By Wayne T. Hudson, LEED AP
Most owners are used to doing all the planning and spec work when it comes to repairing or renovating a building. But energy work is different, and there are many opportunities for savings that can be missed if you don’t know what you are looking for. Here are five tips for creating and getting the most out of an energy saving performance contract (EPC).
Determine Your EPC Fit
The U.S. Department of Energy defines an EPC as “The use of guaranteed savings from the maintenance and operations budget (utilities) as capital to make needed upgrades and modernizations to your building environmental systems, financed over a specified period of time.” Most facilities would benefit from an EPC, especially since there are many opportunities to achieve at least some, if not some significant, energy savings. Factors to consider that would determine your facility’s fit for an EPC include the age of your building or the systems and equipment equipment; a recurring need for maintenance or even just high maintenance costs; the length of time since you upgraded your lighting or controls systems or if you have energy-using equipment that is ready for replacement.
Build Your Team
The first step is to assemble a team to investigate the need for and the benefits of creating an EPC. Whether you gather staff from within your organization or hire a third party, such as an energy service company (ESCO), this group should work together through the entire process and include a range of expertise, including maintenance, financial, legal, and procurement. Energy-saving opportunities to consider include new lighting technologies, more efficient boilers and chillers, and energy management controls, to name a few.
Hire an ESCO
If you have them, using internal resources may save you some time and money. However, a professional ESCO can put together a complete package of services that exceed what your staff can provide, including identifying and evaluating energy-saving opportunities, providing engineering services, ordering and installing equipment, and managing all phases of construction. An ESCO can offer staff training and long-term maintenance services to ensure that savings meet or exceed annual payments to cover all project costs, usually over a period of 7-10 years. And, if savings don’t materialize, the ESCO pays the difference, not you. An ESCO can help you secure financing if you don’t have your own source.
Remember that the EPC is your road map for implementing and tracking the project over the term of the agreement. Therefore, be sure to define roles and responsibilities in the EPC and explain how savings are determined and how the guarantee will function. Negotiate costs, too, and ask for open-book pricing to ensure that you receive good value. You may want to get input from your internal staff (engineering, financial and legal) for help in negotiating the scope and terms of the contract.
For additional tips and information about creating EPCs, contact us.