Most companies would like to reduce their energy use—it’s good for the environment because it reduces carbon emissions, customers value a company’s commitment to the environment, and decreased energy use reduces operating costs. Moreover, energy-efficient solutions can improve workplace productivity with better lighting and a more comfortable work environment.

Cleantech Solutions’ performance contracting can be a great way for your business to realize the benefits of reducing energy use and operating expenses without incurring a capital expense or taking on debt. By partnering with Cleantech your business will benefit from a net reduction in operating costs while improving its energy efficiency.

A Cleantech performance contract is a multi-year partnership between Cleantech, an energy services company (ESCO), and your business. At the start of the relationship, the Cleantech measures your business’ current energy usage and identifies opportunities for energy reduction. Cleantech quantifies the value of anticipated energy savings and contracts with you to invest in capital projects that create these savings. Typical projects include replacing or upgrading existing lighting and/or HVAC systems with higher efficiency solutions, and may also include implementing building automation systems (BAS), making improvements to the building shell (insulation, windows, etc.), and on-site renewable energy generation such as solar or wind turbines. For the term of the contract, Cleantech owns the capital equipment and your company uses that equipment via an operating lease. Cleantech uses the lease payments to pay off the capital equipment and to make a return on its investment. At the end of the term, your company can either extend the leasing agreement, with the option of proceeding with additional energy efficiency upgrades, or purchase the equipment from Cleantech, typically at 10-20% of the original cost.

Your company realizes many advantages from performance contracting. First, the new systems offer operational benefits: improvements in lighting and HVAC can have significant impact on productivity, employee morale and retention, and in a retail environment, sales. Additionally, by reducing its carbon footprint, your company fulfills part of its corporate responsibility and creates a valuable opportunity to market your commitment to the environment. And of course lower energy usage decreases operating expenses, improving profitability.

One very attractive aspect of a performance contract is the financial relationship between Cleantech and your company. Because capital improvements are financed via an operating lease rather than by taking on debt, the only impact to your financial statements is in the form of an operating expense on your income statement, similar to a copier lease or an automobile rental. Because the operating lease is an off-balance sheet arrangement, important debt ratios are not affected.

Cleantech Solutions starts the performance contract process with an eMAP™, an energy management action plan. This plan begins with a detailed assessment of energy use and savings opportunities for your business. Key steps in this process include:

• An investment grade energy audit,
• Identification of energy-efficiency projects, and
• An engineering feasibility study.

This analysis results in a cost-benefit assessment of possible energy-efficiency projects for your business. In addition to project cost, functional implications, and environmental impact are detailed so your business can identify the solutions that meet your objectives.

When the optimal solution that maximizes environmental, operational and cost objectives is determined, Cleantech develops implementation plan that meets the objectives of your business. When the implementation plan is approved, Cleantech Solutions and your business enter into a performance contract, a multi-year agreement in which your business realizes a net reduction of operating expenses due to the energy savings realized.

Cleantech provides expert project management to ensure your project is completed on schedule with minimal operational disruption and the systems are properly commissioned. During the contract period, Cleantech performs all maintenance on your new systems. In addition, Cleantech continuously monitors your energy use ensuring energy use and cost reduction goals are realized throughout the contract term.