The US Government’s General Services Administration is using a mechanism to reduce energy use in buildings that GallonDaily believes should be used much more widely by governments and businesses in Canada. Offered by “energy service companies” and sometimes known as “performance-based contracting”, the approach puts the onus for energy savings on the contractor and achieves significant energy savings with no additional cash outlay to the building owner or operator.

In brief, the energy service company pays for and implements energy savings throughout the building. The building operator continues to pay for energy used at the rate paid prior to the energy savings being implemented. The energy service company recoups its costs and fees from the cost difference between the higher energy use before efficiency measures and the lower energy use after efficiency measures. This continues until the contractor has been repaid in full, at which point the building operator starts receiving energy bills based on the lower energy use achieved by the efficiency measures.

Through its Deep Retrofit Challenge, the US GSA is entering into at least $2 billion in performance-based contracts over the next two years to achieve substantial energy savings and to create jobs. Through the Better Buildings Challenge, more than 60 private companies, hospitals, cities, states, and colleges in the US have collectively committed to $2 billion in energy efficiency retrofits to 1.6 billion square feet of property.

Energy service contracting takes knowledge and skill to avoid a few pitfalls but if done well GallonDaily can see few better ways for government and business to reduce energy use and create jobs. GallonDaily’s parent company Canadian Institute for Business and the Environment at 1-416-410-0432 can provide advice to clients.

Information about the GSA program is at http://www.gsa.gov/portal/content/129983