Pay for Perform
mance










Eligibilitty
Incentivees
Energy Reduction
R
Pllan
Implementation
Post-Con
nstruction Beenchmarking
g
Building Simulation
Combineed Heat & Po
ower (CHP)
High Eneergy Intensitty - Industriaal, Manufactturing, Waterr Treatment, Datacenterrs
Multifam
mily Building
gs
Other
Eligiibility
Whaat constitutees program eligibility?
Pay for Performaance is availlable to existting building
gs with a peaak electric deemand in exxcess of 100 kW in any
of thhe preceding twelve mon
nths. Buildin
ngs that fall into one of thhe followingg five custom
mer classes aare not
requuired to meett the 100 kW
W eligibility requirement
r
in order to pparticipate inn the program
m: hospital, public
colleeges and univ
versities, 501(c)(3) non--profits, affo
ordable multiifamily houssing, and loccal governmeental entitiess
(inclluding K-12 schools).
Could gas consu
umption (th
herms) be co
ombined with the kW tto reach thee minimum demand req
quirements?
?
No, oonly the elecctric demand
d can be used
d in determin
ning eligibillity.
Is Paay for Perfo
ormance ava
ailable for both
b
public and privatee customerss?
The program is available
a
to all
a commerccial, industriaal, institutionnal, and mullti-family cuustomers witth a peak
demaand in excesss of 100 kW
W in any of th
he preceding
g twelve monnths who conntribute to thhe societal bbenefits
chargge (i.e. custo
omers of at least
l
one of New
N Jersey'ss public utiliity companiees). Buildinggs that fall innto the
folloowing five cu
ustomer classses are not required
r
to meet
m the 1000 kW demandd in order too participate in the
proggram: hospitaal, public colleges and un
niversities, 501(c)(3)
5
noon-profits, afffordable muultifamily hoousing, and
locall governmen
ntal entities (including
(
K-12
K
schools)).
Incenntives
To w
whom are th
he incentivees paid?
Incenntives are paaid to the parrticipant (cu
ustomer).
Can the incentiv
ve paymentts be assigneed to partneers?
No, tthe partner will
w be paid by
b the particcipant.
Und
der certain programs,
p
th
he partner must
m
be paiid and docu
umentation m
must be proovided priorr to the
partticipant receeiving an incentive pay
yment. Will Pay for Perrformance w
work this waay?
The partner must ensure the contract structure with the participant covers this item.
Are the incentives adjustable or fixed per project?
There will be three incentives. Incentive #1 is based on the size of the facility and Incentives #2 and #3 are
based on the level of savings in kWh and/or therms. View the existing buildings incentive structure and the new
construction incentive structure documents for details.
What if actual post-retrofit savings are higher than estimated?
Incentive Payment #2 represents 50% of the total performance incentive, based on estimated savings predicted
by the simulation results. Savings in excess of (or less than) the estimate will result in a re-calculation of the
total performance incentive. This will be “trued-up” with Incentive Payment #3.
The payment per kWh and therm saved is for what period?
Incentive payments #2 and #3 are based on annual electric kWh and natural gas savings, as applicable (not to
exceed 50% of total project cost).
What incentives can be expected for a multi-building (campus type) situation where there are only two
meters?
The entire campus must be treated as one project, unless sub-metering has been established. The 15% savings
will be achieved on a campus-wide level and one set of incentives will be paid out. The established incentive
cap will remain $1,000,000 per electric and gas utility account, not to exceed $2,000,000 per project.
How much of a reduction in kWh (or therms) is required to receive an incentive?
A minimum of 15% source energy reduction is required, which can be achieved through a combination of
electric, gas and other fuel source reductions, but incentives will only be paid for electric and natural gas
savings.
What are the 15% savings based on?
The 15% savings represents source energy savings (estimated Btu site energy savings converted to Btu source
energy) and can include electric, natural gas and other fuels (i.e. fuel oil, steam, chilled water, etc.).
Can fuel oil reduction be included as savings?
Fuel oil (and other fuels) may be included in the savings to meet the 15% source reduction requirement,
however no incentives are provided for these fuel types.
Do other available incentives jeopardize Pay for Performance incentives?
Incentives will not be paid from multiple Clean Energy Programs for the same energy efficiency measures.
Local Government Energy Audit participants will have their first Pay for Performance incentive reduced by
50% to acknowledge the value of the audit.
What is the average amount in incentives expected for a typical project?
The average incentive per project is roughly 40% of the total project cost, or $350,000.
Do interruptible gas clientss qualify forr incentives for therms saved?
Yes, as long as the interruptiible gas clien
nt has an acttive account for gas servvice and payss the Societaal Benefits
Charrge they are eligible for incentives
i
frrom the prog
gram.
Enerrgy Reductio
on Plan
Whaat if the 15%
% source sav
vings canno
ot be met aft
fter the audiit is perform
med?
The program willl not provid
de Incentive #1 if the sav
vings cannot be met or thhe installatioon of measurres does not
movve forward. The
T partner must
m inform the participaant and shouuld make cerrtain that theeir contract ccovers this
situaation. Identiffied measurees could then
n apply for NJ
N SmartStarrt Buildings incentives.
Whaat is the reason behind the 15% sa
avings not being allowed
ngle energy conservatioon
d from a sin
meaasure?
Pay for Performaance is desig
gned to be co
omprehensiv
ve in nature, thus savings are anticippated to be prrovided by
multtiple energy conservation
n measures. If savings arre anticipateed to be derivved from a ssingle measuure (such as
lightting), the parrticipant should be referrred to the preescriptive orr custom traccks offered aas part of thee NJ
SmaartStart Build
dings Prograam.
Can solar PV panels and other renewa
able projectts contributte to the 15%
% savings?
No. R
Renewable measures
m
thaat generate power
p
canno
ot be include d in the 15%
% savings. Soolar water heeaters and
therm
mal storage are
a OK.
Oncce I complete my energy
y reduction plan am I required
r
to continue with the rest of the program?
You are not requ
uired to continue with the program, but
b you will not receive Incentive #11. Incentive #1 is
distrributed contingent on thee installation
n of the energ
gy efficient m
measures ouutlined in youur energy reeduction
plan.
ment that all energy con
nservation measures
m
evaaluated must be implem
mented?
Is it a requirem
gy conservattion measurees (ECMs) is to be deterrmined by thhe participant
The decision on implementaation of energ
withh input from the partner. It is not a reequirement th
hat all ECM s be implem
mented as lonng as the onees selected
yieldd the minimu
um 15% savings. Section
n III of the ERP
E requiress a list of reccommended ECMs (withh associated
savinngs), and listting of non-rrecommendeed ECMs wiith an explannation as to w
why these arre not includded. Any
channge in the list of ECMs to
o be installed after ERP approval reqquires approoval from thee program m
manager.
Can energy sav
vings from operation
o
& maintenan
nce items be included (ee.g. if econom
mizers are n
not
work
king)?
Retroo-commissio
oning type ittems may bee incorporateed into the E
ERP, howeveer savings esstimates assoociated with
thesee should be well
w documeented.
Whaat about electric deman
nd reduction
n measures (e.g. therm
mal storage)??
Pay for Performance is designed for, and provides incentives for, energy reduction measures. Electric demand
reduction measures may benefit the participant and can be included in the ERP, however no incentive is
specifically associated with demand savings.
Is the use of Portfolio Manager required?
Yes. The data entered into Portfolio Manager provides pre- and post-benchmarking for the project, including
the actual source energy reduction.
What effect would a change in operating hours have on the project?
If a substantial change in operating hours occurs during the construction and/or post-retrofit period, this change
would be accounted for by documenting the changes and adjusting the hours of operation in Portfolio Manager.
In some cases, a change to the baseline simulation model may also be required. Contact program
representatives.
Since the program is designed around utility billing history, how will the Partner get this when in many
cases this goes to corporate management offices?
The program manager is available to facilitate the process; however partners will need to make arrangements
with the participant to obtain the utility history.
Will utility release forms be available?
Yes, utility release forms can be obtained by contacting the market manager.
Is it a requirement to meter each piece of equipment?
Any existing equipment or recommended measure that cannot be incorporated into the simulated building
model will require pre and post metering. Have your partner refer to the program guidelines.
ASHRAE 90.1-2004 is currently in effect; will this change to ASHRAE 90.1-2007?
ASHRAE 90.1-2007 was adopted in September 2010 with a 6-month grace period for ASHRAE 90.1-2004.
New construction and major renovation projects will be required to reduce their energy costs 15% below current
applicable code. If building permits were already obtained for ASHRAE 90.1-2004, then this will be the code
used. All other projects will be required to use ASHRAE 90.1-2007 as their baseline.
Is the internal rate of return calculated on an individual energy conservation measure basis, or on a total
project basis?
The internal rate of return for the entire project must be 10% or greater. There is no IRR requirement for
individual measures.
What can be included in total project cost?
Partner fees, equipment and installation costs, design fees, construction management, measurement and
verification / commissioning fees are included.
What if another energy conservation measure is found during the construction phase?
This would be co
onsidered a scope chang
ge and may require
r
re-sub
ubmittal of thhe ERP. Thee performancce incentivess
woulld be recalcu
ulated to include the add
ditional estim
mated energyy savings.
Can the particip
pant choosee a differentt partner aft
fter the enerrgy reductioon plan has been submiitted and
apprroved?
The participant can
c choose to change parrtners. Partn
ners should m
make certainn that their coontract covers this
situaation so they
y are paid forr their servicces. Should th
he participannt choose noot continue inn the Pay for
Perfo
formance Pro
ogram, the fu
unds associaated with Inccentive #1 m
must be returnned by the paarticipant.
Impllementation
Som
me participan
nts such as school distrricts may no
ot be able too commit to the Pay forr Performan
nce process,,
due to New Jerssey laws tha
at require su
uch entities to go out too bid.
Pay for Performaance must co
omply with any
a state and
d local procuurement law
ws, but will w
work with paartners and
partiicipants in th
hese particular situationss on how besst to proceedd. Keep in m
mind that parttner servicess are
conssidered “proffessional serrvices” and may
m be subjeect to alternaative procureement requirrements. If thhe physical
instaallation of recommended
d energy efficiency meassures is bid tto a differentt company fr
from the parttner
comppany, make sure that thee partner rem
mains involveed to ensure installation is done per the energy rreduction
plan and to deveelop the post--construction
n benchmark
king report.
Whaat types of bid
b and/or construction
c
n documentss are requirred?
The partner role is to perform
m services ass necessary to
t ensure thaat the measuures are bid, designed, annd installed
as prresented and
d modeled in
n the ERP. Su
ubmission of these docuuments is nott required.
Whaat happens if
i construction costs arre higher tha
an those esttimated, wh
hich would lead to a low
wer internall
rate of return?
onsiders the initial cost and
a internal rrate of returnn provided inn the ERP. T
This will nott
Pay for Performaance only co
be m
modified.
If a p
participant requires a multiple bid
d process an
nd must seleect the low b
bidder, whiich is not th
he partner,
is th
he applicant still entitled
d to Incentiives #2 and #3?
#
The participant can
c only receeive Incentiv
ves #2 and #3
# if an approoved partnerr remains wiith the projecct in some
capaacity. Partnerrs should be aware of thee procuremeent requiremeents of the pparticipant too guard againnst this.
Post-Constructio
on Benchmarrking
Whaat happens if
i the buildiing becomess vacant, or if there is a shift in operation duee to economic issues,
afterr the baselin
ne is develop
ped?
marking datta. There willl be a case-bby-case
This must be adjjusted in Porrtfolio Manaager pre- and
d post-benchm
uses source savings to drrop below th
he required 115%.
revieew if this cau
Whaat happens if
i the 15% source
s
energy reduction target is n
not met afteer the post-cconstruction
n
bencchmarking?
?
If thee minimum 15% savingss is not met using
u
12 mo
onths of postt-constructioon billing hisstory, an addditional 6
monnths will be allowed
a
to acccomplish th
his goal. If, after
a
the 18 m
month periodd the reductiion is not meet, Incentive
#3 w
will not be paaid. Incentives #1 and #2
2 are not in jeopardy.
Certtain program
ms allow pa
ayment in sh
horter time period if peerformancee criteria aree met (i.e. 6 months
wortth of billing
g history), will
w New Jerssey’s Clean Energy Proogram conssider this?
No. IIncentive #3
3 will be calcculated based
d on 12 mon
nths of post-cconstructionn utility bills.
Buildding Simulaation
Can tax incentiv
ves associatted with EPACT be app
plied to a Paay for Perfoormance prroject?
Yes. Information
n on EPACT
T tax incentiv
ves can be fo
ound at http:://www.enerrgy.gov/taxbbreaks.htm.
Do tthe simulation guidelinees require modeling
m
off the actual u
utility rate ttariff?
