State Energy Savings Performance Contracting

Jocelyn Durkay 11/15/2013

Electric meter Energy savings performance contracts (ESPCs) help building owners increase energy efficiency and lower energy bills at no expense to the owner, since energy savings are guaranteed to pay for improvements. An energy services company (ESCO) analyses the building’s energy usage, identifies possible conservation measures and agrees on improvements with the building operator, owner or government agency. The ESCO guarantees that the savings from efficiency measures will pay the monthly financing costs of the loan for the upgrades, which may be arranged through the ESCO or independently. If the savings are not enough to pay the loan, the contract guarantees the ESCO pays the difference. After the loan is paid, energy saving are kept by the owner or operator. By overcoming the technical barriers and high upfront costs, performance contracting can makes energy efficiency a wise business decision for many owners, driving efficiency investments and expanding employment opportunities.

Although all 50 states, Puerto Rico and Washington, D.C., have statutes allowing companies to offer energy savings performance contracts, success varies because of variations in the approach, the state’s degree of involvement and other factors. States can authorize ESPCs for state agencies, counties, municipalities, school districts, state colleges and universities and public agencies. As state energy codes typically focus on new construction or significantly renovations, ESPCs can help fill the gap by allowing owners of existing buildings to reap the economic and comfort benefits of efficiency.

Some states have taken steps to ensure the success of performance contracting by identifying and prescreening eligible ESCOs, establishing offices or programs to monitor ESPCs, connecting ESCOs with building owners and offering outreach, education and support. ESCO-driven investments in 10 states resulted in more than $3.4 billion of investments and reduced carbon emission by 488,000 tons. Below are examples of state initiatives that work to ensure successful performance contracting programs.

The Colorado Energy Office has supported more than 146 completed projects and 26 active projects, for a total of $294 million in construction as of late 2012. The office provides technical assistance to public agencies, monitors and establishes standards for ESCOs, maintains contract documents, and provides education and outreach.
In 2013 Hawaii’s performance contracting program drove more than $171 million in energy efficiency investments, the most of any state, according to the Energy Services Coalition. The performance contracting program, housed in the State Energy Office, offers technical assistance and maintains a list of pre-qualified ESCOs and educational documents.
Massachusetts’ Leading by Example and Green Communities programs in the Executive Office of Energy and Environmental Affairs, Department of Energy Resources helps state and local government realize savings through ESPCs. The Division of Capital Asset Management and the Department of Housing and Community Development also oversee ESPC projects. The state’s Energy Performance Contracting Program lists current and completed projects.
The Pennsylvania Department of General Services Energy Management Office with the Governor’s Green Government Council oversees ESPCs with state agencies or local governments. The organization has developed a procurement and contracting process, pre-screened ESCOs, designed new approaches for under-served customers and met aggressive goals to reduce energy consumption in state buildings by 18 percent. State agencies can also receive assistance from the Pennsylvania State Facilities Engineering Institute.
Utah’s efforts have resulted in more than $165 million of investments in ESPC projects through the leadership of the Division of Facilities Construction and Management. The program is now directing its focus on large state university and college campuses. The state’s comprehensive program was initiated by legislation directing the state to undertake "aggressive programs to reduce energy use in state facilities in order to reduce operating costs of government and to set an example for the public.”
The Washington state Department of Enterprise Services is responsible for overseeing ESPCs. As of 2012, the state ESPC program has been involved in more than $300 million of energy construction projects since its 1986 inception, resulting in a $15 million a year reduction in utility costs for public facilities. In addition to state agencies, counties, municipalities, school districts, state colleges and universities and public agencies, the Department of Enterprise Services specifically advertises technical assistance for port districts, libraries, hospitals and health districts.

Chart: Enabling Statutes for ESPCs

A-C | D-G | H-I |J-L | M | N | O-P | Q-S | T-V | W-Z

State	State Agencies	Counties	Municipalities	School Districts	State Colleges and Universities	Public Agencies
Alabama	Ala. Code §41-16-140	Ala. Code §41-16-140	Ala. Code §41-16-140	Ala. Code §41-16-140	Ala. Code §41-16-140	Ala. Code §41-16-140
Alaska	The state authorizes limited competition procurements under Alaska Stat. §36.30.305 through §36.30.308, although no sectors are specifically named.
