If you are responsible for energy planning and management for your organization, it’s likely you’ve received offers that guarantee energy savings with solar, battery storage, or energy efficiency upgrades. These offers, usually from solar developers, energy service companies (ESCOs), or the vendors that sell energy products, may be promising. You may feel pressure from higher ups, board members, or other stakeholders to act quickly on an offer before incentives expire. But you put your reputation, and your organization’s financial future, on the line when you sign a contract.
That leaves project managers and decision makers in a difficult bind: where can you find objective information about what you’re offered and compare it with alternatives? How can your energy plan account for multiple scenarios, and conservatively consider the benefits, risks and value of each?
“ESCOs” are a compelling offer, but are they a good deal?
Energy Service Companies (ESCOs) offer a complete energy savings package in an easy, plug-and-play solution. One contract, one package – that sounds good when you have too many options and not enough information. But there’s a catch – the financial incentives of an ESCO may not align with yours.
As your energy advisor, they recommend systems and technologies to achieve a threshold amount of energy savings. However, as the developer and financier of those systems, they profit from your decision to move forward with their recommended solutions. This gives ESCOs a strong incentive to recommend their preferred vendors and financing partners.
Without a transparent, competitive procurement and objective evaluation, you can’t be sure you’re getting a good deal. Finally, because all of an ESCO’s services are combined into one package, the actual financial return of each recommended solution is not clear. Therefore, low or even negative value solutions may be combined with high value solutions to arrive at an average return, which may seem like a good deal if you don’t have the information to dig deeper or provide objective comparison with other options.
So what’s the solution?
An independent consulting and project management firm like Sage Renewables serves only one party—you, and represents your interests at every stage of planning and implementation. Sage analyzes all generation and efficiency options to develop a comprehensive energy plan, with clear risk analyses and objective recommendations based on your goals, resources and needs.
Sage assesses all available financing options, such as cash purchase, bond measures, lease-purchase and Power Purchase Agreements (PPA), to help select the option with the highest 25-year, net present value (NPV) energy savings. We are independent of any financial firms or vendors, and help you carefully assess the risks to project schedule and energy value before making a decision.
If your organization does move forward, Sage helps develop and manage a transparent, competitive procurement (RFP) process to ensure best value design, financing and timeline for your project. Sage defines the parameters of a project well beforehand to minimize costly change orders, and holds vendors accountable to contractual terms throughout design, construction and operations.
An ESCO’s package deal may seem tempting, but it’s important to have a trusted partner that presents all options and represents only your interests. Over 75 public and private organizations have trusted Sage to help plan and implement energy projects with confidence.
Want to learn more about how to finance your next solar energy project? Read more from our CEO, Arno Aghamalian, in the Washington Post.