Kaladar Enersave Management Inc.

Energy Management Process Consulting

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EPC Consulting

ENERGY PERFORMANCE CONTRACTING

An Energy Performance Contract (EPC) is a business arrangement whereby an Energy Service Company (ESCO) conceives, designs, installs and finances facility improvements. The ESCO recovers its costs and profits from the related energy savings and bears the financial cost of any savings shortfall.

The EPC concept is simple. It allows the owner to acquire expertise and equipment for facility renewal and energy efficiency, without the need for capital funding. The owner sets out the overall objectives regarding short- and long-term savings, contract length and desired upgrades. The ESCO, who generally has more resources and/or experience than the owner, is responsible for the whole project including the detailed design, specifications and the implementation of the improvements. Projects often include completion of long-deferred maintenance activities, and staff training in the operation of modern equipment. The modernization of mechanical and electrical systems not only renews the facility, it also reduces future costs and reduces the facility's impact on the environment and the need for natural resources.

The implementation of EPC is complex for most owners, since the award and management of performance contracts (design/build) is non-conventional for most facility managers. The key tasks faced by the owner in implementing an EPC are:

C establishment of proper objectives for the project

C selection of a compatible ESCO, qualified for the type of work likely to be required, and offering good value

C negotiation of suitable terms in the performance contract to focus both the owner and ESCO on the same objectives. The owner should be confident that fair value will be obtained throughout the contract, even before a design has been prepared

C selection amongst upgrade strategies presented by the ESCO and subsequent approval of design and operational details

C coordination of retrofit activities to minimize impact on ongoing operations

C coordination of full communication throughout the organization to ensure that all employees are aware of and supportive of the project

C verification of acceptable installation and complete staff training

C verification of ESCO cost reporting to its financier

C verification of ongoing savings reports and owner payments of savings

C evaluation of ESCO claims for adjustments to the energy baseline.

Following successful implementation and payback of an EPC project, typically over five to ten years, the owner receives all savings and will have acquired a modernized facility with appropriately trained operating staff.

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