By Wayne T. Hudson, LEED AP
An energy service company, or ESCO, is a private company that develops, installs, and arranges financing for projects designed to improve the energy efficiency and maintenance costs for facilities over a set time period, usually between seven and 20 years. ESCOs generally act as project developers for a wide range of tasks and assume the technical and performance risk associated with the project.
You may think that you can perform these services on your own to save time and money on a renovation or other construction project. However, ESCOs offer such a wide range of services and savings opportunities that I find they are indispensable. Here are the top reasons why I say this:
- ESCOs are comprehensive. They develop, design, and arrange financing for energy efficiency projects; they install and maintain the energy efficient equipment involved; they measure, monitor, and verify the project’s energy savings; and they assume the risk that the project will save the amount of energy guaranteed. Often these services are bundled into the project’s cost and are repaid through the dollar savings generated. Also, ESCOs employ a wide array of cost-effective measures to achieve energy savings, such as high-efficiency lighting, high-efficiency heating and air conditioning, efficient motors and variable-speed drives, and centralized energy management systems.
- ESCOs know performance. What sets ESCOs apart from other firms that offer energy savings, like equipment contractors, is the concept of performance-based contracting. In other words, when an ESCO undertakes a project, the company’s compensation, and often the project’s financing, are directly linked to the amount of energy that is actually saved. For this reason, ESCOs have led the effort to verify, rather than estimate, energy savings — for example, through the practice of “metering,” which is direct tracking of energy savings according to sanctioned engineering protocols. Most performance-based energy efficiency projects include the maintenance of some portion of the new high-energy equipment over the life of the contract. The cost of this ongoing maintenance is folded into the overall cost of the project. Therefore, the customer receives the benefit of reduced maintenance costs, in addition to reduced energy costs.
- ESCOs can teach. As part of any energy-efficiency project, an ESCO will educate its customers about their own energy use patterns in order to develop an “energy efficiency partnership.” A primary purpose of this partnership is to help the customer understand how their energy use is related to the business that they conduct. ESCOs also typically handle the removal and disposal of hazardous materials from the customer’s facility, including the removal of asbestos during upgrades to heating, air conditioning, and ventilation systems.
For additional tips and advice about hiring and working with ESCOs, contact us.
Some information in this article came from the National Association of Energy Service Companies (NAESC).