Western Resource Advocates and McKinstry released a new market study indicating that schools and public facilities in the Colorado River Basin states (AZ, CA, CO, NM, NV, UT, WY) can save $859 million annually with energy and water efficiency projects that pay for themselves.

Though it’s unfamiliar to many, the performance contracting model is a smart approach for cities, counties, school districts, and wastewater/water utilities to implement energy and water efficiency improvements in their facilities. Performance contracting is a mechanism that allows public entities, such as a school district or local government, to quickly perform comprehensive energy and water retrofit projects in public buildings using a qualified private energy services company. Savings on water or electric bills resulting from the installation of energy and water conservation measures are guaranteed by an energy services company to exceed the financing costs necessary to implement the energy and water-saving upgrades. If the realized savings do not exceed the financing costs, the contracted energy services company makes up the difference. Innovative governments, schools and other public entities have used performance contracting for more than two decades to save energy and promote renewable sources of energy.

Performance Contracting Infographic_2_Final

At a time when western states are looking at all options to save energy, reduce carbon pollution, and stretch our water supplies, the report, Tapping the Power of the Market: Financial, Energy and Water Savings, and New Revenue Streams through Performance Contracting in the Colorado River Basin States,demonstrates that performance contracting is a financially powerful tool that can be used to achieve these goals.

The report shows how government and school facilities would save more than 6 million megawatts of electricity, 4 million cubic feet of natural gas, and 40,000 acre feet of water a year by implementing conservation measures using the performance contracting approach. These annual energy savings could power all of Denver’s homes and provide water for more than 150,000 homes.

Performance Contracting Infographic_1_Final

The report also found that water utilities in the Colorado River Basin states could use performance contracting to fund water meter replacement projects that install advanced technologies that can reduce apparent water loss (resulting from customer meter inaccuracies) by 461,000 acre-feet per year, while providing $593 million in additional revenue per year. This amount of apparent water losses in the municipal water systems in the Colorado River Basin states is equivalent to 1.7 million homes in the Basin states currently using water year-round without paying for it. These new metering technologies would not only provide enormous new revenue for water utilities that are nationally facing a $1 trillion water infrastructure investment gap in the next 25 years, but would also serve as the backbone for municipal water conservation and municipal drought management programs by allowing water providers to know, almost in real time, who is using water, when, and where.  Finding financial tools that can fund these capital-intensive infrastructure improvements is more important than ever with the over-allocation of the Colorado River as well as extended droughts and growing populations in many western states.

Based on the potential water conservation and financial benefits of water meter replacement projects, the report makes two main water meter-related recommendations:

  1. All Basin states should ensure their performance contracting enabling legislation allows for the upgrading of water meters using performance contracts to enhance water utility revenue, advance water conservation, and promote drought preparedness; and
  2. The Basin states need to provide strong technical support and best practices for water meter replacement projects implemented through performance contracting.

We hope this study educates and alerts water utilities and decision-makers so they can fund and implement solutions faster.

For the Executive Summary and Full Report click here 


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