Performance Contracting

Performance contracting is a method of financing, designing and building major projects that have a return on investment in avoided utility costs. It provides a way to replace obsolete and inefficient equipment using guaranteed utility savings to pay for the project.

North Carolina General Statute § 143-64.17 Energy Savings Contracts and North Carolina Administrative Code Subchapter 41b – Guaranteed Energy Savings Contracts provide the basis for Energy Performance Contracts and the rules by which this type of business is conducted in North Carolina for both state and local governmental units (also referred to as “owner”). According to the statute, the State Energy Office, currently the DEQ USI staff, oversees parts of the process.

The major stages for the Energy Performance Contract include:

  1. RFP: Request for Proposals
  2. IGA: Investment Grade Audit
  3. ESA: Energy Services Agreement
  4. Construction Acceptance
  5. Performance Period/Annual Reconciliation

 

Energy Services Coalition (ESC)

The Energy Services Coalition (ESC) is a national nonprofit organization composed of a network of experts from a wide range of organizations working together at the state and local level to increase energy efficiency and building upgrades through energy savings performance contracting. Energy savings performance contracting enables building owners to use future energy savings to pay for up-front costs of energy-saving projects, eliminating the need to dip into capital budgets.

 

North Carolina ESC Chapter (NC ESC)

The NC ESC are dedicated to providing an outreach program that provides information and education on performance contracting to the target audience within our state. Get involved in the North Carolina chapter to learn more about performance contracting, access to case studies, connected with ESCO companies in the state and more!

 

Utility Savings Initiative (USI)

The Utility Savings Initiative (USI) is North Carolina’s lead-by-example program supporting energy efficiency in public buildings.  The program was created to assist North Carolina governmental units manage the use and cost of energy, water and other utilities in their facilities. The program serves state agencies, the University of North Carolina system, the state’s community colleges, public schools, county and municipal governments. The effort includes oversight of the Performance Contracting process for governmental units.

To learn more about the program, read the annual reports to the N.C. General Assembly:

 

NAESCO (National Association of Energy Service Companies)

The National Association of Energy Service Companies (NAESCO) celebrates 35 years of advancing the energy efficiency industry. NAESCO is the leading national trade organization representing and promoting the energy efficiency industry in the energy marketplace, the media, and the government both at the state and federal level; NAESCO serves as the voice for energy efficiency and performance contracting in state and federal regulatory and legislative activities.

Energy Service Companies (ESCOs) contract with private and public sector energy users to provide cost-effective energy efficiency retrofits across a wide spectrum of client facilities, from college campuses to water treatment plants. Effectively utilizing a performance-based contract business model, ESCOs have implemented significant comprehensive energy efficiency retrofit projects over the last three decades. The latest Lawrence Berkeley National Laboratory Report estimates that ESCO investment in energy efficiency retrofit projects currently runs about $5 billion a year. 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

 

North Carolina Case Studies

North Carolina State University

ESCO: Schneider Electric

North Carolina State University turned to Schneider Electric to provide a campus-wide solution to improve energy efficiency and drive sustainable, clean energy projects in 1.6 million square feet of building space across 13 campus facilities. The comprehensive solution developed includes new or enhanced direct digital controls, improved lighting controls with occupancy sensors, improvements to the heating and cooling systems and a solar thermal heating system for domestic water and swimming pools.

 

North Carolina Museum of Art

ESCO: Trane Comfort Solutions

The North Carolina Museum of Art underwent a performance contract under ESCO Trane Comfort Solutions. Following the recommendations of the General Survey, and an additional survey by an independent engineer, the Museum established performance targets to follow for the Performance Contract. Required Standards for Mechanical Systems (HVAC) necessary to ensure the Long-Term Preservation of the Art Collections of the NCMA.

 

Saving Energy While Improving Campus Operations in North Carolina

ESCO: Trane Comfort Solutions

As Central Piedmont Community College (CPCC) in Charlotte, North Carolina continued to increase its enrollment and expand its campuses, the school sought to upgrade its infrastructure to ensure an optimal learning environment for students. Challenged by budget constraints, the college also wanted to reduce energy and operational costs to improve building performance, while implementing conservation measures in alignment with its sustainability goals.

 

Using Performance Contracting and Incentives to Accelerate Energy Efficiency Projects

ESCO: Johnson Controls

Performance contracting provides a number of advantages that are important elements of a successful energy and climate policy. This programmatic approach to building retrofits and water utility upgrades results in energy reductions and lower long-term operating costs.

 

Additional Resources