Energy Savings Performance Contracts

From the city zoo to the city hall, Louisville is improving the quality of life for all residents and making good on its promise to decrease the city’s per capita energy use 25 percent by 2025. Louisville Metro Government has signed two energy savings performance contracts (ESPCs), one in 2010 and another in 2013. 

Louisville Metro Government's City Hall

The 2010 Energy Savings Performance Contract

Between its 2012 completion and December 2013, the first ESPC saved more than 14.6 million kilowatt hours (kWh) in electricity consumption (equivalent to 918 homes’ energy use for one year), more than 350,000 hundred cubic feet (ccf) in natural gas usage (equivalent to 169 homes’ energy use for one year), and more than $750,000 in energy bills.

The 2013 Energy Savings Performance Contract

Louisville Metro's second ESPC was innovative compared to the 2010 contract as well as any other energy contract ever signed by a local government. In 2013, the Johnson Controls team, in partnership with the Office of Advanced Planning and Sustainability and the Office of Management and Budget, designed a plan that would include nearly $27 million in energy-efficient upgrades and repairs in municipal-owned buildings, without the need for Louisville Metro to provide capital or assume financial risk. Under this ESPC, facility improvements would be paid for up front by Johnson Controls and guaranteed to generate enough savings to pay for themselves over time. And if the savings were to fall short, Johnson Controls would assume financial liability. “When you have limited resources, it’s important that you get results, and that you’re only paying for success,” said the city’s Chief Financial Officer Steve Rowland. “This approach with Johnson Controls allows us to meet that objective, and without us having to put up the capital.” And, as an added bonus, because the funding mechanism does not affect Louisville Metro’s bond capacity, it frees up capacity for other critical projects.

With funding in place, energy and infrastructure improvements got underway (in late 2013) and will eventually encompass more than 200 buildings across the metro area. The project includes water conservation efforts, lighting upgrades, HVAC upgrades, solar panels, and building management system controls to improve energy, efficiency, and sustainability in the city’s buildings, libraries, parks and pools.

Combined, the improvements are expected to result in:

  • Reduced energy use: The performance contract guarantees $2.7 million in annual energy savings.
  • Reduced water use: In less than a year, Louisville Metro buildings used 395,000 fewer gallons of water.
  • Reduced CO2 emissions: The improvements are expected to reduce CO2 emissions by 19,900 metric tons CO2 annually, which is equal to removing 4,100 vehicles from the road.

In addition to the results guaranteed in the energy savings performance contract, the project is expected to have a positive impact on the Louisville Metro economy, by:

  • Creating jobs: The project has created 400 jobs with 90% remaining in the community. The program is using local contractors and engineering Louisville Metro Government's Metro Hallpartners and is also expected to exceed Louisville Metro’s targets for participation from minority- and women-owned businesses. 
  • Attracting new business: As Louisville moves closer to becoming one of the greenest cities in the country, the Louisville Metro Director of Sustainability, Maria Koetter, hopes the efforts will help foster economic development. “We want potential new businesses to understand we are committed to clean air, clean water and sustainability - today, and for the future.”
  • Encouraging residents to join the effort: As Louisville Metro's energy and water conservation efforts begin to take shape, leaders hope the success of those projects will encourage individuals to become greater stewards of the environment, too. Through citizen engagement and education initiatives, planners are creating a culture of sustainability they hope will ultimately make Louisville a healthier and more desirable city.

For the city of Louisville, energy savings performance contracting makes it possible to create an environmentally sound, vibrant and prosperous future for the metro area and its citizens.