NC State uses performance contracting to address a backlog of nearly $500 million in building and utility renovations. Performance contracts are a performance-based procurement method and financial mechanism for building renewal projects whereby the utility bill savings that result from the installation of new building systems pay for the project’s cost.
The first performance contract was a 13 building, $17 million agreement with Schneider Electric. The project has an 11-year payback with an annual savings of roughly $1.7 million.
Another major performance contract provided for upgrades to the Cates and Yarbrough Utility Plants on campus. This $61 million contract with Ameresco allows NC State to generate its own power for the first time through the installation of a gas-fed combined heat and power (CHP) system, which should pay for itself in 20 years. This new system will provide 11 megawatts of power to main campus, supplying one-third of main campus demand.
How it works:
North Carolina legislation allows state agencies to fund energy projects through the “Guaranteed Energy Savings Contract” as defined in NC G.S. 143-64.17, sometimes referred to as energy performance contracting (EPC). With an established allowable payback period of 20 years and an aggregate principal amount of $100 million available, a “Guaranteed Energy Savings” performance contract includes language that obligates the contractor, a qualified energy services company, to pay the difference if at any time the savings fall short of the guarantee.
Performance contracting makes a significant contribution to the reduction of campus energy demand through:
- Economic Efficiency – Installation of more energy efficient systems and controls reduces utilities costs and provides a funding source for building renewal projects.
- Economic Development – Allows for more building and renovation activity than would normally be possible through traditional contracting methods.
- Environmental Stewardship – Allows for significant reductions in energy, which ultimately can reduce greenhouse gas emissions.
- Indoor Environment – Allows for indoor air quality improvements that may not otherwise have been possible due to funding constraints.
- Sustainability EPC – A practical tool for improving economic efficiency, environmental stewardship and indoor spaces for building occupants.