What is Energy Performance Contracting? Should you be considering this process?

I have spent a substantial amount of time in the recent few months learning more about Energy Savings Performance Contracting (ESPC) and I thought it might be useful to many of you to share some of the basic tenets of this practice with you.  We live in a time where Energy continues to gain influence in a variety of circles.  Wars have been fought, and will continue to be fought, over the access to energy and ESPC is a process that offers a very viable method for institutions in both the public and private sector to gain greater efficiencies and also reduce energy consumption while also saving funds with a minimum of investment in the process.  Let’s take a look at what ESPC is and also learn some of the organizations that spend time working with and expanding this field.

HUD defines Energy Performance Contracting in the following manner:

Energy Performance Contracting (EPC) is an innovative financing technique that uses cost savings from reduced energy consumption to repay the cost of installing energy conservation measures. Normally offered by Energy Service Companies (ESCOs), this innovative financing technique allows building users to achieve energy savings without up front capital expenses. The costs of the energy improvements are borne by the performance contractor and paid back out of the energy savings. Other advantages include the ability to use a single contractor to do necessary energy audits and retrofit and to guarantee the energy savings from a selected series of conservation measures.

 

I have underlined a few of the items that seem to be of value-let’s talk about each of them.  Cost savings is an issue that confronts every organization in every field, every day.  When this subject comes up in discussion everyone pays attention.  We live in a world where we are all looking for ways to do more with less.  Performance contracting offers that option.  EPC also is typically offered by Energy Service Companies (ESCO’s) and a number of such entities are members of organization such as the Energy Service Coalition (ESC), 

  a member-based group with branches in many states of the USA.  Members in the ESC work with public and private sector companies to help them reap the benefits of EPC.  Another organization, NASEO, the National Association of State Energy Officials, whose members are the public sector champions of all things energy with in their respective state.

The National Association of State Energy Officials (NASEO) is the only national non-profit organization whose membership includes the governor-designated energy officials from each state and territory. NASEO was formed by the states and through an agreement with the National Governors Association in 1986. The organization was created to improve the effectiveness and quality of state energy programs and policies, provide policy input and analysis, share successes among the states, and to be a repository of information on issues of particular concern to the states and their citizens. NASEO is an instrumentality of the states and derives basic funding from the states and the federal government.

I will post more in a series of articles involving the work of ESC and NASEO.  In a time when energy continues to be a scarce and valuable resource, the work of both of these organizations is valuable and well worth knowing about.