Energy Savings Performance Contracting
Energy Savings Performance Contracting (ESPC) is a new concept for Montgomery County Government. The County engages a Contractor to examine a building or group of buildings seeking improvements that can be implemented to reduce energy usage.
There are several unique aspects of ESPC:
- A single Energy Savings Contractor (ESCO) is engaged to provide the evaluation, design, implementation and verification of the energy savings project.
- Capital costs of project implementation are funded by borrowing money directly, rather than funding via General Obligation Bonds.
- ESPC implementation costs are paid back via the energy savings provided by the project. The payback includes the cost of Capital (interest) and is generally achieved in 15 years or less.
- The ESCO guarantees the projected savings to the County and is contractually obligated to reimburse the County for any shortfall in the savings.
- Actual savings are calculated and reconciled on an annual basis for a period as defined by the Contract.
Performance Contracting
Performance Contracting enables aging facilities to upgrade their equipment with no upfront costs, using the generated savings to pay for the project. Additionally, this program increases cash flow, reduces deferred maintenance and decreases exposure to ambiguous utility charges. This approach essentially eliminates any performance risk to the County, providing guaranteed operational and energy savings.
These projects provide the County with a mechanism to implement major building upgrades at essentially no cost. An added benefit is that outdated and obsolete equipment is replaced by the project without requiring Capital or operating expenditures.
Implementation
Montgomery County has entered into Contracts with 3 Energy Savings Performance Contractors:
- Noresco
- Ameresco
- Energy Systems Group
Initial projects are being kicked off with each Contractor.
Energy Savings Performance Contracting (ESPC) Projects
Pilot Project - 401 Hungerford Drive, Rockville
The project upgrades a number of systems to effect a projected annual energy and operational savings in excess of $200,000.00. The capital cost of the project is $4,091,951.00. Project cost is fully recouped by savings in a 20 year payback period, including costs of debt service. Johnson Controls, Inc. (JCI) was selected as Montgomery County's partner for implementation of this pilot Energy Savings Performance Contracting project. JCI is providing analysis, design, construction and monitoring and verification services in support of the project.
Department of Health and Human Services Building 8818 Georgia Avenue
Department of Health and Human Services Building 1301 Piccard Drive
Pre-Release Center
Longwood Community Recreation Center
