Louisiana Embraces Energy Savings Performance Contracts

Situated at the mouth of the Mississippi River, Louisiana has abundant crude oil and natural gas reserves both on and offshore.  It is one of the top five natural gas-producing states, accounting for 7% of U.S. total gas production. Louisiana also has 17 oil refineries processing up to 3.3 million barrels of crude oil per day, accounting for nearly one-fifth of the nation’s refining capacity. In addition to oil and natural gas, Louisiana’s energy resources include deposits of lignite coal and substantial biomass resources from agricultural byproducts, wood, and wood waste.

With an average cost of 7.71 cents/kWh, Louisiana is ranked as being one of the least expensive states for electricity.  Low energy prices may be the reason why the state falls behind many other states in terms of energy efficiency programs.  (The 2019 ASAEE State Efficiency Scorecard ranked Louisiana 48 out of 50 states.)


Louisiana is committed to optimizing the energy performance of public-funded buildings and to improving environmental quality by decreasing the discharge of pollutants from public-funded buildings. To achieve that, Louisiana promotes Energy Savings Performance Contracting as the best option to leverage limited government budgets and achieve regional energy efficiency goals.

An Energy Savings Performance Contract, or ESPC, uses the energy savings achieved through efficiency upgrades to finance the cost of upgraded equipment and technology. Government facilities, schools, and hospitals are ideal candidates for ESPC projects because, with long-term ownership of the facilities, they can accommodate longer financing terms. To that end, Louisiana statutes require that performance contracting is used to the “maximum extent possible.”

Benefits of Using Performance Contracting 

More Efficient Buildings Mean More Productive Employees

  • Updating outdated building infrastructure with newer, more efficient technologies, results in higher quality systems, fewer breakdowns, and reduced maintenance costs. Multiple studies have confirmed that when building occupants experience improved lighting, better air quality, and more comfortable room temperatures, they are happier and more productive.

A Smart Investment

  • By bundling multiple small energy improvement projects together, an ESPC allows local governments to leverage money from quick-turnaround projects to finance larger-scale efficiency upgrades. For governments, this means making better use of limited budgets and putting taxpayers’ money where it really benefits the community.

No Capital Required

  • Since Energy Savings Performance Contracts are a budget-neutral financing solution, they allow cash-strapped parishes to implement energy-efficiency projects even when faced with budget cuts or competing priorities. No capital is required.

Immediate and Ongoing Cost Savings

  • State and local governments are responsible for providing essential services while using taxpayer dollars in the most efficient manner. Energy conservation offers a way to do so without sacrificing government services. Improving energy efficiency is generally less expensive than investing in new generation and transmission. By using an ESPC to improve energy efficiency, local governments throughout Louisiana can achieve substantial energy cost and maintenance savings across multiple facilities.
  • ESPC provides immediate savings as agencies retain a portion of the energy, water and maintenance savings during project implementation.
  • Water and wastewater facilities are large consumers of energy in Louisiana’s municipal operations. Improving the energy efficiency of pumping equipment and operations at water and wastewater facilities can increase treatment efficiency and reduce energy costs by as much as 20%.
  • Under the terms of the ESPC, once efficiency upgrade costs are paid off, the organization keeps all the savings in addition to any excess of the guarantee during the contract term.

Reduced Greenhouse Gas Emissions

  • Reducing energy consumption isn’t just about economics. Citizens expect their local governments to act as environmental stewards. A recent poll found that 71% of Louisiana’s voters believe in climate change and 50% say they’re seeing its effects today. By lowering demand for energy, Louisiana’s municipalities can use an ESPC to reduce emissions from energy generation—and preserve and improve quality of life throughout the state.
  • A new report from the American Council for an Energy-Efficient Economy (ACEEE) explains that energy efficiency measures can reduce energy-related carbon emissions in the U.S. in 2050 by as much as 57% relative to current projections. This is of particular importance to Louisiana which, currently ranks as the fourth-highest producer of greenhouse gas emissions (226 million metric tons). With its vast network of wetlands and low ground levels along its coast, Louisiana is among the U.S. states most at risk from the effects of climate change. Rising ocean levels will lead to additional land loss, eventually submerging large portions of south Louisiana—including New Orleans, Houma, and Lake Charles. And rising ocean temperatures will negatively impact the seafood industry, which plays a major role in the state’s economy.

Proven Technology and Expertise

  • Municipalities across the U.S. have used energy performance contracting to improve energy efficiency and reduce costs since the 1970s.
  • Energy Service Companies like SmartWatt manage every stage of the ESPC process to ensure each customer’s energy efficiency upgrade is a stress-free, risk-free experience. Customized energy solutions are developed that allow municipalities to implement the infrastructure upgrades needed to achieve their energy savings and sustainability goals.
Louisiana governments can use an ESPC for A Variety of Efficiency Upgrades
  • Replacement or modification of lighting fixtures to increase the energy efficiency of the lighting system
  • Heating, ventilating, or air conditioning system modifications or replacements
  • Automated or computerized energy control systems, including computer software and technical data licenses
  • Water and other natural resource conservation, including accuracy and measurement of water distribution and consumption
  • Energy recovery systems
  • Insulation and reduced air infiltration of the building structure, including walls, ceilings, and roofs or systems within the building
  • Storm windows or doors, caulking or weather-stripping, multi-glazed windows or doors, heat-absorbing or heat-reflective glazed and coated window or door systems, additional glazing, reductions in glass area, or other window and door system modifications that reduce energy consumption
  • Electric system improvements
  • An alteration or measure identified through a comprehensive audit or assessment of new or existing facilities

Improving energy efficiency across Louisiana is one of the most constructive and cost-effective ways to boost the state’s economic stability, reduce its environmental footprint and improve the health and wellness of its citizens.

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