Use a Performance Contract for Municipal Efficiency Projects

An energy savings performance contract (ESPC) is a special contracting tool that allows building owners to pay for energy efficiency upgrades out of the energy cost savings guaranteed by the contractor. In Massachusetts, ESPCs are defined as a subset of energy management services (EMS) agreements, which can also include performance-based energy generation projects. MGL Ch. 25A sections 11c and 11i allow public entities to contract for the full range of EMS through a single solicitation process. This eliminates the costs associated with multiple bidding processes, as a single vendor is selected to complete engineering, design, construction, commissioning, and savings measurement and verification.

EMS agreements are often used for “big ticket” asset modernization projects with long paybacks but will typically also address a range of end uses, building systems, and equipment. This guide outlines the process for hiring a qualified energy services company (ESCO), including creating an energy baseline, developing a business case, drafting and issuing a solicitation, selecting a vendor, securing project financing, and implementing the project. Read more.