When looking to significantly reduce energy costs of a state facility, a state agency can enter into an energy performance-based contract with an energy performance contractor. This Energy Performance Contract, or EPC, is an agreement between a contractor or energy services company (ESCO) and a customer to meet a guaranteed level of energy savings as a condition of payment.

Energy Performance Contracting is generally equipment replacement that allows energy savings and installation of building control systems to control energy consumption, which is implemented by the Virginia Uniform Statewide Building Code. ESCOs provide all the labor, materials, equipment, and subcontractor management while often requiring little supervision. However, companies like DMME can serve as a trusted third party to state agencies and local governments who are considering entering into an EPC.

As an added incentive, EPCs offer customers guaranteed savings. If the ESCO does not meet the guaranteed savings, they must write a check for the difference and make needed changes at their cost. Additionally, Measurement and Verification data entered by an ESCO into DOE eProjectBuilder software are made available to end users.

Thomas Nicholas, a Facilities Engineer with the City of Virginia Beach Department of Public Works and VAEEC Board member, sees the opportunities that EPCs can offer a local government:

In the fall of 2018, using the Commonwealth of Virginia’s Energy Performance Contract, the City of Virginia Beach will be seeking solicitations from experienced Energy Service Companies (ESCOs) to complete energy retrofit work. Using the City’s capital improvement funding, we are seeking a whole building approach with an emphasis on LED lighting for approximately five City facilities.  Our goal is to maximize energy savings, while at the same time meet the building occupants’ requirements.

This process of receiving an Energy Performance Contract has been relatively unchanged since 2001. However, now instead of only selecting four items from the list of ESCOs, state agency’s can invite all 15 pre-approved ESCOs to the “Back of the Envelope” (BOE). This change was created with the intent to start more competition and give the agencies and public bodies more choices.

Tim Bernadowski, a VAEEC member with Siemens, has only positive things to say about the revised EPC guidelines:

The newly revised Virginia ESCO pre-qualification and energy performance contract instructions provide a framework for Commonwealth agencies as well as other public entities, to help them simplify and speed the procurement of energy performance contract services and, as a result, the implementation of energy efficiency improvements.  This is important, since energy performance contracting can appear to be a complicated and imposing process, even though it is one of the best ways to implement efficiency improvements both technically and financially.

The VAEEC supports the use of EPCs as a way for state-owned buildings and public institutions of higher education to replace aging equipment and become more energy efficient. Since 2001, state and local governments and institutions of public higher education have invested nearly $900M in Energy Performance Contracting, enabling them to save money that can be better utilized elsewhere. The VAEEC looks forward to seeing an increase in EPCs across the Commonwealth as more public agencies and institutions decide to opt-in.

Click here for a current list of Energy Service Companies and here for DMME’s Performance Contracting Support page. The new Request for Proposals for the Back of the Envelope can be viewed here.

Additionally, check out our Census report to see the VAEEC’s recommendation on EPC’s!