When facilities implement an Energy Savings Performance Contract (ESPC), it can help them maximize and leverage American Recovery and Reinvestment Act (ARRA) funds, and finance energy conservation measures (ECMs) without any upfront capital costs. ESPCs are a financial mechanism that can pay for today’s facility upgrades with tomorrow's energy savings – all without tapping an organization’s capital budget. A contracted partnership between a facility owner and an energy service company (ESCO) can be a time and cost-effective means of completing comprehensive energy upgrades.

As part of an ongoing series on the ESPC process, this post covers challenges and considerations regarding maintenance responsibilities of newly installed equipment.

Question:  Is a separate maintenance agreement needed as part of the ESPC?

Answer:  If the ESCO maintains and services the equipment installed under the ESPC, it should be stated clearly in the Request for Proposal (RFP) and contract, and there does not need to be a separate maintenance and service agreement. If applicable however, the RFP and contract should specifically require the ESCO to train the facility owner’s operating personnel in the operation, service, and maintenance of the installed equipment.

Maintenance responsibilities can be included as an ESCO or agency responsibility, depending on the agreement negotiated and priorities of the site. The RFP and contract could specify that maintenance and service are severable from the energy savings guarantee in the instance where a site may wish to terminate a portion of their contract for convenience.

The ESCO and the facility should negotiate how to best handle operations and maintenance (O&M), as having the ESCO perform O&M in all instances may not make sense. The site should work with the ESCO to determine which party will take responsibility for which measures. It is ultimately the site/agency’s decision to hire the ESCO to perform the maintenance and service, to contract the work out to another organization, or to do the work themselves.  No matter what it decides, however, a site or agency should be aware of the inherent risks with O&M as it relates to performance and savings claims.

For additional information regarding the conditions of maintenance agreements, or other ESPC-related questions, please submit a comment to this post or contact a Technical Assistance Provider.

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