Wilson Rickerson

Center for Energy & Environmental Policy
University of Delaware
Newark, Delaware, USA

Performance contracting, or contract energy management as it is called in the UK, refers to the practice of financing energy services based on the savings stream that those energy services are projected to generate. While performance contracts have not traditionally incorporated renewable energy systems (Goldman et al., 2002), a number of recent contracts have incorporated photovoltaic (PV) systems as part of an overall building energy service strategy. This paper presents the results of a survey of US PV performance contracts and describes how, when examined in aggregate, PV performance contracts represent an important share of new US installations. This paper will also report on the diffusion of the PV performance contracting model from the US Federal government to other sectors.

Methodology

Three sources of information were used in preparing this paper: (1) a review of the literature on performance contracting, solar energy, and energy service companies[44] (ESCOs); (2) a review of PV performance contract project case studies posted on the Internet; (3) telephone interviews with government and industry stakeholders.

PV performance contracting has emerged only in the last four years, and therefore little published literature exists. A few documents released by the Renewable Energy Policy Project (REPP) discuss the theory of bundling PV with energy efficiency in performance contracts (Stronberg & Singh, 1998; Eckhart, 1999; Singh 2001), but they do not address the subject empirically. There is a considerable amount of information available from the Federal Energy Management Program (FEMP), the US agency charged with improving the energy performance of Federal buildings, but PV performance contracting activity at the state, municipal, or private levels is not addressed

To determine the extent of PV performance contracting in the US, 32 interviews were conducted targeting Federal, state, and municipal governments, 8 ESCOs, and 3 solar contractors. Data for 18 projects completed in the period 2000-2003 were gathered. Follow­up calls were made to the ESCOs, solar installers, and government officials to verify that the data were complete and accurate. The nameplate capacities of these projects were then aggregated by year and compared to figures on total annual grid-tied Us installations through 2003 (Maycock, 2004).