ENERGY PERFORMANCE CONTRACTING
State and County agencies face increasing energy costs and the need to replace or upgrade aging, inefficient, and obsolete energy- and water-consuming systems. Capital improvement and operating budgets have typically been inadequate to fund the needed upgrades. Energy Performance Contracting (EPC) is an innovative approach to implementing energy and water efficiency projects using guaranteed energy savings to pay for the projects.
WHAT IS ENERGY PERFORMANCE CONTRACTING?
Energy performance contracting is an agreement between a building owner or facilities manager and a private energy services company (ESCO), in which future operational cost savings—such as those from annual electricity, water, sewer, or solid waste charges, as well as equipment maintenance service contracts—are used to cover the entire cost of a building’s energy and water efficiency retrofits (also known as energy conservation measures, or ECMs). The building owner contracts with an ESCO to facilitate third-party financing for mutually agreed-upon ECMs. Once the financing is secured by the building owner, the ESCO implements the ECMs under a “design-build” framework, which includes design, procurement, installation, and construction.
Energy Savings Performance Contracting For State and local Agencies
Department of Accounting and General Services (DAGS) Pre-Qualified ESCO List
DAGS has updated its Pre-Qualified Energy Service Companies (ESCO) List effective from 2025 through January 2027. Stage agencies can use this list to choose a qualified ESCO to help reduce the burden of the Energy Performance Contracting. More details are provided in the list at the link below.
- Effective on January 6, 2025
- Expires January 5, 2027
Benefits of Energy Performance Contracting
Sreamlined Procurement Process
- Reduces the time and administrative burden of the procurement process by eliminating the need to conduct a full competitive bidding process for each ESPC project.
- Pre-qualification ensures only capable and experienced ESCOs are considered, simplifying the selection process.
Quality Assurance
ESCOs on the list are vetted for qualifications, experience, and financial stability, ensuring high standards for energy projects. By leveraging a pre-qualified list of ESCOs, agencies can focus on achieving measurable energy savings and performance improvements with reduced risks and enhanced efficiency.
Spotlight on State Agencies
Several State and County EPC’s have been completed to date. One highlight is the State Department of Transportation (DOT) Energy Performance Saving Contract with Johnston Controls, Inc. The contracts for the Airports, Highways, and Harbors divisions totaled $245 million in large-scale energy efficiency upgrades. The projects are expected to generate $680 million in energy savings and reduce overall energy consumption. The Airports Division garnered the largest contract at $158 million and is nationally the largest performance contract signed by one agency. Learn more about DOT’s energy performance contracting in their video Preserving Paradise
Agencies Benefitting from ESPC Contracts to Date
| Agency | Year(s) | Contract Amount ($) | Estimated Savings Over Life of Contract ($) |
|---|---|---|---|
| U.H. Hilo | 1996-2012 | $6,402,695 | $14,630,066 |
| County of Hawai‘i | 1997-2026 | $2,215,546 | $8,157,880 |
| County of Kauai | 1998-2012 | $525,965 | $1,205,990 |
| C&C of Honolulu | 2001-2025 | $11,900,205 | $36,066,761 |
| Hawai‘i Health Systems Corporation | 2002-2022 | $21,939,997 | $55,766,364 |
| Judiciary | 2002-2012 | $1,474,406 | $9,785,036 |
| Dept. of Accounting & General Services Phase I | 2009-2029 | $36,873,266 | $72,580,767 |
| Department of Public Safety | 2010-2032 | $25,511,264 | $57,211,112 |
| University of Hawai‘i Community Colleges | 2013-2033 | $34,207,392 | $37,000,000 |
| C&C Honolulu Kailua Wastewater Treatment Plant | 2013-2033 | $6,054,178 | $13,693,910 |
| Dept. of Accounting and General Services Phase II | 2013-2033 | $17,400,000 | $28,000,000 |
| Department of Transportation | 2013-2034 | $309,506,592 | $795,560,746 |
| Honolulu Board of Water Supply | 2016-2036 | $33,125,398 | $56,846,668 |
| Total | $507,133,904 | $1,186,505,300 |