From Rede’s Blog
By Matthew Redekopp, Founder and CEO
Two approaches for energy management projects are performance contracting and energy management contracting. Rede Energy Solutions focuses on energy management contracting to offer school districts unbiased solutions, more flexibility and lets them reap the complete financial benefits from the energy savings.
Performance contracting is a specialization in energy engineering where a contractor goes to a site and finds things that can be improved or upgraded. For any improvements, the performance contractor typically finances the project. The resultant savings from the project become the basis for the form of payment – the school district pays the performance contractor over a period of time for the utility costs at a pre-upgrade rate. The performance contractor is paid through the resultant savings.
This approach has its benefits and can be ideal in various scenarios. School districts don’t need to pay for the improvements and they get to enjoy the energy savings in the long run.
Rede chooses to work with school districts using a different approach – we are partners in energy management. As an energy management consultant, Rede uses an unbiased approach to find energy savings. Our goal is to discover the best solutions for school districts at the lowest costs, not to find savings that will result in the biggest financial return.
The two approaches are not exclusive – energy management can be performed on its own or alongside projects financed by performance contracts. However, a performance contract project does not replace energy management.
Performance contracting often requires a stringent contract. Contracts need to account for future changes (such as in building size or occupancy) that have an impact on utility costs. Since performance contractors are only paid for the savings from projects they participated on, any changes in savings from unrelated projects needs to be considered. Contracts also often stipulate how facility systems should operate to ensure the energy savings are realized.
Rede partners with schools to implement continuous improvement processes that are always adjusting to technological, building or occupancy changes. Districts have the flexibility to run schools their way.
The monitoring phase for performance contracts is typically two years, and then the savings are extrapolated for the remainder of the contract. Energy management has no finite timeline – Rede remains as a partner to monitor, analyze and continuously find solutions, and we are always there to troubleshoot problems and offer advice.
If districts have the financial ability to implement energy projects, they get to reap all the financial benefits. With Rede, districts receive our expertise and district-specific solutions without being tied in for decades.
There are scenarios where performance contracts can make sense for a district. As an unbiased contractor, Rede can assist in vetting performance contracts or ensuring existing contracts are being upheld. Energy management can complement existing or new performance contract projects to maximize energy savings and adapt to future changes.
Whether you are looking for an innovative energy manager or a third eye on a performance contract, contact Rede for more information on our solutions for your school district.
MORE ABOUT PERFORMANCE CONTRACTING
Read more about performance contracting in Rede’s blog: