Frequently Asked Questions​

An energy service company (ESCO) helps organizations reduce utility costs (electricity, water, and natural gas), minimize operational costs, and modernize facilities through upgrades related to HVAC, lighting, building automation, building envelopes, vehicle electrification, water and wastewater systems, renewable energy, and more. ESCOs deliver turnkey solutions, including energy audits, engineering, design, construction, maintenance, service, and ongoing performance verification. Using energy performance contracting (EPC), ESCOs typically deliver projects with little or no upfront cost and guarantee energy savings, reducing clients’ financial risk. K-12 schools, local governments, airports, higher education, healthcare, manufacturing, and federal agencies partner with ESCOs to improve sustainability, address aging infrastructure, and control long-term operating expenses.

Energy as a Service (EaaS) is a financing and delivery model in which a third-party provider, like Veregy, designs, installs, owns, and maintains energy infrastructure, such as HVAC systems, lighting, renewable energy, and building controls, while customers pay a predictable fee based on performance or energy savings. This approach enables organizations to modernize facilities, reduce energy and operational costs, and achieve sustainability goals without upfront capital investment or added maintenance burden.

The primary risk associated with energy savings guarantees is that projected savings may not fully materialize if facility operations, occupancy patterns, utility rates, or equipment usage change over time. However, in a well-structured performance contract, created by energy experts and seasoned professionals, the energy services provider typically assumes much of this risk by contractually guaranteeing savings and compensating the customer if agreed-upon performance levels are not achieved. Veregy rarely experiences energy savings issues in our projects, and if it does happen, we compensate our clients for any shortcomings.

Energy rates continue to increase over time. Therefore, our energy savings calculations include a conservative annual escalation rate, typically in the 2-5% range, although this can vary by utility, state, and region. This escalation is applied to baseline energy rates to project future savings and provide a more realistic long-term financial outlook. The escalation rates applied by Veregy align with industry best practices and guidance from the Federal Energy Management Program (FEMP), energy price projections from the U.S. Department of Energy’s Energy Information Administration (EIA), and escalation factors published in the National Institute of Standards and Technology (NIST) life-cycle costing guidelines.

A Design-Build Construction Method is when one entity provides both design and construction of the project at a fixed cost. This type of partnership can reduce time, save money, provide stronger guarantees with no change orders, and allocate additional project risk to the Design-Build firm. It also reduces conflict by having a single entity responsible to the public owner for the design and construction. The downsides are limited competitive bidding, which can increase initial costs.

A Build-Operate-Transfer Construction Method is when a private entity builds a facility to the specifications agreed by the public agency, operates the facility for a specified time period under a contract or franchise agreement with the agency, and then transfers the facility to the agency at the end of the specified period of time. This can allow for accelerated timelines and provide access to specialized expertise. The downsides to this approach are financial risks from revenue underestimation and operational challenges with a complex handover process.

A Construction Management At Risk (CMAR) Construction Method is when the client contracts separately with the Designer and Construction Manager, with a Guaranteed Maximum Price. The positives to a CMAR approach are cost control and certainty, reduced risk for owners, and each entity contributing specialized expertise to the project. The downsides to this method are that separate design can lead to misalignment in construction, more client involvement is needed to manage separate contracts, and a low bid process may limit the client’s control over scope.

All performance contracts use a no change-order approach to ensure transparency, cost predictability, and client satisfaction throughout the project lifecycle. Through a Guaranteed Maximum Price (GMP) contract structure, an entity establishes fixed project costs, which include all materials, labor, and services required to complete the agreed-upon scope of work. This means that clients are safeguarded from unexpected cost increases or overruns, which simplifies the contracting process and avoids financial surprises.

We can help guide you through the RFP/Q process for your energy performance project. If you’re interested in a free RFP/Q template, feel free to reach out to VeregyMarketing@veregy.com for a template tailored to your state.

Yes. In most states, legislation allows clients to use the ESPC procurement option with cash payments. If a client chooses to pay cash rather than finance the project, the other benefits of using ESPC legislation as a procurement tool still generally apply, including the streamlined procurement process and performance-based structure. Because requirements vary by state, project teams should confirm any state-specific rules before proceeding.

Building upgrades are paid for through energy savings using Energy Savings Performance Contracts (ESPCs), a financing model where the cost of energy efficiency and infrastructure upgrades is covered by the energy and operational savings they generate over time. An Energy Services Company (ESCO) designs and implements improvements such as HVAC systems, LED lighting, and building automation, while guaranteeing savings to reduce financial risk. This approach allows municipalities, universities, schools, and hospitals to pay for building upgrades without large upfront capital costs, as defined by the National Association of Energy Service Companies (NAESCO).

Budget Neutral Facility Upgrades are facility improvements structured so that project costs can be offset over time through energy savings, operational savings, and reduced maintenance expenses. This approach can help organizations address aging infrastructure, deferred maintenance, HVAC, lighting, and building controls without relying entirely on large upfront capital budgets. Because financing structures, procurement requirements, and energy policies can vary by state, the exact approach may look different from one project to another.

Vendor-neutral service providers are dedicated to understanding the needs and pain points of a client’s unique situation so that they may suggest the best solutions to fulfill their needs fully. There are multiple benefits of a vendor-agnostic service provider, including not getting locked into a proprietary technology that doesn’t fit your needs, the ability to flexibly choose from the best tools in the market, and improved interoperability of systems. There is also frequently a lower cost of ownership and improved return on investment when you are not locked into a single vendor.

To learn more about this topic, read our article on Unlocking Efficiency and Sustainability: The Benefits of Integrated Facilities Management.

Vendor or software lock-in is when a customer becomes dependent on a single vendor. Switching products or services becomes too expensive or technically difficult to achieve if the solution is no longer working. Original equipment manufacturers (OEMs) will try to sell you closed protocol, proprietary hardware, and software, forcing you to use only their brand of products.

Veregy integrates open protocol systems into each project to enhance customer flexibility and scalability by allowing different systems and devices to communicate seamlessly, regardless of manufacturer. An integrated system reduces redundancies, automates workflows, and optimizes resource allocation. Leadership and facility management teams gain real-time insights into building performance, enabling quick decision-making and reduced downtime.

Veregy provides comprehensive, ongoing staff training to ensure your systems operate at peak performance long after project completion.

At project turnover, we deliver customized training for your team, including system overviews, hands-on instruction, and detailed O&M manuals and equipment cut sheets. Training is tailored to your facility and can be conducted on-site, with optional recorded sessions for future reference.

Our support doesn’t stop there. We offer continued training, re-training for new staff, and ongoing guidance to help you maintain energy efficiency, system performance, and long-term operational success. Choosing Veregy for your project means creating a long-term partnership that will benefit your facility for years to come.