Energy performance contract

Lead agency: Department of Transport and Planning

Conditions of use: Non-mandatory

Reference number: GGB-01

Arrangement: Open panel

Start date: 01/09/2010

End date: 30/06/2021

Greener Government Buildings

Greener Government Buildings is a program that improves the energy efficiency of existing government buildings to reduce operating costs and greenhouse gas emissions. Energy is saved through a combination of:

lighting upgrades (for example LED)
heating, ventilation and cooling upgrades (HVAC)
solar panels
building automation and controls

Site specific solutions are available.

Latest achievements

Since its establishment in 2009, Greener Government Buildings has facilitated:

$300 million in energy efficiency and renewable energy projects across 50 projects
achieved annual savings of $50 million
rebates over 530,000 tonnes of greenhouse gases per year to avoid over $90 million in capital costs

Over 14 years, Greener Government Buildings has upgraded 580 buildings, reduced government emissions by 16.9% and saved over $200 million.

Planning pipeline

The following projects are in the planning stage:

South West TAFE
Metro Trains Melbourne lighting projects
Solar power to about 100 primary and secondary schools
Energy efficiency and solar in regional health facilities

What is an energy performance contract

Energy performance contract is a process where a contractor is engaged to design, implement, verify and guarantee the savings from an energy efficiency project. This method of delivering energy efficiency upgrades to buildings is considered low risk and is widely accepted around the world.

Under the Greener Government Building program, the energy performance contract aims to achieve a 5-year simple payback period for all projects, i.e. projects must pay for themselves with the savings achieved over 5 years.

Energy performance contract are not suitable for all facilities and are typically only used for large and/or complex buildings, for example hospitals, TAFEs, large office buildings, and sporting complexes. For smaller sites such as schools, alternative approaches may be preferable.

Alternative arrangements

An alternative project delivery method may be considered in instances where an Agency's total energy consumption is too small to attract the market to deliver an energy performance contract, such as:

less than 1 GWh annual electricity consumption
or the building services are relatively simple

Contact the category manager for further advice.

How to set up an energy performance contract

The energy performance contract process has 7 stages:

Complete a project plan using the project plan template and secure pre-approval from a financial delegate with capacity to approve the expected project value.
Complete the project plan in consultation with the Greener Government Building Team to receive advice on the expected contract size, project scope and identify financing options. The project plan should include:
- details of the buildings to be considered for energy/water saving opportunities
- the process to engage with contractors and determine the project scope
- the proposed governance structure, including details of the ‘Project Sponsor’ and ‘Project Manager’ within the Agency
- expected timelines
- constraints and dependencies
- risks
Review the Expression of Interest and select 3 panel providers to take part in a competitive tender called a Request for Proposal.
The selected tenderers will be provided with details of the buildings included in the project, including their annual historical energy consumption, and current utility rates.
Request for Proposal template
The Request for Proposal involves competitively auditing a selection of the buildings to identify energy efficiency measures. Tenderers will typically have around 10 weeks to undertake audits, after which they will be required to submit a proposal including details of the recommended energy/water saving solutions, along with proposed costs and savings of each measure.
Consistent with a level 2 energy audit, project costs and savings included in the submissions are expected to be accurate to within 20%.
Once the Request for Proposal submissions have been reviewed, a preferred tenderer (contractor) is selected to proceed to the detailed facility study stage. At this stage, the detailed facility study agreement is negotiated with the contractor.
This contract sets out the terms and conditions under which the contractor will perform the detailed facility study on the buildings. The detailed facility study agreement states that the contractor will be paid a fee (typically 2 to 5% of the eventual contract sum) by the Agency if the Agency decides not to proceed with the proposed works.
Once the terms are set, the contractor will commence the detailed study which will outline the full scope of works, including a fixed quotation for all implementation and ongoing costs, and the level of savings that the contractor will guarantee under an energy performance contract.
The study includes a measurement and verification plan which describes how the contractor will measure and verify the savings.
Use the detailed facility study and measurement and verification plan template.
Complete the energy performance contract following:
- Agency approval of the detailed facility study
- Greener Government Building funding approval
The energy performance contract includes:
- full project scope set in the approved detailed facility study
- commissioning procedure
- maintenance schedules
- project costs
- performance guarantee
- measurement and verification plan
The first key deliverable is the works specification. The works specification, is described in Schedule 2 of the energy performance contract, should contain any additional information the Agency requires (over and above what was provided in the detailed facility study) in order to give approval for the works to commence.
The level of detail required in a works specification will vary from project to project, and is typically informed by processes and practices of the Agency, and the specifics (e.g. level of perceived risk) of the proposed works.
Typical inclusions within a works specification are design drawings of planned system modifications and installations, project plans, data sheets, details of contractors, and possibly samples of equipment (e.g. lighting).
In instances where the detailed facility study already includes this information, it may be decided between the customer and the contractor to bypass the works specification stage.
During the installation stage, the ESCO may install, or engage subcontractors to install the contracted solutions.
Once solutions are installed and confirmed by the customer, the ‘guarantee period’ begins. Consistent with the details of the agreed minimum viable product, the contractor is required to to demonstrate the actual savings achieved over the guarantee period.
If savings in any year fail to meet the guaranteed savings (as stated in the contract), the contractor is required to reimburse the customer for the shortfall.

