Tips for Energy Performance Contracting Success

  March 18, 2009

Today’s tip is about how to get the most out of an energy performance contract.

An energy performance contract is a partnership undertaken with an energy services company, or ESCO, whereby the ESCO provides the up-front capital for energy upgrade projects, and then you pay them back over time with the energy savings those upgrades yield.

There are a few considerations you should take into account when selecting your ESCO partner. First, look for a provider with a track record on performance contracts in your type of organization, whether public school district, university or hospital. Make sure the ESCO has an army of auditors, engineers and project managers to give your project the attention it deserves. Does your ESCO understand current technology? What do they tell you about potential utility rebates? Will they do preventive maintenance on equipment as part of the contract or is that something you have to ask for extra?

Once you’ve found your ideal ESCO, a few tips can help ensure a successful project. First, designate someone to manage the contract. That person, and it may be you, doesn’t necessarily have to be an expert in everything from finance to facilities, but he or she should be able to find that expertise quickly. Also, make sure leadership in the C-suite, especially the CFO, is on board. Finally, really know what products are being specified and installed in your facility. You may wish to provide the ESCO with a list of approved vendors or products during the contract phase. Overall, understand that an energy performance contract will take a bit of time to execute – but it’s time well-spent!


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