Using ESCOs to Deliver Maximum Dollar and Energy Savings
Organizations often turn to Energy Service Companies (ESCOs) when considering retrofit projects since ESCOs have extensive design and implementation experience in integrating multiple efficiency measures, mitigating technical and performance risks, and providing a financial guarantee to project lenders that the energy savings generated will cover the debt service.
ESCOs, in essence, act as project developers as they integrate the project’s design, financing, installation and operational elements. Project contract terms typically range between seven and twenty years depending on the types of measures installed. The main differentiator between ESCOs and other energy efficiency contractors is the guarantee of energy savings which is specified as part of the terms of an energy savings performance contract (ESPC).
ESCO Service Offerings
ESCOs provide (either directly or through experienced subcontractors) all of the services identified by the organization as needed to implement the energy efficiency retrofit. ESCOs present a comprehensive plan to maximize energy savings while meeting the customer’s specific facility requirements. ESCOs engineer and design the project to include multiple conservation measures and to account for interactions among the installed measures.
Typical service offerings include the following:
- Provide an Investment Grade Audit
- Engineer projects of appropriate size and scope
- Arrange project financing and assist the organization in understanding the available financing options.
- Procure and install the equipment
- Monitor and verify energy savings for as long as the customer wishes often the entire contract term
- Provide, if requested, ongoing operations and maintenance savings
- Prepare reports for the customer detailing energy savings and a reconciliation plan if energy savings were to fall below projections
Since 1990, ESCOs have delivered:
- $50B in projects paid from savings
- $55B savings – guaranteed and verified
- 450,000 person-years of direct employment
- $33 billion of infrastructure improvements in public facilities
- 450 million tons of CO2 savings at no additional cost