How to Make Improvements When the Cupboard is Bare: Energy Savings Performance Contracting

摘要

Utilities are facing increasing pressures to maintain or improve their treatment processes withlittle additional revenue through rate increases. This means that utilities need to make hardchoices about spending priorities. Efficiency and renewal projects are often assigned lowerpriorities than regulatory or infrastructure replacement projects. However, utilities that evaluateprojects based on long term costs and benefits may be able to justify investments for operationalefficiencies – including reductions in the use of power, chemicals, or solids disposal costs, orincreased revenues. Even when the utility recognizes that there is a good business case to makean investment, sometimes there simply is not adequate money. Partnering with an EnergyServices Company (ESCO) can be an option to fund improvements and maintain a positive cashflow. There are various vehicles to fund Energy Savings Performance Contract (ESPC) projectsdeveloped by the ESCO, but ESPC projects provide guaranteed efficiency savings to offset thecapital cost of the projects, consequently greatly reducing utility risk. This paper addresses theissues facing utilities in making capital decisions, how to evaluate them as business cases, andthe ESPC process. The experiences of two utilities, Frederick Winchester Service Authority andUpper Occoquan Service Authority, illustrate options, process, and outcomes.