Tools and templates

Use the following templates to set up an energy performance contract:

Energy performance contracting - Request for Proposal Template

Word 305.1 KB

Energy Performance Contract - Request for proposal evaluation matrix

Excel 15.94 KB

Greener Government Buildings Guidelines

PDF 860.4 KB

Energy Performance Contract - Project plan template

Word 1.23 MB

Energy Performance Contract - Detailed facility study template (draft)

Word 279.71 KB

Energy Performance Contract - Measurement and verification plan

Word 168.72 KB

Energy Performance Contract - Standard Detailed Facility Study Agreement

Word 197 KB

Energy Performance Contract - Standard Energy Performance Contract

Word 184.63 KB

Panel providers

Current and past projects

Review all projects

Since its establishment in 2009, Greener Government Buildings has facilitated $280 million in energy efficiency and renewable energy projects across 38 projects. Combined, these projects are estimated to achieve annual savings of $39 million and abate over 173,000 tonnes of greenhouse gases per year.

Project	Contractor	Status	GHG Savings
Treasury Office Buildings	Johnson Controls	Guarantee Period	29%
State-wide LED Traffic Lighting Upgrade	Various (not EPC)	Complete	70%
Melbourne Sports and Aquatic Centre	Total Energy Solutions	Guarantee Period	29%
South West TAFE Institute	Total Energy Solutions	Guarantee Period	30%
Kangan TAFE Institute	A.G. Coombs	Guarantee Period	15%
Federation Square	Siemens	Guarantee Period	55%
Grampians Wimmera Mallee Water	CarbonetiX	Guarantee Period	9%
City of Yarra	Ecosave	Guarantee Period	N/A
Melbourne Cricket Ground	Siemens	Guarantee Period	19%
Sunraysia TAFE	Schneider	Guarantee Period	23%
RMIT Bundoora & Brunswick Campuses	Honeywell	Guarantee Period	52%
RMIT City Campus	Siemens	Guarantee Period	34%
Museums Victoria	Siemens	Guarantee Period	66%
East Gippsland Water	Ecosave	Guarantee Period	41%
Public Housing (high-rise)	Various (not EPC)	Installing	58%
Metropolitan Fire Brigade	Ecosave	Guarantee Period	13%
Chisholm Institute	Ecosave	Guarantee Period	29%
West Gippsland Health	Schneider	Guarantee Period	59%
Holmesglen Institute	Total Energy Solutions	Guarantee Period	36%
Austin Health	Honeywell	Guarantee Period	2%
Melbourne Polytechnic	A.G. Coombs	Guarantee Period	40%
Central Gippsland Health Solar	Various (not EPC)	Complete
Peninsula Health	FG Advisory	Installing	21%
Gordon Institute	FG Advisory	Installing	34%
Freeway LED Lighting Renewal	Various (not EPC)	Installing	N/A
Gippsland Region Health Solar	Various (EPC)	Complete
Barwon-Southwestern Region	Various (EPC)	Complete
Health Solar
National Gallery Victoria	Siemens	Detailed Facility Study	16%
Northern Health	FG Advisory	Detailed Facility Study	N/A
Primary and Secondary Schools	Various Contractors	Stage 1 Installations	N/A
Boxhill Institute	N/A	Tendering	N/A
Boxhill Institute Primary and Secondary Schools - Stage 1	N/A	Installing (Non-EPC)	N/A
Melbourne Water Mini Hydroelectric Power Stations	N/A	Installing (Non-EPC)	N/A
Melbourne Water Large Scale Solar Project	N/A	Installing (Non-EPC)	N/A
Yarra Trams Solar Stage 2	N/A	Installing (Non-EPC)	N/A
Transdev Solar Stage 2	N/A	Installing (Non-EPC)	23%
Metro Trains Melbourne Saloon Lighting	N/A	Installing (Non-EPC)	12%
West Gippsland Health EPC Stage 2 (Warragul Hospital)	FGA	Installing (EPC)	N/A
Primary and Secondary Schools - Stage 2-1 (2020-21)	N/A	Installing (Non-EPC)	N/A
Primary and Secondary Schools - Stage 2-2 (2021-22)	N/A	Installing (Non-EPC)	N/A
Melbourne Market Authority Solar Canopy	N/A	Complete
Victoria Police Stage 1	FGA	DFS	N/A
Metro Train Melbourne Saloon Lighting Upgrade 2	N/A	Installing (Non-EPC)	N/A
Museums Victoria EPC Stage 2	Siemens	Installing (EPC)	N/A
Metro Trains Melbourne LED Project (2023)	N/A	Installing (EPC)	N/A
Victoria Police Stage 2	N/A	DFS	N/A
South West TAFE - 2023	FGA	DFS	N/A