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Energy Savings Performance Contracting Program

saving
Lead by Example By Making Energy Improvements to Your State or Municipal Facilities
 
Type
Town
 
Category
Other
  • Performance Contracting

Lead by Example by making energy improvements to your state or municipal facilities. Improving the energy performance of your public facility demonstrates a commitment to spending taxpayer money efficiently, improving the environment, and creating healthier places to live, work, or learn.  

Additional Details

 

Preparation Image The preparation stage includes gathering background information on your facilities, inviting contractors to prepare an initial feasibility study, and building internal support for moving forward.

Specific steps include: 

Read more below to learn more about each stage of the ESPC process, or to locate specific program documents.

Questions? Please read our FAQs or view the ESPC Overview Presentation (PDF).

DEEP is ready to help you get started. Email ESPC@energizect.com. 

Tools

During the design phase, the QESP is engaged to prepare an Investment Grade Energy Audit (IGEA). The cost of the IGEA can eventually be wrapped into the project’s overall financing, unless you choose not to go forward, in which case you will have to pay the QESP for the IGEA. 

The IGEA will include detailed engineering studies to understand your facility’s existing energy use and identify specific energy saving measures (ESMs). The IGEA also includes financial modeling to ensure that guaranteed energy savings from the ESMs will fully cover any financing payments. DEEP staff and a Technical Service Provider (TSP, a.k.a Owner’s Engineer) funded by the Connecticut Energy Efficiency Fund will work closely with you, the QESP, and our utility partners to review the QESP’s recommendations and calculations in preparation for signing of the ESPC and financing agreements. During the design phase, the CT Green Bank can also help you to identify and secure a source of funding for the project.  

Questions? Please read our FAQs.

Ready to get started? Email ESPC@energizect.com. 

Construction Tools

The construction phase is when the QESP finalizes design and installs the Energy Saving Measures (ESMs).  Permits and approvals may be needed, and the ESMs will be inspected, tested, commissioned, and accepted. Incentives from the utilities may become available at this stage, and may be used to offset the amount that is ultimately financed. The QESP will provide training to your facilities maintenance staff on how to operate the new equipment, or you may enter third-party maintenance contracts based on what equipment is installed.   

Questions? Please read our FAQs.

DEEP is ready to help you get started. Email ESPC@energizect.com.

 

The performance stage may last up to 15 years, from the completion of construction until the end of the ESPC contract. Ongoing measurements through real-time data access will ensure that the Energy Saving Measures (ESMs) are performing properly and an annual reconciliation will demonstrate that the ESMs have delivered their guaranteed energy savings. You will enjoy the benefits of reduced maintenance, increased occupant comfort, and lower utility payments for the lifetime of the ESMs!  

Questions? Please read our FAQs below.

Ready to get started? Email ESPC@energizect.com. 

 

Resources

ESPC Program Overview Presentation

List of Qualified Energy Service Providers (QESPs)

 

Guidance Documents
Contract Documents 

Please Note: Fillable forms are available by emailing ESPC@energizect.com. 

  • Technical Facility Profile – Form for basic facility information to be prepared in advance of soliciting interest from QESPs
  • Letter of Interest – Document to be sent to QESPs to begin the process of selection. Must be accompanied by Technical Facility Profile
  • RFP for Feasibility Analysis – RFP to be sent to the QESPs that respond to the Letter of Interest. It details the process that will be used to select a QESP (see also Guidance for Preparation of Feasibility Analysis)
  • IGEA and Project Development Proposal - Document to be signed after the QESP is selected. It details the process and information required to perform the IGEA (see also Guidance for Preliminary Site Assessment and Guidance for IGEA)
  • Statement of Work – This document is the ESPC, the contract that specifies the work to be done to retrofit the facility. It will be prepared and signed after completion of the IGEA.
    • Project Schedules – These detail project-specific information for the Statement of Work, such as the energy cost savings guarantee, energy baselines, measurement and verification plans, final project cost and project cash flow analysis, etc. 
Other Documents
  • DAS Contract Results from the QESP Qualification process (Contract #12PSX0153) can be found here. They include:
    • Contract for Energy Savings Performance Contracting Services – The contract between the Department of Administrative Services and the QESP.
    • Cost and Pricing – During the DAS qualification process, the QESPs identified maximum values for costs, markups, margins, and fees throughout their participation in the state’s Energy Savings Performance Contracting Program. Final values will be negotiated between the selected QESP and the state agency or municipality.

 

Frequently Asked Questions

What will an ESPC cost?
Performance contracting is often touted as a “no upfront cost” program. While it’s true that the cost of the retrofit is usually financed over a period of up to 15 years, and the energy savings that result are guaranteed to fully cover those finance payments so that you are “cash positive” from Day 1, there may be up front preparatory costs and significant staff time needed to develop a project. When you engage a QESP to conduct an Investment Grade Energy Audit (IGEA), you commit to paying for that audit: If you go forward with an ESPC, the cost of the IGEA can be included in the project financing, but if you do not go forward, you must pay the QESP for the audit. For public agencies, this usually means that the amount of the IGEA, which is typically calculated on a $/sq ft basis, must be allocated or encumbered before the IGEA contract is signed. There may also be good reasons to pay for additional metering during the IGEA phase, to establish a robust energy consumption baseline for your facility. Potential project hosts should discuss these working capital needs with the DEEP Program Manager and/or the CT Green Bank, who may be able to assist.
 
How does the financing work for ESPCs?
State agencies will work with DEEP, the CT Green Bank, and the Office of Policy and Management to determine if state-issued bonds or private capital will be used to finance a project. Municipalities typically issue municipal bonds or utilize Tax Exempt Lease Purchasing (capital leasing) to finance performance contracts. The CT Green Bank is available to help municipalities better understand their financing options and to help identify and/or qualify lenders if necessary. The financing agreement will almost always be separate from the contract with the QESP, though the QESP’s guarantee of energy savings provides assurance that sufficient savings will be produced to cover any debt service.
 
How can the QESP really guarantee energy savings?
QESPs guarantee the post-retrofit energy consumption of your facility, and measure “savings” by comparing the post-retrofit consumption to the facility’s pre-project energy consumption (the baseline). The value of those savings is based on current and forecasted values of energy. Actual energy consumption is affected on an ongoing basis by weather, facility use and occupancy levels, and other factors. During contract negotiations, the QESP and the host will come to agreement on the facility’s baseline energy use, the process for measuring post-retrofit energy consumption and normalizing it to account for weather, occupancy, and other factors, and the process for valuing the energy. Assisting the agency or municipality in this effort is a primary role of the Technical Service Provider.
 
What if the promised energy savings are not delivered?
If the post-retrofit energy consumption turns out to be higher than what the QESP had predicted, after normalizing for weather, occupancy, and other factors, then the savings against the baseline will be less than expected. In that case, the QESP must compensate the host customer for the value of the savings shortfall. It is helpful to engage an owner’s engineer to continue to assist the agency or municipality in reviewing these savings calculations during the performance period; the cost of engaging the owner’s engineer can be built into the project’s financing.
 
Who else has done a performance contract in Connecticut?
So far, four state agencies (Department of Mental Health and Addiction Services, Department of Corrections, Department of Motor Vehicles, and UConn) have begun the process of developing performance contracts under the recently standardized state process. Two municipalities have also begun projects using the standardized process (Bristol and Enfield). Over two dozen cities and towns in Connecticut have done performance contracts, mostly before the standardized process was developed. Learn more about prior experiences with performance contracting in East Hartford and Stamford.