What is energy performance contracting?
Performance energy contracting is the main service provided by a private Energy Services Company (ESCO). When an organization enters into a Guaranteed Energy Savings Performance Contract (GESPC) with the ESCO, the ESCO will evaluate the organization’s facilities to identify energy-saving opportunities. The ESCO will then work with the organization to recommend improvements which can save energy and money for the organization. The improvements are guaranteed by the ESCO to generate enough money via savings to pay for the project over the term of the GESPC. In fact, if the energy savings do not cover the cost of the contracted improvements for any given year, the ESCO will pay the difference.
Why do organizations choose energy performance contracting?
The greatest benefit in energy performance contracting is the guaranteed performance from the ESCO and the ability to introduce energy savings projects without up-front capital costs. The ESCO not only installs equipment that they guarantee will generate savings for the payback period of the loan; they are also responsible for repairing or replacing that equipment if it fails. Other benefits include lower utility costs and cost certainty, as well as low-interest financing options, generally arranged by the ESCO. The ESCO is also responsible to pay the difference if there’s an energy savings shortfall during any period of the contract. All energy savings are reviewed and verified per the International Performance Measurement and Verification Protocol (IPMVP). Finally, the ESCO serves as the single point of accountability for the project, which allows an organization to work with one entity for a number of installations and energy-saving initiatives.
Which organizations are candidates for GESPC?
Any organization that owns or uses large buildings or groups of buildings could be a good candidate for a GESPC. These include municipal, county, state, or federal government facilities, schools and universities, hospital systems, commercial office buildings, hotels and hospitality buildings, and even multi-family buildings or apartments.
How much energy can my organization expect to save if we use Yearout Energy for a Guaranteed Energy Savings Performance Contract?
The amount of energy saved depends on several factors, including the size of your facilities and how much you currently spend on utilities. The Energy Services Coalition has created a benefits estimator, which you can access here.