Given the challenges of today's economy, a number of building owners and managers are turning to Energy Service Companies (ESCOs) to help them implement energy conservation measures on a performance-contracting or shared-savings basis. For many, ESCO services are a new and complex contractual arrangement. Engineering Economics, Inc. (EEI) is helping its clients navigate the ESCO process as an Owner's Representative, representing our clients' interests as they explore and contract ESCO services.
The Case for ESCOs
ESCOs generally investigate, develop, install and finance projects designed to improve the energy efficiency of client facilities. While ESCOs may consider a wide range of cost-effective, energy-saving measures, most projects focus on improving the operation and efficiency of lighting, heating, ventilation, air-conditioning, motors, variable speed drives, building controls and/or energy management systems.
Unlike traditional energy consulting services, ESCOs generally provide a turn-key solution for implementing energy conservation measures. Their services include the study, design, implementation and maintenance of their recommended energy-saving projects. Particularly attractive to cash-strapped organizations, the ESCO often provides the financing of the project -- where the total cost of the project (and financing interest) is repaid from the energy dollars saved. In some cases, the ESCO also provides a guarantee of those savings.
EEI is helping clients explore their ESCO options while safeguarding the client's interest throughout the ESCO process and contract. EEI educates its clients on the ESCO approach, maximizes the results and financial rewards of the client-ESCO relationship, and independently verifies the performance and energy savings. Just as our clients hire independent auditors to review their business financials, EEI encourages its clients to hire an independent third party to measure and verify the energy savings realized under their ESCO contracts, particularly where ESCO payments are based on energy savings.
EEI's ESCO-related services include:
- Development of Owner Project Requirements
- Development of the ESCO solicitation
- Assistance in selection of the ESCO
- Contract and financial model review
- Contract negotiation
- Peer review of preliminary ESCO investigation and study
- Peer review of ESCO design and submittals
- Peer review/audit of ESCO equipment pricing and mark-up
- Independent third-party commissioning (to maximize performance/savings)
- Independent third-party measurement and verification
- Independent third-party report of findings
If you are considering ESCO services, contact EEI today for a free consultation to explore how our ESCO Owner's Representative services might benefit your organization.