Arizona	Ariz. Rev. Stat. Ann. §34-105	Ariz. Rev. Stat. Ann. §34-105	Ariz. Rev. Stat. Ann. §34-105	Ariz. Rev. Stat. Ann. §213.01	Ariz. Rev. Stat. Ann. §34-105	Ariz. Rev. Stat. Ann. §34-105
Arkansas	Ark. Stat. Ann. §19-11-1201 through §19-11-1206	Ark. Stat. Ann. §14-164-801 through §14-164-821	Ark. Stat. Ann. §14-164-801 through §14-164-821	Ark. Stat. Ann. §19-11-1201 through §19-11-1206	Ark. Stat. Ann. §19-11-1201 through §19-11-1206	Ark. Stat. Ann. §19-11-1201 through §19-11-1206
California	Cal. Public Resources Code §25410	Cal. Public Resources Code §25410	Cal. Public Resources Code §25410	Cal. Education Code §17650-17653	Cal. Public Resources Code §25410	Cal. Public Resources Code §25410
Colorado	Colo. Rev. Stat. §24-30-2001 through §24-30-2003	Colo. Rev. Stat. §24-30-2001 through §24-30-2003	Colo. Rev. Stat. §24-30-2001 through §24-30-2003	Colo. Rev. Stat. §24-30-2001 through §24-30-2003	Colo. Rev. Stat. §24-30-2001 through §24-30-2003	Colo. Rev. Stat. §24-30-2001 through §24-30-2003
Connecticut	Conn. Gen. Stat 11-80, §123	Conn. Gen. Stat 11-80, §123	Conn. Gen. Stat 11-80, §123	Conn. Gen. Stat 11-80, §123	Conn. Gen. Stat 11-80, §123	Conn. Gen. Stat 11-80, §123
Delaware	Del. Code Ann. tit. 29 ch.69, §6971	Del. Code Ann. tit. 29 ch.69, §6971	Del. Code Ann. tit. 29 ch.69, §6971	Del. Code Ann. tit. 29 ch.69, §6971	Del. Code Ann. tit. 29 ch.69, §6971	Del. Code Ann. tit. 29 ch.69, §6971
Florida	Fla. Stat. §489.145	Fla. Stat. §489.145	Fla. Stat. §489.145	Fla. Stat §1013.23	Fla. Stat §1013.23	Fla. Stat. §489.145
Georgia	Ga. Code §50-37-1 through §50-37-8	Ga. Code §50-37-1 through §50-37-8	Ga. Code §50-37-1 through §50-37-8	Ga. Code §50-37-1 through §50-37-8	Ga. Code §50-37-1 through §50-37-8	Ga. Code §50-37-1 through §50-37-8
Hawaii	Hawaii Rev. Stat. §36-41	Hawaii Rev. Stat. §36-41	Hawaii Rev. Stat. §36-41	Hawaii Rev. Stat. §36-41	Hawaii Rev. Stat. §36-41	Hawaii Rev. Stat. §36-41
Idaho	Idaho Code §67-5711D	Idaho Code §67-5711D	Idaho Code §67-5711D	Idaho Code §67-5711D	Idaho Code §67-5711D	Idaho Code §67-5711D
Illinois	Ill. Ann. Stat ch. 515/1, §50	Ill. Ann. Stat ch. 515/1, §50	Ill. Ann. Stat ch. 515/1, §50	Ill. Ann. Stat. ch.5, §105, Article 19b	Ill. Ann Stat. ch.110 §62/1; Ill. Ann. Stat. ch.30, §805/5A-5	Ill. Ann. Stat ch. 515/1, §50
Indiana	Ind. Code §4-13.6-8; Ind. Code §4-13.5-1.5; Ind. Code §36-1-12.5	Ind. Code §4-13.6-8; Ind. Code §4-13.5-1.5; Ind. Code §36-1-12.5	Ind. Code §4-13.6-8; Ind. Code §4-13.5-1.5; Ind. Code §36-1-12.5	Ind. Code §36-1-12.5	Ind. Code §21-33-4	Ind. Code §4-13.6-8; Ind. Code §4-13.5-1.5; Ind. Code §36-1-12.5
