By Mario Iusi, Executive Vice President
I spent the better part of my career working in the energy efficiency business developing energy efficiency programs for institutional and commercial building owners, identifying and recommending implementation strategies for energy and water to reduce building operating costs.
Our business approach was to create programs that were based on best practices, consistent, comprehensive, transparent measurement and verification, and honest accountability, the programs were geared to reduce savings risk for our clients. Our method of delivery was based on pay-for-performance efficiency which had gained momentum across the country in the 90’s.
While pay-for-performance efficiency holds enormous promise, there are also real risks if it’s not done right. There were variations in quality of the performance-based efficiency companies that showed up in the 90’s. It was like the “Wild West”, some good and some very bad that left a stain on the Industry. The companies that survived are still standing today and they have improved the technical processes, created new service offerings with new methods of delivery and technologies. Along with having satisfied and loyal customers.
I am still committed to performance as the solution for the future of energy efficiency as long as we keep three critical lessons in mind. First, set the right expectations with the client up front and agree on a transparent method for the evaluation of savings. Energy measures, costs, savings and term must be mutually agreed to by both parties. Second, the ground rules need to be clear and enforced both for the energy performance company and the client, for their roles and responsibilities within the energy performance contract agreement. Finally, all parties must have access to information, analysis and knowledge of their own performance to allow for mutual accountability.
The method and the execution of the energy efficiency program must be understood at the design phase, foundational to deployment of the measures installation /effort, and serve as the contractual basis for payment. Also Technology advancements in the controls industry ( ie, Internet Of Things (IOT) controls ) has created better methods and tools for measurement and verification of savings in support of proving operational savings.
Each party that participates in the energy efficiency program needs to know how it will be measured and monitored to assume responsibility and maintain accountability, with continuous progress monitored as the project rolls out. If there is too much room for interpretation, methods will be vulnerable to persistent dispute, usually from the party that didn’t get a favorable outcome. Energy efficiency requires upfront agreement, with a partnering approach where both parties are working together to achieve great results.
With the lessons learned by the energy performance contracting industry over the last 30 yrs, I can honestly say that a number of poorly designed energy efficiency projects failed due to the fact that no clear method, plan or mutually agreed commitment was made between the two parties (energy performance company and client). This is when trust is lost between the parties and ugly stories are told!
I believe that these failed projects of the past can be avoided if everyone understands the execution of the plan and the role they each play regarding their own accountability and responsibility to the energy efficiency program. Many successful projects have been developed over the years with successful outcomes that continue to save energy for building owners.