The United States is the home to millions of commercial and industrial businesses. Each year one of the largest operating expenses for these businesses is their energy spend. It is estimated that nearly 30% of the energy spend is used inefficiently or unnecessarily. 1

So what options do businesses have to address their energy waste and improve their facilities? How would an owner evaluate all of the choices for facility improvements and select the projects that would be the best fit for their needs? How do they improve their facilities if improvements are not in the annual capital budget?

One option is to consider a Performance Contract. A Performance Contract allows a building owner to use future energy and operational savings to finance infrastructure improvement projects.

New, energy saving equipment for free sounds too good to be true, right? Let’s explore it a little further.

A Performance Contract is a performance-based procurement and financing method in which an Energy Service Company (ESCO) takes on project performance risks and provides a single source turnkey solution to address the customer’s energy and facility improvement needs.

This contracting method is a good fit for facilities with aging infrastructures and little money for capital improvements. Performance Contracting has been successfully used to upgrade schools facilities, college campuses, and government buildings in North Carolina and across the United States.

The scope of a Performance Contract will vary by owner and facility needs. The projects can include lighting upgrades, upgrades to the HVAC and control systems, and other building envelope improvements.

The selected ESCO will assist with a wide range of needs, including the energy audit, design engineering, arranging project financing, construction management, commissioning, operations and maintenance of new technologies, and verification of energy savings.

The National Association of Energy Service Companies (NAESCO) is a trade association that sponsors an accreditation program for ESCOs. Each company must undergo a strict review process by an independent selection committee before becoming an accredited organization. Accredited organizations include DMJM Harris, BCS, Honeywell International, TAC / Tour Andover Controls Energy Solutions, Trane, and Water & Energy Savings Corporation.

Projects in North Carolina include the North Carolina Museum of Art, Wayne County Public Schools, and the University of North Carolina at Greensboro. These projects alone have a guaranteed annual savings of almost 2 million dollars.

Interested in pursuing a Performance Contact? Here are the steps you would take to start a project.

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Sources:(1)U.S. Environmental Protection Agency, ENERGY STAR program. “Useful Facts and Figures.” No date referenced. 1 June 2007