ESCOs

Introduction

In offering energy-conservation programs, performance contracting, retrocommissioning, and capital projects, you provide high-value services to your clients. Building Performance Services (BPS) allows you to expand your client base by adding some low-cost, high-impact solutions to your mix of offerings. As an Energy Services Company (ESCO), you are well-positioned to embrace BPS with little investment or additional personnel. By offering building tune-ups and enhanced O&M, you can capture immediate opportunities that may lead to more high-end services.

Business Opportunities

By adding the building tune-up and enhanced O&M to your services, you can generate creative opportunities to help your business grow.

  • Offering an enhanced O&M contract with a periodic tune-up in performance-contracting proposals:
    • ensures that the building performance you achieved will persist over time.
    • provides ongoing contact with the client to leverage future business
  • Contact previous performance-contracting customers to offer BPS services.
  • Suggest a package of building tune-up and enhanced O&M to prospects who are not receptive to a full performance-contracting project. (It may later revitalize the performance-contracting opportunity.)
  • If the economics of an energy-services capital-improvement project aren't viable, suggest BPS as an alternative.
  • If you are associated with a mechanical contractor, provide enhanced O&M as an "add-on" to the warranty period of a construction project and perform a building tune-up at the end. This could provide you with:
    • more revenue for the service department,
    • the value-added specification item that might win you the job
    • a reason to get in front of the building owner before occupancy, which may secure more business.
  • Leverage successful BPS services to explore energy-service opportunities in other locations your customer may not have previously considered.

Talking Points

Building tune-ups and enhanced O&M services provide many benefits to building owners. As you address your customers' questions, here are a few points to make:

  • Bottom-line savings are immediate.
  • Enhanced O&M results are measurable and verifiable. You can easily track:
    • dollars saved,
    • energy saved,
    • reduction in complaints, and
    • reduction in unscheduled service calls.
  • Better building performance improves the value of your customer's investment.
  • Green buildings are in demand. BPS may influence LEED-EB qualification.
  • Green buildings attract tenants and employees.

Potential Revenue

The following scenario illustrates the revenue potential of adding BPS to your service offering.

Tom runs Apex Energy Services, an ESCO whose services team is currently winning $30,000,000 of new business annually, with a 50% markup. He anticipates growing the business 5% each of the next five years. By adding BPS to his business, he captures an additional 5% of his energy services revenue in enhanced O&M services and 10% in building tune-ups, each with a 50% markup. In building these relationships, he also finds new capital projects that equal 30% of the new BPS revenues, with a 50% markup.

Summary of assumptions used for the business model

Current annual contract sales: $30,000,000
Projected growth: 5%

BPS Addition:
Enhanced O&M:
5% of service contracts
Building tune-up: 10% of service contracts
Equipment projects related to BPS: 30% of other BPS sales

Entering these assumptions into the Business Model Tool for energy service contractors produces the results shown in the figure below.

Example BPS business model for energy service contractors

Download the BPS Business Model Tool