Question:  What should be included in the energy service company (ESCO)’s energy savings performance contract (ESPC) proposal?

Answer:  The following major components should be included in a guaranteed savings ESPC proposal, presented by an ESCO to the facility owner:

  • An executive summary including a brief overview of the proposal content.  This includes Energy Conservation Measures (ECMs), first year guaranteed energy savings, total guaranteed energy savings for the duration of the contract, etc.  If applicable, the proposal should also present service and maintenance savings.
  • A complete description of each building listed in the project, including square footage, type of usage, list of major equipment, types of energy used and any other relevant information.
  • A detailed description of all ECMs for each building, including baseline energy usage and guaranteed energy savings.
  • The overall guaranteed energy savings expressed in both energy units and dollars, with a complete breakdown per energy type.
  • Total implementation costs, broken down by ECM per building.  This should also include the costs for the audit, design and engineering (both ESCO in-house and sub-contracted), the ESCO’s Project Manager and/or Construction Manager, overhead and profit, as well as any other costs, if applicable.
  • A preliminary cash flow analysis that shows all costs and all guaranteed savings on an annual basis for the total project payback duration.  Note, the owner should do the final cash flow analysis based on the final interest rate he/she will be paying, as well as the interest the owner will be earning on the escrow account.
  • A proposed Measurement & Verification (M&V) plan, broken down by ECM per building.  Note, each ECM should have its own unique M&V plan; an ECM in one building might save a lot of energy and require a very detailed M&V procedure, while the same ECM in another building may only save a small amount of energy, eliminating the need for a detailed M&V.
  • A preliminary Critical Path Method (CPM) schedule, showing the first three critical paths so the facility owner can get an understanding of project priorities once the implementation contract is signed.  If the ESCO’s preliminary schedule does not include critical paths, it is important to request a revised schedule.
  • A complete description of the ESCO’s proposed service and maintenance for the equipment they plan to install, and associated costs for this plan.
  • A detailed outline of the commissioning plan – one of the most important aspects of finalizing the installation of energy efficient improvement equipment and systems.  Commissioning is done to make sure all equipment and systems operate at maximum efficiency throughout the load range.  The outline will be preliminary because it cannot be finalized until the design of the systems is completed.  However, this preliminary plan is important for two reasons: (1) it provides a good overview of what is planned, and (2) it helps the designers understand what is expected, so that they can allow for the commissioning process in their design.  The facility owner should witness the commissioning and make sure it is completed in a satisfactory manner before signing the certificate of completion.
  • A proposed training program.  As part of the implementation of an ESPC, the ESCO should train the facility owner’s operating and maintenance personnel on the newly installed equipment.  It is wise to videotape the training, since there will be turnover of personnel during the payback period of the project and incoming operators and maintenance crew will also need to get the same training on the equipment.

Other information that should be part of the proposal includes, but is not limited to, the following:

  • Building modeling inputs and outputs that allow the facility owner to verify all input data and assumptions, show the calculated energy savings based on proposed equipment and ascertain if the guaranteed savings level is reasonable.
  • A project organization chart with resumes for ESCO personnel so that the owner can request a different sub-contractor if desired.
  • If the ESCO arranges financing for the project, commitment letters from at least two financial institutions with the specific financing terms should be provided.  It is important to note that the facility owner can use the ESCO’s financing or secure his or her own financing.
  • Copies of the ESCO’s bonding and insurance certificates.
  • Preliminary drawings of major equipment (boilers, chillers, air handlers, pumps, etc.), so that it can be determined how much of the old equipment will be removed and where the new scope begins.

Please submit your questions regarding ESCO’s and ESPC proposals in the comment section below, or contact a Technical Assistance Program representative for immediate support specific to your project or program.

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Content for this Blog post courtesy of Sentech-SRA/ICF International