Iowa	Iowa Code §473.13A; Iowa Code §473.19 and §473.19A; Iowa Code §473.20	Iowa Code §473.13A; Iowa Code §473.19 and §473.19A; Iowa Code §473.20	Iowa Code §473.13A; Iowa Code §473.19 and §473.19A; Iowa Code §473.20	Iowa Code §473.13A; Iowa Code §473.19 and §473.19A; Iowa Code §473.20	Iowa Code §473.13A; Iowa Code §473.19 and §473.19A; Iowa Code §473.20	Iowa Code §473.13A; Iowa Code §473.19 and §473.19A; Iowa Code §473.20
Kansas	Kan. Stat. Ann, 75-37, 125	Kan. Stat. Ann, 75-37, 125	Kan. Stat. Ann, 75-37, 125	Kan. Stat. Ann, 75-37, 125	Kan. Stat. Ann, 75-37, 125	Kan. Stat. Ann, 75-37, 125
Kentucky	KY Rev. Stat. §56.770 through §56.784	KY Rev. Stat. §45A.343 through §45A.460; KY Rev. Stat. §58.600	KY Rev. Stat. §45A.343 through §45A.460 ; KY Rev. Stat. §58.600	KY Rev. Stat. §45A.343 through §45A.460; KY Rev. Stat. §157.420(5)	KY Rev. Stat. §56.770 through §56.784	KY Rev. Stat. §56.770 through §56.784 ; KY Rev. Stat. §58.600
Louisiana	La. Rev. Stat. Ann. §39:251-257; La. Rev. Stat. Ann. §39:1496.1; La. Rev. Stat. Ann. §40:1730.49	La. Rev. Stat. Ann §33:4547.1(B); La. Rev. Stat. Ann. §4547.1 through 3	La. Rev. Stat. Ann §33:4547.1(B); La. Rev. Stat. Ann. §4547.1 through 3	La. Rev. Stat. Ann. §39:251-257; La. Rev. Stat. Ann. §39:1496.1; La. Rev. Stat. Ann. §40:1730.49	La. Rev. Stat. Ann. §39:251-257; La. Rev. Stat. Ann. §39:1496.1; La. Rev. Stat. Ann. §40:1730.49	La. Rev. Stat. Ann. §39:251-257; La. Rev. Stat. Ann. §39:1496.1; La. Rev. Stat. Ann. §40:1730.49
Maine	Me. Rev. Stat. Ann. tit.5 §20005-A; Me. Rev. Stat. Ann. tit.5 §1770	Me. Rev. Stat. Ann. tit.5 §20005-A; Me. Rev. Stat. Ann. tit.5 §1770	Me. Rev. Stat. Ann. tit.30-A §5953-C ; Me. Rev. Stat. Ann. tit.5 §1770	Me. Rev. Stat. Ann. tit.30-A §5953-C; Me. Rev. Stat. Ann. tit.5 §1770	Me. Rev. Stat. Ann. tit.5 §20005-A; Me. Rev. Stat. Ann. tit.5 §1770	Me. Rev. Stat. Ann. tit.5 §20005-A; Me. Rev. Stat. Ann. tit.5 §1770
Maryland	Md. State Finance and Procurement Code Ann. §4-806; Md. State Finance and Procurement Code Ann. §11-101; Md. State Finance and Procurement Code Ann. §12-301-303	Md. State Finance and Procurement Code Ann. §4-806; Md. State Finance and Procurement Code Ann. §11-101; Md. State Finance and Procurement Code Ann. §12-301-303	Md. State Finance and Procurement Code Ann. §4-806; Md. State Finance and Procurement Code Ann. §11-101; Md. State Finance and Procurement Code Ann. §12-301-303	Md. State Finance and Procurement Code Ann. §4-806; Md. State Finance and Procurement Code Ann. §11-101; Md. State Finance and Procurement Code Ann. §12-301-303	Md. State Finance and Procurement Code Ann. §4-806; Md. State Finance and Procurement Code Ann. §11-101; Md. State Finance and Procurement Code Ann. §12-301-303	Md. State Finance and Procurement Code Ann. §4-806; Md. State Finance and Procurement Code Ann. §11-101; Md. State Finance and Procurement Code Ann. §12-301-303
