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Energy Savings Contract

RonTC Member Posts: 13
Is anyone providing energy saving contracts? I am thinking about offering one with guaranteed energy savings on the HVAC system. My thought would be to install a geothermal system and install a data logger to measure temperature and current on the HVAC equipment. Then when we perform our annual tune-up we would chart the energy usage and compare it to the customers electric bill. Then depending on how the contract was set-up we would share the energy savings with the customer. I would appreciate your comments and or samples of contracts.

Ron Hartzheim


  • Brad White
    Brad White Member Posts: 2,398
    Danger I see

    Ron, the danger I see in making (guaranteeing) such results is, how can you control the variables leading to energy use?

    If you can offer such a contract, the hours of usage and all variables which define the base case have to be spelled out and have to be maintained during the testing/acceptance period.

    I can name one building owner who undertook a performance contract to upgrade his building. The contractor was to be paid a percentage of energy savings with a floor and a cap.

    The building owner, not the most scrupulous type, fudged a few things, raised certain setpoints and knowingly or not, sabotaged the payback meter in effect. All to get improvements for next to nothing.

    A HO with such a contract in hand might have an incentive to not pay you and a mechanism to do so. How would you police that?

    Anyway, my $0.02

    "If you do not know the answer, say, "I do not know the answer", and you will be correct!"

    -Ernie White, my Dad
  • RonTC
    RonTC Member Posts: 13
    Energy Saving Contract

    I would monitor the tempertures with the data logger and I think that the HO would not be savy enough to tamper with the logger. I would set the contact up to a predetemined temp range such as 70 to 78 degree range. Thanks for your comments. Has anyone else have any comments?
  • mikea23
    mikea23 Member Posts: 224


    I am looking to do a simalar thing email me if you would like to discuse it. There are a few companys already doing such a thing and I have spoken in detail with them.

    I am in the process of taking a trip to look at one guys operation and try and get some pointers

    [email protected]
  • Christian Egli_2
    Christian Egli_2 Member Posts: 812
    Rien ne va plus

    Placing negative bets in Vegas for the maximum positive gains

    Imagine you could play the Roulette in Vegas, not by piling $1.00 chips, but by gambling away IOU notes instead - betting negative amounts. Now, when the pesky boule falls as usual in the non-winning slot, the casino rakes in your IOU and in effect the casino now owes you whatever negative amount you had wagered in the first place. Come-on EZ money.

    I once busted the bank at one Monte Carlo night where there was one such electronic machine that didn't keep track of whose side the debits were on. But it wasn't in Las Vegas and it wasn't real money.

    Like Brad, that's also the part of such actual energy saving contract I'd be most worried about.

    Suppose the home owner operates the system so that there are no savings at all, no actual decrease in energy consumption (all you need to do is open the window and crank up the heat). With now an increase in fuel use and a poorly written contract will you be sharing the extra cost? I really hope not.

    This scenario sounds incredibly short sighted and wholly unrealistic to reasonable people, yet, assemble perfectly normal tenants in a building in a city that forbids submetering, and then watch what happens as the windows swing open. Savings can't be shared. It's all free heat... the landlord's paying for it... sure... free... like collective taxes, only everyone else pays for them...

    Meanwhile the bank goes bust.

    All I would try to be mindful of in the contract is that energy savings come mostly once an owner figures out how fast a meter can turn when it's turning on his dime. Nice equipment always plays a secondary role to warm sweaters.

    Obviously, you're trying to sell the expensive upfront cost of geothermal systems in exchange for long term energy savings. All these numbers can be reasonably calculated so that you don't technically need actual usages to determine a present value for the savings. To afford the expensive upfront investment, I think plain lease agreements are well suited. Plus, you can still build in performance benchmarks to compare actual operation - say if everything turns out as fantastic as predicted, you get an extra bonus, if not, you give a discount... this way, the gambling installation risk is shared with you, while the owner retains for himself the full value for monthly energy savings. This self interest is the only way to guarantee reasonable system operation, and hence, guarantee your performance bonus at the end.

    Faites vos jeux

    There is a large concern in Germany that goes around proposing such lease arrangements to home owners, they also sell the fuel and the maintenance contracts, but present value of savings are built into the initial costs. This is a calculated value and if the owner does better, good for the owner, if not, good for... $$$.

    I have brochures somewhere but I can't remember the name though it was all orange and blue.

    It is all the same sort of stuff done for car leases and odometer usage and maintenance contracts and residual values. There certainly is a place for this in the market.

  • Weezbo
    Weezbo Member Posts: 6,232
    sometimes in the past i have been called to look at a \"System\"

    and after looking at it, i have offered the owner this arrangement... i will buy the equipment and do the install and remove the existing system...you just pay me the difference in savings in KW and gallons of BTU's of oil saved over the next three years...never get them to go for it..and i dont know why....:)

    yet, i have never seen them not have someone come in and rip the system out and install and entirely new lash up...go figure...
  • Mitch_4
    Mitch_4 Member Posts: 955
    there was a company

    here in Canada that did something like that for commercial boiler. They would install ath system for free (yes 0$) and you gave them the difference in your bill on degree day consumption for 5 years.

    In essence, you paid the same amount every month, and they got the difference. Do not know if they a re still in business, but they did a LOT of business. All stats were locked and the monthly gas bill would be calculated every month to determine savings.

    Might be adaptable to your idea if you log actual house temps before and after and calculate degree day savings.

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