Report on Energy Savings Contracts and Their Contribution to Sustainable Development Goals

Executive Summary

In response to aging infrastructure and rising energy costs, energy savings contracts have emerged as a vital financial mechanism for facility upgrades. These contracts facilitate the implementation of on-site renewables, real-time monitoring, and performance guarantees, enabling organizations to achieve significant energy savings without initial capital expenditure. This model directly supports the achievement of several United Nations Sustainable Development Goals (SDGs) by promoting energy efficiency, sustainable infrastructure, and climate action.

Advancing SDG 7: Affordable and Clean Energy

Energy savings contracts provide a practical pathway for public and private entities to transition towards more affordable and cleaner energy systems. By converting large capital costs into manageable operating expenses, these agreements make sustainable energy solutions more accessible.

• Energy Efficiency Measures: Contracts finance retrofits of building systems, such as HVAC, to reduce overall energy consumption.
• Clean Energy Integration: The model supports the installation of on-site renewable energy sources. While solar implementation is becoming more nuanced based on true parity costs, it remains a key component where geographically and economically viable.
• High-Efficiency Generation: The adoption of technologies like Cogeneration, or Combined Heat and Power (CHP), is a central strategy. CHP systems can operate at approximately 75% efficiency, a significant improvement over the 50% national average for separate services, thereby maximizing energy resources.

Fostering SDG 9: Industry, Innovation, and Infrastructure

This approach drives innovation in infrastructure management by leveraging data and technology to build resilience and efficiency, which are core tenets of SDG 9.

1. Data-Driven Upgrades: Smart building automation and proprietary emissions monitoring software are used to capture real-time data. This data informs decision-making, identifies inefficiencies like broken air dampers, and quantifies wasted energy and costs, enabling targeted and effective upgrades.
2. Resilient Infrastructure: In the face of decreasing utility reliability, these contracts encourage the installation of on-site generation. This enhances energy resilience, ensuring operational continuity for businesses and public services.
3. Innovative Financing: The contract itself is an innovation, removing the barrier of upfront capital and replacing it with a performance-based agreement that guarantees savings.

Building SDG 11: Sustainable Cities and Communities

The widespread adoption of energy savings contracts contributes directly to the development of sustainable and resilient communities. By upgrading the energy performance of individual buildings, the collective urban energy footprint is reduced.

• Reduced Urban Energy Demand: System-wide retrofits in commercial and municipal buildings lower the overall energy demand of a city.
• Enhanced Community Resilience: The promotion of distributed generation through CHP and renewables makes communities less vulnerable to large-scale grid failures.
• Scalable Sustainability Model: These contracts offer a replicable framework for municipalities and local companies to meet sustainability targets and improve infrastructure without straining public or private capital.

Promoting SDG 12 & 13: Responsible Consumption and Climate Action

The fundamental goal of these contracts is to conserve energy, directly aligning with the principles of responsible consumption (SDG 12) and providing a tangible tool for climate action (SDG 13).

• Guaranteed Energy Reduction: The contracts are built on a guarantee of energy savings, ensuring a direct contribution to more responsible consumption patterns.
• Measurable Climate Impact: The use of monitoring software allows for the precise tracking of energy savings and the corresponding reduction in greenhouse gas emissions.
• Reduced Fossil Fuel Dependency: By improving efficiency and integrating renewable energy, facilities decrease their reliance on traditional, carbon-intensive energy sources.

Contractual Framework and Long-Term Impact

The operational structure of these contracts is designed for long-term partnership and sustainable outcomes. This framework ensures accountability and sustained performance over the asset’s lifecycle.

• Contract Duration: Agreements typically span between nine and 20 years.
• Asset Ownership and Responsibility: The energy service company owns the assets and assumes responsibility for maintenance and insurance throughout the contract term.
• End-of-Term Options: Upon contract conclusion, the client can purchase the equipment at fair market value, securing the long-term benefits of the upgraded, efficient infrastructure and ensuring continued contribution to sustainability goals.

