Editor’s note: Here are the views of Nello Tortora, who is director of federal programs for Southland Energy. The company is based in Garden Grove, Calif.

Federal and state budgets will continue to be significantly challenged in 2014 to fund building efficiency and other initiatives to meet energy reduction and renewable energy goals. There has been a significant push by federal and some state governments to pursue third party-financed alternatives for funding energy efficiency projects through Energy Savings Performance Contracts (ESPC) and other alternative financing methods.

The federal government has been motivated by the active engagement of the executive branch, most recently in the form of a Presidential Performance Contracting Challenge in 2011, which challenged federal agencies to enter into $2 billion worth of performance-based contracts within two years. Federal agencies have executed over $800 million in ESPC projects, and have developed a pipeline of nearly $2.3 billion.

The challenge was recently extended through 2016, and agencies are currently working to expand the project pipeline. State and local governments are taking on the President’s Better Buildings Challenge, and committing to reduce the energy used across their building portfolios by 20 percent or more over ten years.

The emphasis on performance contracting at all levels of government is providing steady growth for Energy Services Companies (ESCOs). Market penetration estimates show that the industry could more than double in size from about $5.3 billion in 2011 to between $11 and $15 billion by 2020. ESCOs and industry experts provided the estimates. The data was reported in a recent analysis from Lawrence Berkeley National Laboratory.

Nello Tortora, Federal Programs Director of Southland Energy, spent more than 20 years working in government before moving to Southland last year.

As a division of Southland Industries, Southland Energy is a comprehensive energy services firm with roots in a large mechanical, electrical and plumbing (MEP) building systems group. The company self-performs energy services work through its design-build-operate-maintain expertise.

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