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Demand Response Auctions Help GSA Generate More Competition and Keep More Revenues From Energy Curtailment Participation

WORCESTER, MA -- (Marketwire) -- 03/01/12 -- World Energy Solutions, Inc. (NASDAQ: XWES), a leading energy management services firm, today announced it successfully teamed with the GSA Energy Division to auction approximately 24 MW of demand response (~8 MW annually over a three year term) with support from Science Applications International Corporation (SAIC) (NYSE: SAI). Two sets of auctions were run, one for GSA Region 5 facilities located in the Commonwealth Edison service territory of PJM and one for U.S. Department of Veterans Affairs (VA) facilities located in the Consolidated Edison service territory of the NYISO. The new contracts awarded as a result of these auctions should generate revenues of at least $1.5 million for the GSA and VA, which can be re-invested into further energy efficiency and facility improvement projects.

The ground-breaking auctions on the World DR Exchange® were the first ever on behalf of GSA. To date, the majority of government agencies participating in energy curtailment programs have utilized a process through which they request quotes from a handful of providers then negotiate revenue shares and contract terms directly.

"In meeting with various government agencies, it quickly became apparent their share of energy curtailment revenues varied greatly and was highly dependent on their knowledge of the often complex markets and programs available to their facilities," said Luke McAuliffe, Vice President of Demand Response Services at World Energy Solutions. "Many were also paying for items such as metering, ongoing reporting and enrollment fees, and the contracts they signed were not always clear on how to calculate payment amounts."

By contrast, the GSA Energy Division's process required interested demand response providers to deliver technical proposals in response to a bid document which specified that all enrollment, metering, site assessment and reporting costs would be borne by providers. Approved providers then competed against one another in fair and transparent real-time forward auctions designed to maximize the government's share of energy curtailment payments. Testifying to the auctions' effectiveness, the GSA Energy Division received 79 bids from 10 approved suppliers in one hour, highlighting demand response providers' willingness to participate in a transparent process to compete for Federal business.

Compared to the revenue splits the facilities were receiving under their previous energy curtailment contracts, the GSA and VA's share of revenue increased from an average of 75.5% to 91.8%. This will net additional revenues in addition to avoiding costs and potential performance penalties they were responsible for under previous contracts for these same facilities.

"Collaborating with the GSA Energy Division and its team of experts was a positive experience that helped us get a lot more from our participation in demand response," said Frank Napoli, Network Energy/Fleet Manager VISN 3 at the U.S Department of Veterans Affairs. "The whole approach, from the design of the RFP to the marketing and execution of the auction event, put us in control of the process and yielded considerable benefits. Every extra dollar we gain from our participation in the Demand Response Program translates into more resources for providing high-quality care to the veterans we serve."

Chris McCall, Senior Program Manager at SAIC, added: "We have an exciting alliance with GSA and World Energy that continues to key on innovation. The GSA Energy Division leveraged the GSA and VA's buying power to dictate its own performance terms and significantly increase its share of payments. The precedent set today will make it easier for more federal agencies to participate in, and get their fair share of value out of, energy curtailment programs."

About GSA
As the federal government's workplace solutions provider, the U.S. General Services Administration works to foster an effective, sustainable and transparent government for the American people. GSA's expertise in government workplace solutions include:

  • Effective management of government assets, including more than 9,600 government-owned or leased buildings and 215,000 vehicles in the federal fleet, and preservation of historic federal properties;
  • Leveraging the government's buying power through responsible acquisition of products and services making up approximately 14 percent of the government's total procurement dollars;
  • Providing innovative technology solutions to enhance government efficiency and increase citizen engagement; and
  • Promoting responsible use of federal resources through development of government-wide policies ranging from federal travel to property and management practices.

For more information about GSA, please visit www.gsa.gov.

About World Energy Solutions, Inc.
World Energy Solutions, Inc. (NASDAQ: XWES) is an energy management services firm that brings together the passion, processes and technologies to take the complexity out of energy management and turn it into bottom-line impact for the businesses, institutions and governments we serve. To date, the Company has transacted more than $20 billion in energy, demand response and environmental commodities on behalf of its customers, creating more than $1 billion in value for them. World Energy is also a leader in the global carbon market, where its World Energy Exchange® supports the ground-breaking Regional Greenhouse Gas Initiative's (RGGI) cap and trade program for CO2 emissions. For more information, please visit www.worldenergy.com.

This press release contains forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ from those indicated in the forward-looking statements. Such risks and uncertainties include, but are not limited to the following: our revenue and backlog are dependent on actual future energy purchases pursuant to completed procurements; the demand for our services is affected by changes in regulated prices or cyclicality or volatility in competitive market prices for energy; and there are factors outside our control that affect transaction volume in the electricity market. Additional risk factors are identified in our Annual Report on Form 10-K and subsequent reports filed with the Securities and Exchange Commission.

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