Energy Efficiency & Performance Contracting Support
Any state agency may enter into an energy performance-based contract with an energy performance contractor to significantly reduce energy costs of a state facility through one or more energy conservation or operational efficiency measures.
An energy performance contract (EPC) is an agreement between a contractor, most often an energy services company, or ESCO, and a customer to perform as a condition of payment. Performance in this context means meeting a guaranteed level of energy savings.
ESCOs are essentially design-build general contractors combined with a diagnostic front end and a guaranteed-savings back end. They should provide, by some combination of in-house staff and subcontracts, all the labor, materials, equipment, and subcontractor management. If they do that well, they need little supervision. That being said, DMME can serve as an experienced and trusted third-party advisor to state agencies and local governments considering entering into an EPC.
Energy Performance Contracting (EPC) is primarily equipment replacement to provide energy savings and installation of building control systems to control energy consumption, which are defined as maintenance projects. They are impacted by the Virginia Uniform Statewide Building Code. State agencies shall comply with the CPSM for all design and construction work under this contract. Other public bodies must comply with their local building codes.
How Successful Have EPCs Been in Virginia?
The graph below indicates the total annual value of EPCs supported by DMME. The cumulative EPC investment since 2001 is $697,337,119:
The following graph shows the value of avoided costs that exceed debt service during and after repayment of the loan. These are cash-flow improvements realized by paying less for the sum of energy and water plus debt service than would have been paid for energy and water alone had there been no EPC. This value is discounted to a Net Present Value as of the date of investment using the presumed customer’s cost of money as the discount rate to reflect the fact that it is realized over the lifetimes of the improvements.
Click here for a current list of Energy Services Companies, all of which are pre-approved to serve all public bodies in Virginia that use the state performance contract.
For more information on energy performance contracting, please contact:
Technical Support/Project Review
Lead – Charlie Barksdale
Email – Charlie.Barksdale@dmme.virginia.gov
Backup – Tommy Thompson
Email – Thomas.Thompson@dmme.virginia.gov