What is an Energy Services Agreement (ESA)?

An ESA is a contract where we provide energy efficiency improvements, renewable energy systems, or other energy services to your facility. Kite covers all of the upfront project costs and is paid back through the energy savings generated over time.

What types of energy services are typically included?

Common services include HVAC system optimization, building automation systems, solar installations, energy management systems, equipment retrofits, LED lighting upgrades, and ongoing maintenance and monitoring services.

How does the financial structure work?

Most ESAs operate on a shared savings model where you pay us a portion of your energy cost savings. Alternatively, some use guaranteed savings contracts where we guarantee specific savings levels, or energy supply agreements where they provide energy at predetermined rates.

What are the typical contract terms?

ESA contracts typically range from 15 to 25 years, depending on the project scope and payback period. Longer terms are common for capital-intensive projects like solar installations or major equipment replacements.

Who owns the equipment installed?

We own and maintain the equipment throughout the contract term. In come cases we are open to discussing a buyout at appraised Fair Market Value (FVM) at year 10. In some cases we may utilize a capital partner and jointly own the equipment with the capital partner. 

What happens if the promised savings don't materialize?

We offer measurement and verification protocols to track actual savings. We include a guarantee on the savings where we make up the shortfalls, though terms vary significantly between providers.

Are there any upfront costs?

Most ESAs are designed to minimize or completely eliminate upfront capital expenditure for the customer. However, some agreements may require small deposits or fees for engineering studies and project development.

How are energy savings measured and verified?

Savings are typically measured using baseline energy consumption data compared to post-installation usage, adjusted for variables like weather and occupancy changes. 

What are the tax implications?

ESAs can affect depreciation schedules, tax credits, and deductions. Since we own the equipment, we realize the depreciation and tax credit benefits.

Can we terminate the agreement early?

Most ESAs include early termination clauses, but these often require paying remaining contract value or equipment buyout costs. Review termination terms carefully before signing.

What maintenance and warranty coverage is provided?

Our ESA includes ongoing maintenance, monitoring, and warranty coverage for installed equipment. The scope and duration are clearly defined in the contract terms.

How does this affect our utility relationships?

ESAs generally don't impact your utility service agreements, though you should notify utilities of major equipment changes. Some utilities offer rebates or incentives that can be incorporated into ESA projects. 

What regulatory approvals might be required?

Depending on your location and project scope, we will likely need permits for electrical work, structural modifications, or interconnection agreements for renewable energy systems. Our General Contractor handles all permit applications.