actual implementation of the $2 billion extension of the Challenge announced in October, 2016 with its new focus on both water and energy efficiency. FEMP has announced that federal agencies implemented $4.2 billion of ESPC and UESC projects by the end of 2016, exceeding the original $4 billion target. NAESCO has sent a welcome letter to the new Secretary of Energy Perry congratulating him on his new role and providing him with direct examples of what NAESCO member companies have accomplished in Texas and elsewhere, the magnitude of the energy and dollar savings created by the industry nationwide, and suggestions of how NAESCO, working with its members and DOE, can contribute meaningfully to the realization of the Administration’s interest in implementation of  a massive infrastructure program.

Policy Agenda for the New Administration

NAESCO is making a focused effort to get the Trump administration to adopt a public buildings “Retrofit for Resiliency” program as part of its infrastructure initiative.

NAESCO has worked with the EE Strategy Group coalition to promote a broader list of EE programs that can produce tens of thousands of new jobs. These include the extension and expansion of tax incentives (179D and Section 48 renewables) and the extension and expansion of federal incentive programs for bonds used in ESCO projects (QECB, CREBs, QZAB, etc.), and the creation of a new incentive for bonds used to finance comprehensive projects to make public facilities resilient (EE + RE + DG + storage and microgrids).

179D Deduction

NAESCO has worked successfully for four years with a group of interested NAESCO members and the lobbying firms of Van Ness Feldman and Prime Policy Group to secure the extension of the Section 179D deductions for energy efficiency work in commercial buildings. We were able to obtain extensions that covered the 2014 through 2016 tax years.

The outlook for comprehensive tax reform legislation, including energy related tax incentives, has changed dramatically and the Section 179D Building deduction, which expired on December 31, 2016, is an example of the type of deduction that Congress may try to permanently eliminate. We will be working with the energy efficiency community to continue efforts to educate Senators, Representatives, and the Trump administration on the importance of providing a tax incentive for increasing the energy efficiency of commercial buildings, including those owned by governments and other not-taxable entities. 

HUD Programs and Procedures

  • NAESCO and a number of ESCOs had established bi-monthly conference calls, hosted by HUD, to discuss several chronic problem areas in the HUD PHA ESPC program, including the difficulties of implementing ESPC projects with the Rental Assistance Demonstration (RAD) program that is changing the federal funding of PHAs, the lack of knowledge of local HUD staff and PHA managers about the HUD Rate Reduction Incentive program, and the HUD initiative to stimulate EE projects in federally assisted multifamily housing. HUD has postponed the first two calls in 2017, pending the installation of the new HUD senior management team led by Secretary Carson.

      Clean Power Plan (CPP)

NAESCO has worked for three years with a group of ten ESCOs that developed a substantial White Paper and a number of formal comment documents that have been submitted to the EPA.  .  President Trump signed an Executive Order to unwind the CPP. The actual process could take several years, because the CPP is based on federal court orders and an extensive record of EPA research and findings that must be challenged and reversed.

PACENation

  • NAESCO now has a seat on the board of PACENation, a national organization formerly called PACENow, which is promoting the adoption of high-quality PACE programs across the country. We will work with the Trump Administration to identify opportunities to promote commercial PACE nationally as a way to stimulate EE and RE investments in commercial, non-profit and public facilities.

U.S. Energy Service Company Industry Study Updates Market Trends

  • Lawrence Berkeley National Laboratory and NAESCO released an updated study in late fall 2016 analyzing  the market size, growth projections and industry trends of the U.S. Energy Service Company industry, drawing on information provided by ESCO executives in late 2015. A key finding was that after more than two decades of year‐over‐year growth, ESCO industry revenues appeared to flatten between 2011 and 2014. ESCOs reported 2014 industry revenue of approximately $5.3 billion, which represents no increase over the 2011 ESCO industry revenue of $5.3 billion (nominal $) reported by Stuart et al. (2013).
  • In that earlier Lawrence Berkeley National Laboratory study, ESCOs projected annual revenues of ~$7.5 billion in 2014, which was about 44% ($2.3billion) higher than actual ESCO‐reported revenues. ESCOs expect total annual industry revenues to be approximately $7.6 billion in 2017, which equates to an average annual growth rate of ~13% from 2015‐2017.

 

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