Performance Contracting — ESCO

ESCO New Building Performance Contracting is very similar to ESCO retrofit performance contracting: an energy services company upgrades the performance and energy efficiency of a building at no upfront cost to the owner. The ESCO is compensated out of documented energy cost savings. The most significant differences are that baseline energy is determined by simulation modeling and that more coordination with other contractors is required in the new building case. Steps in the process can include:

Build a DOE2 simulation model of the existing design in order to determine baseline energy consumption. (Minimum code compliance will be assumed for systems not yet specified in the existing design.)
Develop a list of potential energy conservation measures (ECMs).
Estimate the energy cost savings of each ECM.
Assist the owner in developing an RFP to Energy Service Companies.
Assist the owner and the winning ESCO is writing a performance contract.
Write the performance contract measurement and verification specification. The M&V specification includes the procedures the ESCO must follow in order to demonstrate that the expected savings are being achieved.

Energy Services Companies will respond to the RFP with bids for the incremental cost to finance and implement the ECMs. The monthly payments to the ESCO or the bank must be less than the expected energy cost savings.

The winning ESCO will coordinate closely with the owner, the design team and the other contractors such as the general contractor to insure that the ECMs are smoothly integrated into the building delivery process.