Full Title: Tapping the Power of the Market: Energy Savings, Water Conservation, and New Revenue Streams Through Performance Contracting in the Colorado River Basin States
Author(s): Western Resource Advocates and McKinstry
Publisher(s): Western Resource Advocates and McKinstry
Publication Date: 07/2015
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Our society has placed a high value on conserving energy and water, which are both finite and essential. Developing events emphasize the need to adopt the best energy and water conservation actions even faster than we are currently doing. The federal government has emphasized and set in place new programs to address these issues, such as the Clean Power Plan, calling for strong actions to curb carbon pollution. The Colorado River, which supplies water to almost 40 million people in seven states (Arizona, California, Colorado, New Mexico, Nevada, Utah, and Wyoming), has longterm insufficient water flows to supply the river’s allocations. Limited water supplies, drought, and a warming climate are exacerbating this situation throughout the West. Providing reliable clean water and reducing energy use are “top of mind” for everyone these days.
The market can catapult energy and water savings, providing one important solution to this challenge. The performance contracting model is a smart approach for cities, counties, school districts, and wastewater and water utilities to quickly implement energy and water efficiency improvements in their facilities using a qualified, private energy services company. Financial savings on water and electric bills resulting from the installation of energy and water conservation measures are guaranteed by the contracted energy services company to exceed project and financing costs necessary to implement the energy and water saving upgrades. If the realized savings do not exceed the project and financing costs, the contracted energy services company makes up the difference, not the public entity. At the end of the performance contract, all subsequent savings, year after year, accrue directly to the public entity. Because savings over the life of the contract must cover the costs of the project, public entities with budget constraints can eliminate the need to tap into capital budgets with performance contract projects. As a result, performance contracting has been used for more than two decades by innovative governments, schools, and other public entities to save energy and promote renewable sources of energy.