The Virginia Energy Efficiency Council (VAEEC) recently hosted a webinar, The Ins and Outs of Energy Performance Contracting, featuring Virginia Energy and Loudoun County Public Schools. The webinar provided an overview of how Energy Performance Contracting (EPC) works and the recent improvements to Virginia’s program. Loudoun County Public Schools recounted their experiences using EPC to enhance their buildings and meet their capital improvement and sustainability goals. Speakers included Nam Nguyen (Virginia Energy), Nick Polier (Virginia Energy), Michael Barancewicz (Loudoun County Public Schools), and Susan Gerson (Loudoun County Public Schools).
Energy Performance Contracting (EPC) is a budget-neutral option for state agencies, localities, public schools, and other public bodies to finance building upgrades while reducing energy use. Through EPC, public entities are able to improve their building performance, address maintenance needs, and reduce their energy consumption – all while achieving a guaranteed level of energy savings. Virginia’s program was established in 2002. To date, there have been more than 280 projects and over $1B in project investment.
EPC projects and customers include public K-12 schools and universities, localities, state agencies, regional jails, and correctional facilities. Virginia Energy provides support throughout the entire EPC process – from the design phase all the way through measurement and verification. This support comes at no cost to the customer and includes all necessary documents and templates to reduce time requirements. Customers are able to select an energy service company (ESCO) to perform the work from a prequalified vendor pool, which expedites the procurement process. The avoided costs from building upgrades pay for the cost of the project and there is a guaranteed energy saving.
During this year’s General Assembly Session, the VAEEC worked with Virginia Energy and our ESCO members to update the Commonwealth’s existing EPC legislation. Once these laws take effect, EPC will be able to finance all roof repairs and full replacements, allowing public buildings to use EPC to become solar-ready. This will provide public bodies with the opportunity to fully finance solar under an EPC (see our fact sheet for more information).
EPC has been particularly beneficial to some localities, such as Loudoun County, which is the fastest-growing county in Virginia with the third-largest school division. With sustainability in mind and the challenge of aging infrastructure, Loudoun County Public Schools reached a point where they could no longer reduce their energy usage without making significant investments. This led them to partner with Virginia Energy to pursue EPC. Through this first pilot project, LCPS saw a 75% kWh reduction, which was even better than the guaranteed level of energy savings. This positive experience led LCPS to continue to use EPC to not only address deferred maintenance and equipment upgrades, but to meet their capital improvement and sustainability goals.
EPC provides the school system with the fiscal advantage of financing energy efficiency retrofits from realized future energy savings. Additional benefits include expertise in design, planning, implementation, and communication; resources that guarantee long-term success; the inclusion of non-energy conservation measures projects (such as security systems); and a trusted partnership between LCPS and their selected ESCO, CMTA. Not only did CMTA understand the nuances of working in an educational environment, but they offered staff training for LCPS employees and have participated in educational opportunities for students.
If you are interested in learning more about energy performance contracting, check out the resources below.
VAEEC EPC fact sheet (6/2022)
VAEEC EPC webpage
Virginia Energy EPC webpage
Webinar Presentation PDF (6/2022)
Webinar Recording link (6/2022)
by Rebecca Hui, Office Manager at VAEEC
When facilities managers shut off the lights this spring, they had no idea that months later, the nation would still be in the throes of the COVID-19 pandemic. It’s no secret that this virus has irreversibly changed the world around us, and continues to do so with every new development. This three-part series will focus on the ways VAEEC members are meeting these challenges head on to keep their customers and their communities safe. You can view part one, ‘Technologies To Keep Us Safe’, here.
There’s something spooky about an empty elementary school. The tiny, untouched chairs in dim, vacant classrooms. The silent playgrounds and echoing hallways. It all evokes the tumbleweed images of an old Western ghost town. While the realities of COVID-19 have made this scene common nationwide, research shows that the virus spreads more easily indoors, and that viral load and exposure time increase the likelihood of infection. This has put a new emphasis on ventilation and indoor air quality across sectors, including school systems.
For some VAEEC members, this makes it the perfect time to get to work. “Clients are making necessary HVAC improvements or replacements to make buildings healthier and safer for the building users,” said Susan Kalergis, Marketing Communications Manager at 2RW Consultants, Inc.
Making the Case
Energy Performance Contracting (EPC) has been an effective way for businesses and localities to make cost-saving energy efficiency upgrades without large up-front expenditures since the late 1980s. It is a budget-neutral approach to implement energy-saving improvements without using funds from capital budgets. These projects offer comprehensive energy efficiency, renewable energy, water conservation, and/or operational solutions that are tailored to the needs of the specific facility, with a guarantee that the energy savings will cover the lifetime costs of these upgrades. Here in Virginia, public bodies and state agencies can take advantage of the statewide Energy Savings Performance Contracting (ESPC) program to streamline their procurement processes.
“As a vendor, we have seen two different approaches as customers attempt to deal with the pandemic. Some have totally shut down all projects and procurement. Alternatively, others have done the opposite and pursued performance contracting as a way to attack COVID-19 and other issues head on. With spaces vacant and interest rates at historic lows, several customers have moved forward with [EPC] projects,” said VAEEC Board member George Barnes, Account Manager for Complex Solutions for Trane.
While EPCs have been used for decades, the combination of low building occupancy, low interest rates, and an increased need for efficient and effective air filtration systems have made them a more attractive option to many businesses, commercial building owners, and institutions. Trane, 2RW, and other Energy Service Companies (ESCOs) are working to balance the needs of their customers with the safety of their staff as projects continue.
“With the restrictions created by COVID-19, we need to closely manage the logistics of integrating our process with [the project],” said Barnes.
Kalergis shared a similar sentiment. “[In response to the pandemic], a fundamental guiding premise was to rely on data to make thoughtful decisions, which could have long lasting implications.”
“As school districts across the country work to respond to the coronavirus, utility and energy efficiency program administrators have an important role to play in delivering solutions,” a representative from VEIC said in a recent statement. VEIC is a nonprofit organization committed to reducing the economic and environmental costs of energy use. As program administrators of the DC Sustainable Energy Utility (DCSEU), VEIC launched a variety of programs to support safe reopening strategies for schools, small businesses, and more.
School systems across the country report that energy costs are second only to personnel in their annual budgets. With many schools either shut down or reopening with significantly reduced activities, the DCSEU developed a School Shutdown Toolkit that identified low-and-no cost ways that school systems can save energy, as well as recommending priorities for often-deferred maintenance.
VEIC also launched an indoor air quality improvement program for Vermont’s K-12 schools. With a high degree of variability across schools, the program takes a customized approach to assess and improve each unique HVAC system, prioritizing efficiency wherever possible. Typically, increases in ventilation and filtration result in an increase in energy use, but by leveraging equipment controls and efficient equipment, these programs help schools keep energy increases manageable.
“For sustainability advocates, the push for improved indoor air quality is not new; and it has always been an important part of [our] designs and equipment specifications,” said Kalergis. “While not every technique and technology may be advantageous for every building, we advise building owners and facilities operators that techniques for [their] specific building types—such as education or healthcare—are proven to be effective and worth considering.”
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!