Performance contracting of a parabolic trough system at the Federal Correction Institution-Phoenix

Although renewable energy technologies benefit from their "green" image, they also suffer from a perception of being expensive, hard to maintain, and unpredictable in their performance. The National Renewable Energy Laboratory (NREL) formed a partnership with a solar hot-water heating manufacturer and a Federal Correctional Institution (FCI) in Phoenix, Arizona, to demonstrate the first federal renewable energy savings performance contract (ESPC) as a solution to the problems mentioned above. A 17,040 sq. ft. solar water heating system was installed at the Phoenix FCI. The system delivered 1,161,803 kWh of heat and generated revenue of $70,025.18 during the period from March 1999 to January 2000. Under the terms of this first federal renewable ESPC, FCI Phoenix obtains all the benefits of solar water heating while transferring the first-cost and performance risks to the Energy Service Company (ESCO-in this case Industrial Solar Technology, or IST). This addressed all of the perceived risks of renewable energy. The methods used by the ESCO to address the first-cost and performance risks are the subject of this paper.