Performance Contracting

An Energy Savings Performance Contract (ESPC) project is a partnership between the customer and an Energy Services Company (ESCO). The ESCO conducts a comprehensive energy audit and identifies improvements that will save energy, water and operational expenses at a facility. The ESCO guarantees that the improvements will generate utility savings and measures the performance of the improvements to ensure they are occurring. If the savings do not occur then the ESCO must reimburse the customer for the amount of the shortfall. In short, the process redirects money that is currently paid to utility companies and puts it back into a customer's facilities in the form of needed, new equipment, making the facilities more efficient, more comfortable and safer.

Under a firm fixed-price contract, the ESCO assumes full responsibility for total project management, including design, engineering, installation, training, monitoring, measurement and verification, and other ongoing support services. Several benefits have been associated with the ESPC:
  • Increase in the value of facilities
  • Energy and water savings are measured and guaranteed
  • Reduces operational and maintenance costs
  • Failing systems are replaced instead of having to make replacements on an emergency basis
  • Savings are redirected to fund deferred maintenance items
  • Burden on the environment is reduced

To date, the Unviversity of Kansas has implemented $43 million in projects through performance contracting that generate $3 million in annual energy savings and have helped address campus deferred maintenance. These include:
  • A 2003 agreement with Chevron Energy Solutions that included lighting retrofits in more than 30 campus buildings, water conservation measures, HVAC equipment replacement, and more than $3M in electrical distribution improvements on the Main Campus. Click here for details
  • A 2010 agreement with Energy Solutions Professionals which leveraged $4M in deferred maintenance funding to provide a more holistic HVAC solution for Haworth and Malott Halls, and resulted in the installation of the more advance T5 lighting and occupancy based lighting control, expansion of the campus building automation controls system (BACS), steam optimization improvements, chilled water system improvements, and an energy awareness program. Click here for details

For more information on energy performance contracting, see the following:

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