Analysis of Sustainable Development Goals in the Article

1. Which SDGs are addressed or connected to the issues highlighted in the article?

• SDG 7: Affordable and Clean Energy – The article’s primary focus is on improving energy efficiency, promoting energy savings, and implementing renewable energy solutions like solar power to combat rising electricity prices.
• SDG 9: Industry, Innovation, and Infrastructure – The text discusses upgrading aging infrastructure through retrofits of building systems (e.g., HVAC), and adopting innovative technologies like smart building automation and on-site power generation (cogeneration) to create more resilient and efficient facilities.
• SDG 11: Sustainable Cities and Communities – The article mentions that energy savings contracts are gaining popularity among “public municipalities,” indicating that these efforts are being applied at a city level to make urban infrastructure more sustainable and reduce its environmental impact.
• SDG 13: Climate Action – By focusing on energy conservation, increasing efficiency, and using emissions monitoring software, the article directly addresses measures to mitigate climate change by reducing energy consumption and tracking emissions from buildings.

2. What specific targets under those SDGs can be identified based on the article’s content?

1. SDG 7: Affordable and Clean Energy

   • Target 7.2: By 2030, increase substantially the share of renewable energy in the global energy mix. The article supports this by discussing the implementation of “on-site renewables” and how the industry has gotten “smarter when they apply solar.”
   • Target 7.3: By 2030, double the global rate of improvement in energy efficiency. This is the core theme of the article, which highlights achieving “up to 60% savings” through “energy conservation measures,” “building system retrofits,” and the use of cogeneration (CHP) which can improve efficiency from 50% to 75%.

2. SDG 9: Industry, Innovation, and Infrastructure

   • Target 9.4: By 2030, upgrade infrastructure and retrofit industries to make them sustainable, with increased resource-use efficiency and greater adoption of clean and environmentally sound technologies and processes. The article details this through its discussion of retrofitting buildings, installing smart automation systems, and using cogeneration to improve energy efficiency and resilience, all of which represent upgrading infrastructure with clean technologies.

3. SDG 11: Sustainable Cities and Communities

   • Target 11.6: By 2030, reduce the adverse per capita environmental impact of cities. The article connects to this target by noting that “public municipalities” are using energy savings contracts to improve building efficiency, which directly contributes to reducing the overall energy consumption and environmental footprint of a city.

4. SDG 13: Climate Action

   • Target 13.2: Integrate climate change measures into national policies, strategies and planning. While the article focuses on corporate and municipal action, the strategies discussed—such as improving energy efficiency and using “emissions monitoring software”—are practical implementations of climate change mitigation measures at a sub-national level.

3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?

• Percentage of energy savings: The article explicitly mentions that facility upgrades can help “achieve up to 60% savings,” which is a direct indicator of improved energy efficiency (Target 7.3).
• Improvement in operational efficiency: The article provides a specific metric for cogeneration (CHP), stating it can operate at “about 75% efficiency, a significant improvement over the national average of about 50%,” serving as an indicator for Target 7.3 and 9.4.
• Monetary savings from efficiency measures: A concrete example is given where fixing a broken damper could save “$1,617 every month.” This financial metric serves as a powerful indicator of resource-use efficiency (Target 9.4).
• Adoption of clean technologies: The article mentions the implementation of “on-site renewables,” “solar implementation,” “smart building automation systems,” and “co-generation,” which can be counted or measured as indicators of progress towards adopting sustainable infrastructure (Targets 7.2 and 9.4).
• Emissions monitoring: The use of a “proprietary emissions monitoring software to track building efficiency and energy savings” is a direct indicator for measuring and managing the environmental impact of buildings, relevant to climate action and sustainable cities (Targets 11.6 and 13.2).

4. Table of SDGs, Targets, and Indicators

Source: facilitiesdive.com