Massachusetts	Mass. Gen. Laws ch.25A, §11C; Mass. Gen. Laws ch.25A §11I	Mass. Gen. Laws ch.25A, §11C; Mass. Gen. Laws ch.25A §11I	Mass. Gen. Laws ch.25A, §11C; Mass. Gen. Laws ch.25A §11I	Mass. Gen. Laws ch.25A, §11C; Mass. Gen. Laws ch.25A §11I	Mass. Gen. Laws ch.25A, §11C; Mass. Gen. Laws ch.25A §11I	Mass. Gen. Laws ch.25A, §11C; Mass. Gen. Laws ch.25A §11I
Michigan	Mich. Comp. Laws §18.1253	Mich. Comp. Laws §46.11c	Mich. Comp. Laws §41.75b; Mich. Comp. Law §117.5f; Mich. Comp. Laws §68.36; Mich. Comp. Laws §78.24b	Mich. Comp. Law §380.1274a	Mich. Comp. Laws §389.122a	Mich. Comp. Laws §18.1253
Minnesota	Minn. Stat. §16C.14; Minn. Stat. §471.345	Minn. Stat. §16C.14; Minn. Stat. §471.345	Minn. Stat. §16C.14; Minn. Stat. §471.345	Minn. Stat. §123B.65	Minn. Stat. §16B.4821	Minn. Stat. §16C.14; Minn. Stat. §471.345
Mississippi	Miss. Code §31-7-14	Miss. Code §31-7-14	Miss. Code §31-7-14	Miss. Code §31-7-14	Miss. Code §31-7-14	Miss. Code §31-7-14
Missouri	Mo. Rev. Stat.§8.231; Mo. Rev. Stat. §8.805	Mo. Rev. Stat.§8.231; Mo. Rev. Stat. §8.805	Mo. Rev. Stat.§8.231; Mo. Rev. Stat. §8.805	Mo. Rev. Stat.§8.231; Mo. Rev. Stat. §8.805	Mo. Rev. Stat.§8.231; Mo. Rev. Stat. §8.805	Mo. Rev. Stat.§8.231; Mo. Rev. Stat. §8.805
Montana	Mont. Code Ann. §90-4-1101 through §90-4-11-09	Mont. Code Ann. §90-4-1101 through §90-4-11-09	Mont. Code Ann. §90-4-1101 through §90-4-11-09	Mont. Code Ann. §90-4-1101 through §90-4-11-09	Mont. Code Ann. §90-4-1101 through §90-4-11-09	Mont. Code Ann. §90-4-1101 through §90-4-11-09
Nebraska	Neb. Rev. Stat. §66-1062 through §66-1066	Neb. Rev. Stat. §66-1062 through §66-1066	Neb. Rev. Stat. §66-1062 through §66-1066	Neb. Rev. Stat. §66-1062 through §66-1066	Neb. Rev. Stat. §66-1062 through §66-1066	Neb. Rev. Stat. §66-1062 through §66-1066
Nevada	Nev. Rev. Stat. §338.1905 through §338.1907	Nev. Rev. Stat. §338.1905 through §338.1907	Nev. Rev. Stat. §338.1905 through §338.1907	Nev. Rev. Stat. §338.1905 through §338.1907	Nev. Rev. Stat. §338.1905 through §338.1907	Nev. Rev. Stat. §338.1905 through §338.1907
New Hampshire	N.H. Rev. Stat. §21-I:19a through e	N.H. Rev. Stat. §21-I:19a through e	N.H. Rev. Stat. §21-I:19a through e	N.H. Rev. Stat. §21-I:19a through e	N.H. Rev. Stat. §21-I:19a through e	N.H. Rev. Stat. §21-I:19a through e
New Jersey	N.J. Rev. Stat. §52:34-25	N.J. Rev. Stat. §52:34-25	N.J. Rev. Stat. §52:34-25	N.J. Rev. Stat. §52:34-25	N.J. Rev. Stat. §52:34-25	N.J. Rev. Stat. §52:34-25
New Mexico	N.M. Stat. Ann. §6-23-1 through §6-23-10	N.M. Stat. Ann. §6-23-1 through §6-23-10	N.M. Stat. Ann. §6-23-1 through §6-23-10	N.M. Stat. Ann. §6-23-1 through §6-23-10	N.M. Stat. Ann. §6-23-1 through §6-23-10	N.M. Stat. Ann. §6-23-1 through §6-23-10
