North Carolina nationally recognized as good steward of energy and taxpayer money

Raleigh, NC

North Carolina has been named an Energy Stewardship Champion for a second straight year for helping local governments, state agencies, schools and universities save money and protect the environment with utility projects.

The N.C. Department of Environmental Quality’s Utility Savings Initiative staff recently received the 2017 Energy Stewardship Champion Award from the National Energy Services Coalition. North Carolina is one of only 12 states recognized this year.

“Our Utility Savings Initiative exemplifies stewardship,” said Michael Regan, secretary of the N.C. Department of Environmental Quality. “This program leverages private sector financing for improvements that reduce water and energy consumption, where the millions of dollars in savings are guaranteed to pay for the improvements and ongoing savings can be reinvested in other areas.”

Regan added: “In addition to the cost savings, the utility is reducing pollution and supporting a healthy environment for North Carolinians. It’s a win for the agency, a win for the company, a win for the environment and a win for public health.”

The financing solution that underpins this success is called Guaranteed Energy Savings Performance Contracting. The way it works is simple. The public agency and a private sector energy services company negotiate a set of energy conservation measures in the form of a contract. The energy services company installs the measures at no upfront cost to the public agency. Once the measures are installed, the savings on the energy bill are used to repay the installation. If the savings do not meet the cost, then the energy savings company pays the difference. 

The Utility Savings Initiative provides performance contracting to state agencies, cities, counties, prisons, universities and schools. Some 75 projects have saved state and local agencies more than $550 million. And those savings can be seen throughout North Carolina. For example, the N.C. Department of Transportation replaced existing highway lighting statewide with energy-efficient LEDs last year. The performance contact guarantees $50 million in savings during the next 15 years that will repay the $32.3 million project cost. Similarly, on the North Carolina State University campus, energy use was reduced by 33 percent and water use by 50 percent due, in large part, to a performance contract for cogeneration technology at the Cates utility plant. Once the contracts reach the end of their term, the ongoing savings can be re-invested or used to reduce the public budget.

“North Carolina’s practices on performance contracting are becoming best practices nationally,” said Len Hoey, head of the Utilities Savings Initiative. “This program helps state and local entities fund projects that they normally couldn’t afford. We love finding creative ways to fund needed improvements. And we love seeing those cost savings extend beyond the contract term.”

The initiative’s five-person team consults with schools, local governments, agencies and universities to identify areas where they can cut their own energy costs and take advantage of certain incentives in performance contracts. They shepherd the process from the beginning to the end by helping identify improvements, finding energy service companies and tracking savings. Staff with the initiative also conduct free basic energy assessments by studying ways public institutions can more efficiently use lighting, heating and air conditioning, and computer systems in facilities. Hoey estimates the initiative has helped public entities avoid more than $1 billion in energy costs since the program was created in 2002.

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