Trane presents energy-savings performance contract option to Hazel Park board

Representatives from Trane and a partner presented an overview of energy-savings performance contracting to the Hazel Park Board of Education on Jan. 6, explaining how districts can finance building upgrades by reallocating guaranteed energy and operational savings.

Trane staff described the model commonly called an energy savings performance contract (ESPC) or nonvoted bond: a district identifies energy and operational savings, an accredited energy-services company (ESCO) designs and installs upgrades such as boilers, rooftop units, lighting, controls and water-efficiency measures, and the ESCO guarantees savings over a contract term. Presenters said such contracts are typically structured with long-term guarantees — commonly 20 years in their examples — and that the firm would pay the difference if measured savings fell short of guarantees.

The presenters described the legal and financial framework for Michigan districts, citing MCL 380.127 and noting federal incentives such as funding streams from the U.S. Department of Energy and provisions created or funded through the Inflation Reduction Act that can add grant or rebate funding to projects. Trane staff said ESCOs must carry special accreditation and financial standing to offer saved-cost guarantees and described the company’s experience with Michigan districts including examples where districts used sinking funds or bond proceeds alongside the ESPC to extend project scope.

Trane representatives explained how projects are developed: an initial, no-cost utility-bill analysis followed by a detailed energy study with site assessments and engineering, then a scope agreed by the board and staff and a request-for-proposal process for qualified ESCOs. Presenters emphasized single-source warranty/accountability and the benefit of ordering materials up front to avoid multi-year price escalation that can occur with staggered voter-approved bonds.

Board members asked whether all district-owned buildings would be evaluated; the presenters said ownership and payment responsibility determine inclusion and that district-owned facilities are typically included if evaluation shows net benefits. Trustees asked about prior projects and payback timelines; presenters pointed to local references and said project terms vary (some shorter than 20 years in practice) and that some districts had success combining an ESPC with bond or district-contributed funds to increase project scope.

Presenters said the utility-bill analysis and preliminary study are no-cost and that Trane would not receive fees unless the district chose to contract for a project. The board did not take action at the meeting; trustees requested follow-up materials and references and asked staff to return with further financial analysis if the board wants to proceed to a preliminary study.