Performance-based solutions become the premier choice for energy and infrastructure renewal initiatives, resulting in fiscally and environmentally responsible outcomes.
Actively promote government policies and regulatory support for greater use of guaranteed performance based solutions to implement energy efficiency, renewable energy and infrastructure renewal initiatives.
Develop and advocate adoption of government policy, regulations and programs that enhance the role of performance-based solutions in achieving government’s climate change, conservation and economic development objectives.
Increase the profile of performance based solutions as well as members of Energy Services Association of Canada in achieving climate change and conservation objectives, particularly by politicians and senior levels of government.
An Energy Service Company (commonly referred to as an ESCO) is a business that develops, installs and arranges financing for projects designed to improve the energy efficiency (linked to page of same name) and maintenance costs for facilities over a seven to twenty year time period. ESCOs generally act as project developers for a wide range of tasks while assuming the technical and performance risk associated with the project. Typically, they offer the following services:
develop, design, and arrange financing for energy efficiency projects;
install and maintain the energy efficient equipment involved;
measure, monitor, and verify the project’s energy savings; and
assume the risk that the project will save the amount of energy guaranteed.
These services are bundled into the project’s cost and are repaid through the dollar savings generated.
A recent survey of the energy series industry found that about $450 million of performance-based solution (linked to page of same name) projects are undertaken each year. Together, these projects resulted in annual energy savings of about $45 million and savings of many million tonnes of green house gas (CO2e) emissions. It is further estimated that these savings resulted in over 4,000 direct jobs and a further 5,000 indirect jobs.
Performance-based solutions (PBS) consist of a range of ways in which a private energy service company takes responsibility for funding an upgrade project, taking its remuneration based on the success of the project. In this way, the company transfers the risk from the building owner onto itself. This allows the building owner to put more of his or her time, energy, and limited financial resources into the services provided.
One of the forms of a PBS is an Energy Performance Contract (“EPC”) which is a contract between the energy user and an ESCO for evaluation, recommendation, implementation and measurement/verification of one or more energy efficiency (linked to page of same name) measures. There are two types of contacts. In the first, contracts are structured such that savings are guaranteed by the ESCO to meet or exceed total annual contract payments. In the second, the costs are shared with payments based on energy and operational savings and a stipulated maximum energy consumption level over the life of the contract.
Reducing energy consumption continues to grow as a priority for all levels of governments as well as public institutions and private companies. For governments, this priority forms an essential component of their plans to achieve environmental savings, primarily in terms of reducing greenhouse gas (“GHG”) emissions. This is because over 80% of the man-made GHG emissions in Canada come from the production and use of energy. For provincial governments (responsible for electricity systems), energy conservation/efficiency is also embraced because it reduces the need for expensive additions of electricity generation, transmission and distribution assets.
For energy end users, reduced energy use is a growing priority because it represents a way for these organizations to control their energy costs. An important but often unrecognized benefit of investment in energy efficiency is that such investments are relatively labour intensive with most of the labour supplied by companies in the immediate vicinity of the project.
The potential for energy savings and GHG emission reductions in the commercial/ institutional sector is very large. This is because this sector is responsible for 14% of all secondary energy consumed in Canada and 9% of Canada’s man-made GHG emissions in 2006. Within this sector, office buildings (including public administration), health care/social assistance and education represent over 50% of this demand. In the City of Toronto, emissions from this sector account for 1/3 of man-made GHGs. It is estimated that commercial/institutional buildings can typically achieve savings of 15-35%. These potential annual savings are critical in meeting energy conservation and GHG emission reduction targets.