Indiana Guaranteed Energy Savings Contracts Help Municipals Improve Infrastructure
Small municipalities in Indiana, battling aging buildings and empty coffers, can benefit from a little known legislation — Indiana Guaranteed Energy Savings Contracts — to help upgrade their infrastructures without the need for capital.
Indiana Guaranteed Energy Savings Contracts are known as an energy performance contract in other states. The official legislation is Indiana Code 36-1-12.5, which Indiana government leaders often refer to when discussing the ordinance. The law also outlines which governing bodies are able to enter into a Guaranteed Energy Savings Contact. The list includes local governments, municipal water and wastewater utilities, schools and libraries.
“Indiana Guaranteed Energy Savings Contracts is an agreement between a qualified provider and an entity to upgrade buildings and equipment by using the energy savings that result to pay for the project,” said Ed Myers, an account executive at a nationwide energy systems optimization company.
This funding mechanism allows government organizations to partner with an energy systems optimization company to innovate bundled energy projects that achieve modernization of infrastructures, budget reduction, efficiency, and sustainability goals without the need for upfront capital.
The main advantage of these agreements is that the building owner or government entity can participate in the project without a an upfront investment of capital. The savings are used to pay for the investment over a period not to exceed the lesser of 20 years or the payback period of the project. If the guaranteed savings are not achieved, the provider must reimburse the building owner for the difference between the guaranteed and actual cost savings.
But not all energy systems optimization companies are equal and they have to be approved by the State to be qualified to implement projects funded through Indiana Guaranteed Energy Savings Contracts.
“The State of Indiana requires an evaluation process for each company that applies to be qualified as an Indiana Guaranteed Energy Savings Contracts provider,” said Myers, whose company made Indiana’s list of trusted companies.
Often times, Myers explained, entities will run into a hiccup when trying to partner with massive energy service companies (ESCOs), mostly because large companies have high overhead costs and can’t take on smaller projects under a certain dollar amount
“Look for the firm that doesn’t ignore small municipalities because the project doesn’t meet their minimum dollar amount requirements; find a partner who can guide you through the Indiana Guaranteed Energy Savings Contracts process; and one that won’t try to upsell you on more than what makes sense for you and your organization now,” said Myers.