Performance Contracting for Public Facilities

Energy Savings Performance Contracting (ESPC) is a performance-based procurement and financing mechanism that leverages maintenance, operations, and utilities savings achieved through the installation of energy efficiency and renewable energy measures, to finance the cost of the facility retrofit and renewal project, with no bonding or raising taxes. ESPC allows you to bundle projects so that low-hanging fruit can finance deeper retrofits without impacting your budget. 

Facilities that are a good fit: Schools; Courthouses & City Halls; Ice Arenas; Correctional Facilities; Water & Wastewater Treatment Plants; Recreational Facilities & Pools; Public Works Buildings; Libraries; Liquor Stores

What are possible projects?

  • Architectural & Structural: roofing, doors, insulation, weather-stripping, window treatment
  • Electrical: lighting retrofits, emergency power, power and distribution, networks, life safety systems
  • Mechanical: HVAC systems, plumbing and drainage, energy management and building controls
  • Property & Site: underground utilities, lighting improvements, swimming pools, ice arenas
  • Renewable Energy: solar photovoltaic (PV), solar thermal, wind, biomass, hydroelectric
  • Water & Waste: purification systems, sewage facilities, landfill gas capturing, waste utilization


What is the Local Energy Efficiency Program?

The Local Energy Efficiency Program (LEEP) from the Minnesota Department of Commerce helps cities, counties, tribal governments, and K-12 school districts reduce energy costs and improve infrastructure, starting with an investment grade audit, then providing guidance throughout the project. Program benefits:

  1. Achieve Organizational Goals: Reduce energy use; Reduce in greenhouse gas emissions; Increase use of renewable energy; Create jobs.
  2. Address Facility Issues: Increase occupant comfort; Improve health and safety; Handle deferred maintenance; Reduce energy price uncertainty
  3. Access Resources: Augment staff capacity; Access expertise.

What is an investment grade audit? It identifies and evaluates energy
conservation measures and defines project scope, cost, savings, and cash
flow over a proposed financing term.

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What is the Guaranteed Energy Savings Program?

The Guaranteed Energy Savings Program (GESP) from the Minnesota Department of Commerce promotes awareness and implementation of energy efficient and renewable energy measures in public facilities to provide millions of dollars in annual energy savings in Minnesota. To do this, GESP supports you every step of the way:

  1. Solicit and award site-specific requests for proposals from pre-qualified Energy Service Companies (ESCOs) to perform Energy Savings Performance Contracting (ESPC) services
  2. Evaluate the technical and financial feasibility of ESCO proposals
  3. Negotiate and award work order contracts to pre-qualified ESCOs under the GESP Master Contract to implement energy conservation measures
  4. Offer project management oversight of ESPC projects
  5. Provide technical assistance to ensure the ESPC Measurement and Verification Plan is properly performed throughout the performance period of the contract

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How do LEEP and GESP compare?

LEEP and GESP both can be used by public entities to complete energy audits. GESP provides guidance for larger projects through project completion while LEEP aids local governments through completion of the energy audit. Here’s quick comparison:

Eligibility State agencies, higher education, local governments, K-12 schools Local governments, K-12 schools
Type State assisted energy savings performance contracting program with guaranteed savings State assisted energy study using design-bid-build for implementation
Project Size $500,000 minimum. No maximum Typically between $50,000 and $500,000
Term Up to 25 years Up to 15 years (using St. Paul Port Authority’s lease program)
Interest Rate Dependent upon financing instrument – eligible for lease purchase financing Dependent upon financing instrument – eligible for lease purchase financing


LEEP Factsheet
GESP Factsheet
GESP Process