Energy Service Companies Savings Performance Contracts ESA Payments and ESCO Guarantees
Energy Services Agreements - ESAs - are pay-for-performance, off-balance sheet financing solutions that allows customers to implement energy efficiency projects with zero upfront capital expenditure. As in the case of power purchase agreements – PPAs - equipment is installed, owned and operated by the vendor who sells the saved power to the customer.
ESAs are the Energy Efficiency Equivalent of a Power Purchase Agreement
Energy Service Companies – ESCos - provide designs and implementation solutions for energy savings projects, retrofitting, energy conservation, outsourcing, power generation and supply.
Energy Savings Performance Contracts - ESPCs - accelerate investment in cost effective energy conservation measures without up-front capital costs. ESPCs are partnerships between a property owner/operator and an ESCo which conducts a comprehensive energy audit to identify improvements to save energy, designs and constructs the project as well as arranges the necessary financing.
An ESCO Guarantees the Improvements that Generate Energy Cost Savings
Energy Savings result from lighting upgrades, building automation system and controls. A Flexible Contractual Tool for retailers looking to stabilize utility costs as well as achieve longer term benefits by buying out the contract and take ownership of installed equipment.
ESA Payments are operating expenses designed to be off-balance sheet financing solutions with regular payments similar-to a utility bill.
Outputs Quality and Achievements of Specific Measurable Performance Standards and Requirements
Benefits resulting from the application of ESAs include energy efficiency, water conservation, emissions reduction and streamlined contract funding for energy management projects, through access to private-sector expertise, built-in incentives to provide high-quality equipment, and project commissioning infrastructure improvements. Project management ensures building efficiency and new equipment without upfront capital costs as well as energy and related operation and maintenance cost saving guarantees.
Energy Management for Small and Medium-sized Commercial Buildings
Small and Medium-sized Commercial Buildings account for 95 percent of building stock and consume half the energy in a sector of the economy responsible for 20 percent of the total energy consumption. Owners of smaller buildings are often unaware of the amount of energy wasted and the opportunity for savings that building automation systems provide. This sector hasn’t BAS for the following reasons: the high cost of tailoring software and acquiring hardware components is beyond the reach of most small- and medium-sized properties; the owner is not always the tenant that pays the utility bill, hence limited incentive to invest in the building’s energy efficiency.
Building Leases spell out how energy costs are divided between tenants and owners. Often, these leases are not structured in a way that promotes energy savings. Tenants have no incentive to save energy in their leased premises because energy costs are based on tenant square footage. Building owners have no incentive to invest in energy efficiency because the operating expenses are passed onto tenants.
Green Leases promote energy efficiency by creating lease structures which equitably align the costs and benefits of efficiency investments between building owners and tenants.
Energy Management Systems can be used to centrally control devices like HVAC units and lighting systems across multiple locations. EMS also provide metering, sub-metering and monitoring functions that allow facility managers to gather data and insight to make more informed decisions about energy activities across their sites.
LEED Neighborhood Development building technologies and advanced real-time energy smart meters allow business and residential energy users to verify consumption in workplaces and homes. Passive Solar Buildings take advantage of the local climate with window placement and glazing, thermal mass, insulation and shading. Walls, floors and windows are designed and located to collect, store and distribute energy without the use of mechanical and electric devices.
Conservation and Efficiency are energy reduction techniques; conservation implies sufficiency and is the key to sustainability as it lowers energy costs by reducing resource depletion.
Innovative Solutions for Your Neighborhood and Business
Digital Metering and Smart Grids smart meters enable two-way communication between the meter and the central system; unlike home energy monitors, smart meters can gather data for remote reporting. With the inception of electricity deregulation and market-driven pricing, utilities have been looking for a means to match consumption with generation.
Smart meters provide a way of measuring site-specific information, allowing utility companies to introduce different prices for consumption based on the time of day and the season.
Sub-meters identify best practices to reduce energy and water consumption in a building allowing owners, property managers, condominium or homeowners associations to bill tenants for measured utility usage via individual water, gas and electric meters. Water Sub-meters promote conservation and help offset maintenance costs.
Distributed Generation occurs on a property site when energy is sold to the building occupants; here, commercial PPAs enable businesses and governments to purchase electricity directly from the generator rather than from the utility. Power Purchase Agreements PPA is a legal contract between an electricity generator and a power purchaser.
Financing Energy Efficiency Projects face several financial impediments, including information. Financial institutions often lack a full understanding of energy efficiency technologies which are almost always investments with long repayment terms. Small towns and rural communities require specific and unique knowledge, expertise and funding sources.
Power Purchase Agreements and Distributed Generation Projects
A Power Purchase Agreement PPA is a legal contract between an electricity generator and a power purchaser. Contractual terms may last anywhere between 5 and 20 years, during which time the power purchaser buys energy, and sometimes also capacity and services, from the electricity generator. Such agreements play a key role in the financing of independently owned electricity generating assets. The seller is typically an independent power producer - IPP.
PPAs Facilitate the Financing of Distributed Generation Assets
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