New Berkeley Lab report on the decarbonization benefits of energy retrofit projects

January 16, 2025

Lawrence Berkeley National Laboratory (LBNL) has released a new report titled Evaluating GHG Mitigation Potential from ESPC Projects. The analysis draws from LBNL’s eProject Builder (ePB) database, which contains approximately 3,000 energy retrofit projects implemented by energy service companies (ESCOs), mostly energy savings performance contract (ESPC) projects. This report explores the estimated impacts of implemented ESPC projects on the projected greenhouse gas (GHG) emissions reductions in the U.S. buildings sector, and the associated estimated annual cost savings and marginal abatement costs. The report investigates the role that energy retrofits can play in achieving GHG emission reduction targets given that public agencies leverage ESPC to reduce emissions from energy use in addition to historically using ESPC to achieve cost/energy savings and ancillary benefits (e.g., addressing deferred maintenance).

This is the first report to estimate GHG emissions reductions from ongoing ESPC projects in the U.S. based on actual project data. The report is intended for policymakers, federal, state and local government officials and other potential ESPC customers, the ESCO industry, researchers, and other energy policy professionals.

The following are key findings from the report:

1. Energy savings performance contracting (ESPC) delivers considerable greenhouse gas (GHG) emissions reductions, in addition to energy and water savings.

  • Our analysis revealed that approximately two-thirds of the energy retrofit projects in ePB provided positive net benefits through cost savings and associated GHG reductions. Figure 1 below depicts our marginal abatement cost (MAC) curve analysis findings on the efficacy of investments in GHG emissions reduction across measure technologies and regions.
Figure 1

Figure 1: Measure-level MAC curve depicting the efficacy of investments in GHG emissions reduction across measure technologies and regions.

2. Multiple factors impact GHG emissions reductions for ESPCs, including the carbon intensity of the local grid.

  • Our analysis finds that emissions reductions are affected by multiple factors, including the region of projects and carbon intensity of the local grid, the types of measures deployed, and the size of projects.

3. ESPCs contributed to substantial GHG reductions across market segments.

  • Our analysis found that federal ESPCs were the most cost-effective across market segments. Projects deployed in the MUSH (municipalities, universities, schools, and hospitals) market also achieved emissions reductions and energy savings, but at a higher cost than in the federal market. See Figure 2 for a breakdown of the marginal abatement cost across market segments. 
Figure 2

Figure 2: Project-level marginal abatement cost (MAC) curve depicting the efficacy of investments in GHG emissions reductions across market segments

The full slide-deck report is available here: https://emp.lbl.gov/publications/evaluating-ghg-mitigation-potential

The authors of this report are Sunhee Baik, Kathryn Chelminski (Co-Principal Investigator), Shankar Earni (Co-Principal Investigator), and Elizabeth Stuart, LBNL. We acknowledge the funding and leadership of the U.S. Department of Energy’s Federal Energy Management Program (FEMP).