A Proven Tool for Financing Public Facility Improvements
Energy Performance Contracting (EPC) is a creative model for funding and implementing capital improvement upgrades, which allows entities to use future cost savings to fund projects.
Prior to entering an EPC, an Energy Service Company (ESCO) conducts an Investment Grade Audit (IGA) of your facilities and delivers a project proposal that includes: energy & water efficiency measures, renewable energy systems, electric vehicle technology, operations & maintenance and/or metering infrastructure improvements. Using the stream of income from cost savings or renewable energy produced, the project repays itself over the contract term.
The Colorado Energy Office EPC Program assists Local Governments, Special Districts, School Districts, Institutions of Higher Education, and State Agencies to incorporate conservation measures with little or no upfront capital. Energy Performance Contracting clients have upgraded their facilities with both common and innovative savings measures
Also check out:
How It Works:
You are a public entity with:
- High utility costs
- capital improvement/deferred maintenance needs
- Budget constraints
- Sustainability & climate action goals
The Energy Performance Contracting Program will:
- Identify capital improvement opportunities & cost savings
- Provide solutions for capital & financing
- Help achieve community goals through reduced energy use and operational costs
If your organization may benefit from facility improvements and lower operating costs, contact the Energy Office EPC team to discuss whether we can help accomplish your facility energy goals.
The Energy Performance Contracting team can provide an “EPC 101” that explains the program steps and highlights the Energy Office’s technical and contracting assistance. If EPC looks like an appropriate tool to meet your needs, we will establish you as a client and begin allocating staff time towards developing a project. See the EPC Program Memorandum of Understanding here.
The EPC program works alongside industry experts to evaluate facilities and recommend facility improvement measures. A list of program Pre-qualified ESCOs can be found here.
EPC program clients have access to our RFP templates, document preparation services, sample interview questions and scoring guides.
Interested in becoming a prequalified ESCO? Contact firstname.lastname@example.org. The following documents from CEO's 2018 ESCO selection process are helpful for understanding qualifications and requirements for interested firms. Program ESCOs are selected for a 5-year cycle.
The EPC program provides clients and ESCOs with a template Investment Grade Audit Contract approved by the Attorney General’s Office.
After choosing an ESCO, the client will undergo a detailed assessment of its facilities. The investment grade audit will identify:
- Facility improvement measures
- Utility and operational savings
- Fleet conversion & fuel savings
- Eligible grants and incentives
- Capital and financing solutions
If you plan to utilize 3rd party financing for your project, your IGA will identify a project that meets these statutory requirements:
- Guarantees utility cost savings
- Three years of measurement & verification, reviewed by a 3rd party*
- Finance period shorter than cost weighted average life of installed equipment
- Cash flow positive for each year of financing period
* The CEO EPC program offers this review free of charge to program participants
- The EPC program provides clients with a template Energy Performance Contract, Measurement and Verification Guidelines and Commissioning Guidelines to develop a draft contract.
- CEO and/or your ESCO provide an overview of M&V options and project implications.
- With CEO assistance, develop an Energy Performance Contract that meets all your technical, financial and legal requirements as well as those of the Colorado EPC Program.
- Your ESCO provides an acceptable M&V plan following CEO Measurement and Verification Guidelines.
- CEO provides a financing RFP that your team can utilize to select the best financial partner for your project.
- After contract execution, construction begins and your ESCO sees that facility improvement measures are installed and commissioned as specified.
- Your ESCO provides you and the CEO with a Post Implementation Report that documents as-built conditions and any changes to the energy savings guarantee.
- Congratulations! Now that construction is completed, clients immediately realize energy cost savings.
- Your ESCO verifies savings through post-implementation measurement & verification activities and summarizes the results in annual reports (which are reviewed by the CEO EPC team).
EPC Program Impact (as of July 1st, 2021)
Higher Education: 32 Total Program Projects (73% Client Reach)
State Agencies: 23 Total Program Projects (44% Client Reach)
County: 33 Total Program Projects (38% Client Reach)
Municipalities: 61 Total Program Projects (15% Client Reach)
School Districts: 88 Total Program Projects (34% Client Reach)
Special Districts: 17 Total Program Projects
EPC Market Impact
- Office of the State Architect: Energy Management
- Local Government: DOLA EIAF Grant
- School Districts: CDE BEST Grant
- Transportation & Fleet: Charge Ahead Colorado
- Historic Preservation: History Colorado Grants & Financial Incentives
- Water & Wastewater: Colorado Resources & Power Development Authority