Alternative Financing Q&As

November 30, 2004

Q. A local contractor that is not an ESCO has performed several projects at my facility. Can that company be used as a sub-contractor to an ESCO on an ESPC project?

A. Yes. The Super ESPC energy service companies (ESCOs) are open to suggestions regarding contractors who have experience at your facility. Much of the equipment installation under an ESPC will be subcontracted from the ESCO to local companies, so if there is a local contractor with experience in the appropriate technology(ies), necessary security clearances, and knowledge of your facility, they could be a great benefit to the ESCO and your project.

Q. Is it possible for calculation of baseline energy use to change from initial proposal to the final proposal? How?

A. Yes. In fact, this almost always happens. It is important to remember that the baseline energy use is the energy use of the equipment proposed for replacement (or the energy use of a building if a computer simulation model is used) rather than the utility bill for the entire facility. The baseline energy use calculated in the Initial Proposal will be based on utility rates, equipment nameplate data, estimated efficiencies, and engineering calculations. Energy and cost savings estimates are made the same way. During the detailed energy survey, the baseline energy use will be verified through metering and more detailed engineering calculations for use in the Final Proposal. This verified baseline may be different from the Initial Proposal estimates if equipment efficiencies or operating hours are found to differ from assumptions or agency-provided information, and if energy conservation measures have been dropped from or added to the ESPC project.

Q. Can different Measurement & Verification methods be used for different ECMs for the same project?

A. Yes. While savings are guaranteed at the project level, performance is assessed for each ECM included in the project. It is very important to develop a Measurement & Verification (M&V) Plan that addresses each proposed ECM individually. Simple, well-known technologies with low performance and savings risk (such as lighting) will require fewer measurements for shorter durations than systems with multiple variable parameters or variable use (such as variable frequency drives or cogeneration). The FEMP M&V Guidelines defines various M&V methods by ECM and is a procedural guide that you can use to help select the appropriate M&V methods for the ECMs included in your project. The M&V Guidelines and other M&V resources are available at the FEMP Web site.