New York	N.Y. Energy Law §9-101 through §9-103	N.Y. Energy Law §9-101 through §9-103	N.Y. Energy Law §9-101 through §9-103	N.Y. Energy Law §9-101 through §9-103	N.Y. Energy Law §9-101 through §9-103	N.Y. Energy Law §9-101 through §9-103
North Carolina	N.C. Gen. Stat. §143-129; N.C. Gen. Stat. §143-64.17B	N.C. Gen. Stat. §143-129; N.C. Gen. Stat. §143-64.17B	N.C. Gen. Stat. §143-129; N.C. Gen. Stat. §143-64.17B	N.C. Gen. Stat. §143-129; N.C. Gen. Stat. §143-64.17B	N.C. Gen. Stat. §143-129; N.C. Gen. Stat. §143-64.17B	N.C. Gen. Stat. §143-129; N.C. Gen. Stat. §143-64.17B
North Dakota	N.D. Cent. Code §48-05-09 through §48-05-13	N.D. Cent. Code §48-05-09 through §48-05-13	N.D. Cent. Code §48-05-09 through §48-05-13	N.D. Cent. Code §48-05-09 through §48-05-13	N.D. Cent. Code §48-05-09 through §48-05-13	N.D. Cent. Code §48-05-09 through §48-05-13
Ohio	Ohio Rev. Code Ann. §156.01 through .05	Ohio Rev. Code Ann §307.04.01	Ohio Rev. Code Ann. §505.26.4; Ohio Rev. Code Ann. §717.02	Ohio Rev. Code Ann. §3313.372	Ohio Rev. Code Ann. §156.01 through .05
Oklahoma	Okla. Stat. 61 §202; Okla. Stat. 61 §212; Okla. Stat. 70 §5-131.2; Okla. Stat. 19 §458	Okla. Stat. 61 §202; Okla. Stat. 61 §212; Okla. Stat. 70 §5-131.2; Okla. Stat. 19 §458	Okla. Stat. 61 §202; Okla. Stat. 61 §212; Okla. Stat. 70 §5-131.2; Okla. Stat. 19 §458	Okla. Stat. 61 §202; Okla. Stat. 61 §212; Okla. Stat. 70 §5-131.2; Okla. Stat. 19 §458	Okla. Stat. 61 §202; Okla. Stat. 61 §212; Okla. Stat. 70 §5-131.2; Okla. Stat. 19 §458	Okla. Stat. 61 §202; Okla. Stat. 61 §212; Okla. Stat. 70 §5-131.2; Okla. Stat. 19 §458
Oregon	Or. Rev. Stat. §469; Or. Rev. Stat. §279A	Or. Rev. Stat. §469; Or. Rev. Stat. §279A	Or. Rev. Stat. §469; Or. Rev. Stat. §279A	Or. Rev. Stat. §469; Or. Rev. Stat. §279A	Or. Rev. Stat. §469; Or. Rev. Stat. §279A	Or. Rev. Stat. §469; Or. Rev. Stat. §279A
Pennsylvania	Pa. Cons. Stat. tit. 62 §3751 through §3757	Pa. Cons. Stat. tit. 62 §3751 through §3757	Pa. Cons. Stat. tit. 62 §3751 through §3757	Pa. Cons. Stat. tit. 62 §3751 through §3757	Pa. Cons. Stat. tit. 62 §3751 through §3757	Pa. Cons. Stat. tit. 62 §3751 through §3757
Puerto Rico	PR S 2372 (2012)	PR S 2372 (2012)	PR S 2372 (2012)	PR S 2372 (2012)	PR S 2372 (2012)	PR S 2372 (2012)
Rhode Island	R.I. Gen. Law §42-140.1-5; R.I. Gen. Law §42-140-3	R.I. Gen. Law §42-140.1-5; R.I. Gen. Law §42-140-3	R.I. Gen. Law §42-140.1-5; R.I. Gen. Law §42-140-3	R.I. Gen. Law §42-140.1-5; R.I. Gen. Law §42-140-3	R.I. Gen. Law §42-140.1-5; R.I. Gen. Law §42-140-3	R.I. Gen. Law §42-140.1-5; R.I. Gen. Law §42-140-3
South Carolina	S.C. Code Ann. §48-52670	S.C. Code Ann. §48-52670	S.C. Code Ann. §48-52670	S.C. Code Ann. §48-52670	S.C. Code Ann. §48-52670	S.C. Code Ann. §48-52670
South Dakota	S.D. Codified Laws Ann. §1-33B	S.C. Code Ann. §48-52670	S.C. Code Ann. §48-52670	S.C. Code Ann. §48-52670	S.C. Code Ann. §48-52670	S.C. Code Ann. §48-52670
Tennessee	Tenn. Code Ann. § 12-4-106; Tenn. Code Ann. § 12-4-115	Tenn. Code Ann. § 12-4-106; Tenn. Code Ann. § 12-4-115	Tenn. Code Ann. § 12-4-106; Tenn. Code Ann. § 12-4-115	Tenn. Code Ann. § 12-4-106; Tenn. Code Ann. § 12-4-115	Tenn. Code Ann. § 12-4-106; Tenn. Code Ann. § 12-4-115	Tenn. Code Ann. § 12-4-106; Tenn. Code Ann. § 12-4-115
Texas	Tex. Government Code §2166.406	Tex. Local Government Code §302	Tex. Local Government Code §302	Tex. Education Code §44.901	Tex. Education Code §51.927	Tex. Government Code §2166.406
Utah	Utah Code Ann. §63A-5-701	State facilities, including institutions of higher education, are specifically included in statutory language. Other agencies my complete ESPCs using the state’s public procurement code.			Utah Code Ann. §63A-5-701	State facilities, including institutions of higher education, are specifically included in statutory language. Other agencies my complete ESPCs using the state’s public procurement code.
Vermont	Vt. Stat. Ann. 29 §152				Vt. Stat. Ann. 29 §152
Virginia	Va. Code §11-34.1 through §11-34.4	Va. Code §11-34.1 through §11-34.4	Va. Code §11-34.1 through §11-34.4	Va. Code §11-34.1 through §11-34.4	Va. Code §11-34.1 through §11-34.4	Va. Code §11-34.1 through §11-34.4
Washington	Wash. Rev. Code §39.35; Wash. Rev. Code §39.35A; Wash. Rev. Code §39.35C	Wash. Rev. Code §39.35; Wash. Rev. Code §39.35A; Wash. Rev. Code §39.35C	Wash. Rev. Code §39.35; Wash. Rev. Code §39.35A; Wash. Rev. Code §39.35C	Wash. Rev. Code §39.35; Wash. Rev. Code §39.35A; Wash. Rev. Code §39.35C	Wash. Rev. Code §39.35; Wash. Rev. Code §39.35A; Wash. Rev. Code §39.35C	Wash. Rev. Code §39.35; Wash. Rev. Code §39.35A; Wash. Rev. Code §39.35C
Washington, D.C.			D.C. Code §8-1778.01 through §8-1778.48	D.C. Code §8-1778.01 through §8-1778.48		D.C. Code §8-1778.01 through §8-1778.48
West Virginia	W. Va. Code §5A-3B	W. Va. Code §7-1-3oo		W. Va. Code §18-5-9a	W. Va. Code §5A-3B
Wisconsin	Wis. Stat. §66.0133	Wis. Stat. §66.0133	Wis. Stat. §66.0133	Wis. Stat. §66.0133	Wis. Stat. §66.0133	Wis. Stat. §66.0133
Wyoming	Wyo. Stat. §9-12-1202; 9-12-1203	Wyo. Stat. §9-12-1202; 9-12-1203	Wyo. Stat. §9-12-1202; 9-12-1203	Wyo. Stat. §9-12-1202; 9-12-1203	Wyo. Stat. §9-12-1202; 9-12-1203

Sources:

Energy Services Coalition, State Success Stories—Energy Savings Performance Contracting Programs (ESC, 2011).
Energy Services Coalition, Performance Contracting Impacts- State Comparison (ESC, n.d.).
Environmental Protection Agency, Energy Performance Contracting in State Facilities (EPA Clean Energy-Environment Technical Forum, 2008).
Oak Ridge National Laboratory, Performance Contracting by State (Oak Ridge, TN: Oak Ridge National Laboratory, n.d.).