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City staff outline energy savings performance contract to help meet Decatur's 2030 Clean Energy goals
Summary
City staff and owner's representative 2KB Energy Services described an ESPC process to address deferred maintenance and decarbonize municipal buildings. The plan would use guaranteed savings and financed improvements; staff expect selection of an ESCO recommendation in early February and an investment-grade audit next summer if approved.
City staff and consultants briefed the Decatur Commission on Nov. 3 about an energy savings performance contract (ESPC) option intended to help the city meet its Clean Energy Plan goal of powering municipal buildings with renewable energy by 2030.
David Nifong, projects coordinator, said the city issued a request for proposals this year and hired 2KB Energy Services as the owner's representative to guide an ESPC process. George Buchanan, CEO of 2KB, explained that an ESPC combines multiple capital improvements into a single performance contract managed by an ESCO. The ESCO conducts an investment-grade energy audit, identifies a package of energy conservation measures (lighting, controls, HVAC upgrades, variable-frequency drives, water measures), and the city pays for improvements over time with a portion of the guaranteed energy and operational savings.
"The model is designed to reduce cost with no capital outlay from the city," Buchanan said, noting the financing term can extend up to 20 years under state law. He described the phases: owner's representative/ESCO selection, the investment-grade audit and development of a performance-contract proposal, and implementation and ongoing monitoring. He emphasized the importance of baseline analysis (36 months of historical consumption), third-party subcontractor bids, specification review and a continuing-services monitoring contract as part of guaranteeing savings.
Commissioners asked about risks: equipment failure before expected useful life; who guarantees savings; change orders; transparency over later design-level changes; impacts to the millage rate; and how local contractors can participate. Buchanan said guarantees are written into contracts and that escrow/project structures and continuing services monitoring are used to verify savings, but operating behavior and maintenance by city staff affect outcomes. Staff said an ESCO recommendation will return to the Commission in late January or early February for authorization to proceed with the investment-grade audit; the audit and contract development could be complete by next summer, with contract execution possibly by early 2027 depending on timing and financing.
The presentation stressed safeguards: robust specification review by the city, owner's representative oversight during implementation and a structure to minimize change orders. If the city chooses to stop after the investment-grade audit, an exit ramp exists; once the ESPC is executed the city would be committed to the implementation schedule. The city's next step is to finalize the RFQ materials and return with a recommendation for ESCO selection.
