Energy performance contract

Departments and agencies should complete a project plan using the Project Plan Template and secure pre-approval from a financial delegate with capacity to approve the expected level of eventual project costs. The project plan should be completed in consultation with a member from the EGB team who can provide advice to the expected contract size, project scope and identify financing options. The project plan should include:

• details of the buildings to be considered for energy/water saving opportunities
• the process to engage with contractors and determine the project scope
• the proposed governance structure, including details of the ‘Project Sponsor’ and ‘Project Manager’ within the department/agency
• expected timelines
• constraints and dependencies
• risks

At this stage, details of the scope and opportunities for the project are distributed to a panel of prequalified EPC providers. These contractors are Energy Service Companies (ESCOs) who have been pre-qualified by DTF and have demonstrated the required competencies in delivering energy performance contracting (EPC) projects. Information about the members of the panel can be found here.

After receiving the EOIs, the department or agency will select the 3 contractors to take part in a competitive tender called a RFP.

Tenderers will be provided with details of the buildings included in the project, including their annual historical energy consumption, and current utility rates.

Request for Proposal template

Further to a standard tender, the RFP involves competitively auditing the buildings to identify energy efficiency measures. Tenderers will typically have around 10 weeks to undertake audits, after which they will be required to submit a proposal including details of the recommended energy/water saving solutions, along with proposed costs and savings of each measure.

Consistent with a level 2 energy audit, project costs and savings included in the RFP submissions are expected to be accurate to within 20%.

Once the RFP submissions have been reviewed, a preferred contractor is selected to proceed to the DFS stage. At this stage, the Detailed Facility Study Agreement is negotiated with the preferred contractor.

This contract sets out the terms and conditions under which the contractor will perform the DFS on the buildings. The DFS agreement also states that the contractor will be paid a DFS fee (typically in the order of 2 to 5% of the eventual contract sum) if the customer decides not to proceed with the proposed works. Once the terms are set, the contractor will commence the detailed study which, when complete, should outline the exact scope of works, including a fixed quotation for all implementation and ongoing costs, and the level of savings that the contractor will guarantee under an EPC.

The DFS will also include a Measurement and Verification Plan (MVP) which describes the process by which the contractor will measure and verify the savings. A Detailed Facility Study & Measurement and Verification Plan Template is available.

If the project outlined in the DFS is approved and funding for the project is confirmed, the Energy Performance Contracting. The EPC includes details of the exact scope of works (based on the detailed facility study), the commissioning procedure, maintenance schedules, project costs and the performance guarantee, which is supported by the measurement and verification plan.

The first key deliverable after signing an EPC is the Works Specification. The Works Specification, which is described in Schedule 2 of the EPC, should contain any additional information the customer requires (over and above what was provided in the DFS) in order to give approval for the works to commence.

The level of detail required in a works specification will vary from project to project, and is typically informed by processes and practices of the customer, and the specifics (e.g. level of perceived risk) of the proposed works.

Typical inclusions within a works specification are design drawings of planned system modifications and installations, project plans, data sheets, details of contractors, and possibly samples of equipment (e.g. lighting).

In instances where the DFS already includes this information, it may be decided between the customer and the contractor to bypass the works specification stage.

During the installation stage, the ESCO may install, or engage subcontractors to install the contracted solutions. Once solutions are installed and confirmed by the customer, the ‘guarantee period’ begins. Consistent with the details of the agreed MVP, the contractor is required to to demonstrate the actual savings achieved over the guarantee period. If savings in any year fail to meet the guaranteed savings (as stated in the EPC), the contractor is required to reimburse the customer for the shortfall.

Cofely

Genesis Now

MWH Australia