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    Industry Insights

    Reducing Energy Intensity: Why Performance Contracting is Worth a Look

    Posted by Trane on Jun 18, 2019 1:35:00 PM


    Trane Energy Services

    Comfortable, healthy and cost-efficient facilities play an important role in organizational outcomes: Buildings that use energy efficiently and keep occupants comfortable are assets. Those that operate inconsistently and inefficiently are liabilities. Over time, aging systems can turn any facility into a burden. But when budgets barely cover immediate maintenance and repairs, what are the options? Some organizations are taking a look at Energy Savings Performance Contracting (ESPC).

    How Can Energy Saving Performance Contracting Help Organizations

    An ESPC is a financial mechanism offered by Energy Service Companies (ESCO). It enables organizations to pay for comprehensive facility upgrades without tapping into the limited capital budget. Upgraded equipment and services are paid for through the resulting long-term energy cost savings that are guaranteed for the duration of the contract. If, during any contract period, the actual verified savings are less than promised, the ESCO pays the difference. In other words, the ESCO assumes the performance risk, while the organization gains guaranteed benefits.  

    Compared to a capital project approach, ESPC has a long list of advantages.

    Single-contract simplicity. ESPC enables organizations to plan, implement and pay for comprehensive improvements under a single contract. The ESCO takes on project development, design, procurement, installation, maintenance and can even help secure project financing in order to deliver the guaranteed savings and performance. The turnkey approach helps projects get started faster.

    Comfort and productivity. The results gained from major upgrades range from better comfort and indoor air quality  along with reduced maintenance costs and lower energy bills. 

    Focus on value. Traditional capital projects often require organizations to accept the lowest bid. Performance contracting allows you to focus on the best value defined by long-term lifecycle cost savings.

    Accountability. ESCOs are committed to delivering long-term building performance because they potentially have financial consequences involved.  

    Is ESPC right for your organization? It isn’t ideal in every situation. But if you have lots of deferred maintenance and high utility costs, ESPC is worth a look.


    As a supplier partner of OMNIA Partners®, Public Sector, Trane® provides performance contracting through a competitively-solicited cooperative contract. Trane’s turnkey equipment and energy services enable the company to look at the building and operational processes holistically, beyond the typical lighting retrofits and system upgrades. By offering alternative solutions ranging from renewable energy and advanced energy procurement strategies, Trane can also help OMNIA Partners participating agencies to lower their carbon footprint and reduce energy costs, from both sides of the meter, under the umbrella of an Energy Savings Performance Contract.  

    Ready to initiate a facility audit? Request more information from Trane today!  

    Topics: Facilities, Energy & Power