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Energy Performance Contracting in Colorado


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The Colorado Energy Office’s (CEO’s) Energy Performance Contracting (EPC) program offers state-agencies, higher education institutions, and local governments opportunities to finance energy and water efficiency improvements with guaranteed energy savings. These cost-effective business decisions free up taxes, tuition, and fees for other valued programs and services.


In June 2014 Colorado’s EPC project investments total $447.4 million, or $88.96 per Coloradan. These results rank Colorado #3 in total investments and #5 per capita investments, according to the Energy Services Coalition’s national Race to the Top. Even more significantly for Coloradans, EPC projects can be found in communities across 75% of Colorado’s counties, guaranteeing over $28 million in annual utility cost savings.


Since the mid 1990s, the Colorado EPC program has been authorized by state statutes and complied with state TABOR and federal Dodd Frank regulations and other requirements, as well as industry standards. When working with EPC, institutions contract an energy service company (ESCO) to conduct an investment-grade audit of your facilities and receive a prioritized list of facility improvement measures. Next, in a separate performance contract, the ESCO guarantees you will realize energy, water and associated operations and maintenance savings from a set of facility improvements. Because this savings offsets construction costs, capital outlay may not be necessary. After any financing period ends, all subsequent cost savings accrue to you. You can then redirect tax dollars, tuition and fees toward programs and services.


Colorado’s EPC program is the model for the nation because of several best practices, all designed to foster satisfying experiences for participants. Colorado’s standardized, state-approved contracts, sponsored by CEO, Office of the State Architect (OSA), Office of the Attorney General, and the Colorado Chapter of the Energy Services Coalition (ESC) insure the highest quality work. CEO also employs a program consultant, hired to produce standardized, state-approved contracts and processes.


Colorado also offers a talent pool of pre-qualified energy service companies to fit the needs of clients across Colorado. Today, facility owners can confidently select one of 15 pre-qualified ESCOs.  Colorado’s ESCO Base Contract incorporates statutory and regulatory requirements, industry standards and CEO’s standards for success.


Rather than offering a finite loan fund annually through an application process, Colorado projects offer a free market approach to financing with support from private financial markets. With increasing interest in energy efficiency, there is no limit to investment capital in Colorado. Several project investors actively engage in Colorado Chapter and national ESC activity.


Finally, Colorado offers free third-party coaching and technical assistance throughout the lifecycle of an EPC project. Upon signing a non-binding Memorandum of Understanding (MOU) with CEO, a facility owner is assigned a CEO project consultant, who helps guide them through the sometimes daunting the technical, legal and financial complexities of EPC. The MOU ensures the facility owner will benefit from advice and technical assistance available from CEO free of charge.

In addition to maintaining the high standards and best practices it has come to be known for, CEO is ramping up new initiatives in two markets this fiscal year: small and rural communities, and the private sector.

For small and rural communities, CEO is conducting deep data and geographical analyses of its EPC portfolio to identifying Colorado-based partnerships to extend the benefits of EPC to all communities in the state. Though active and completed EPC projects benefit local communities in 75% of Colorado’s counties, only a third of government units in Colorado have benefited from energy performance contracting to date.  


In the private sector, Colorado is also on the leading edge of EPC. In 2011 the US Department of Energy awarded Colorado a competitive grant for the nation’s first statewide pilot EPC program in the private sector. In this leading-edge initiative, CEO provided incentives to private facility owners, paying up to 75% of audit costs. Originally seeking participation from ten companies, CEO actively engaged 16 private companies from a variety of industries (ski resorts, multi-tenant office and residential buildings, retail, manufacturing, television). A total of 18 facility energy audits and EPC project proposals identified more than 12.8 million kWh electricity, 450,000 therms natural gas, 3.4 million gallons water and $1.45 million in potential annual energy and water savings. Colorado is supporting each company’s consideration of individual EPC project proposals and contract development.


For more information on these programs, see the Private Energy Performance Contracting and Public Energy Performance Contracting sections.