Yes.
Can you provid
de tariff inpu
uts for simu
ulation?
Due to the numb
ber of approv
ved simulatio
on programss and wide vvariation in rregulated tariiffs and 3rd party energy
y
provvider contraccts, the progrram managerr cannot prov
vide tariff innputs.
Whaat is the purrpose of caliibrating thee baseline model?
m
Calibbration of th
he baseline model
m
with actual utility bills is requiired to ensurre that the m
model accurattely
repreesents energy use at the facility. Thiss will result in higher acccuracy of esstimated savings.
Supp
pose weatheer condition
ns are an an
nomaly in th
he post-retroofit year?
Portffolio Manag
ger normalizees for weather.
Is th
here a metho
od for rank
king the enerrgy conserv
vation measu
ures?
It is up to the parrtner and parrticipant to determine
d
th
he ranking off the measurres. Referencce program gguidelines
for aadditional infformation.
Whaat is the bassis of the sitee to source conversion?
c
?
Site to source co
onversions arre based on EPA’s
E
Portffolio Manageer software.
The simulation software reeports energ
gy use in terrms of site eenergy, will we need to convert it tto source
enerrgy units?
The conversion is
i done autom
matically in Portfolio Manager
M
and iin the ERP ttables providded, howeveer the energy
y
unitss must be inp
put in kBtu.
Are Incentives #2
# and #3 based
b
on sitee or source energy?
e
Incenntives are caalculated bassed on site en
nergy, in staandard units (kWh or theerms).
If a b
building is being
b
broug
ght up to co
ode (e.g. morre ventilatioon, etc.), willl there be aany allowan
nce for this
in th
he modeling
g?
The model must incorporate recommend
ded measures as they willl actually afffect the buillding. Energgy increases
will count againsst the 15% savings.
Com
mbined Heat and Power (CHP)
(
For CHP projeccts, is down
ntime for ma
aintenance to
t be includ
ded?
The partner is to
o estimate reaal usage, so inherently downtime
d
is iincluded.
Wheere are systeem parasiticcs entered?
Outpputs of the sy
ystem are neet of parasiticcs.
Is th
he funding for
f a CHP sttudy part off the ERP?
No, tthe cost of th
he study sho
ould be inclu
uded in the co
ost of the CH
HP project.
How
w would the installation
n of an absorption chiller under th
he ERP be h
handled if it is intended
d to utilize
the C
CHP waste heat?
The partner must achieve thee 15% sourcce energy red
duction undeer the ERP, aand the wastte heat from the CHP
cannnot be factoreed in.
If th
he building is
i efficient (i.e. an ERP would not be able to aachieve the 115% sourcee reduction)), what
requ
uirements arre there to install
i
CHP
P.
A CH
HP system may
m be installled on an EN
NERGY ST
TAR® Certiffied buildingg. For buildinng types thatt cannot
obtaiin ENERGY
Y STAR Cerrtification thee LEED-EB approach m
may be used tto determinee energy efficiency of
the bbuilding. Seee the CHP prrogram pagee for addition
nal informatiion.
Can a maintena
ance contracct be includ
ded?
The required 5 year
y mainten
nance contracct can be inccluded in thee cost.
Are we requirin
ng the manu
ufacturer to
o warranty a specific levvel of operaation (e.g. 755%, 90%), as there
mayy be a large cost associa
ated with thiis?
Reassonable service requirem
ments are exp
pected.
At w
what point iss the CHP incentive com
mmitted?
Wheen the detaileed feasibility
y study is app
proved by th
he program m
manager andd the BPU appproves the incentive
requuest, the incentive dollarss are set asid
de.
Can incentives be combineed?
Costt for CHP prrojects is net of incentivees, and canno
ot be combinned with anyy other incenntives from N
New
Jerseey’s Clean Energy
E
Progrram.
Highh Energy Intensity Custo
omers - Indu
ustrial, Manu
ufacturing, W
Water Treatm
ment, Datacenters
Whaat if achieving 15% sav
vings in my building is impossible?
i
?
Therre is an exception to the 15% energy
y reduction reequirement ffor the Existting Buildinggs componennt of Pay forr
Perfo
formance. A custom saviings thresholld may be offfered to cus tomers whose annual ennergy consum
mption is
heavvily weighted
d to manufaccturing and process
p
load
ds. This approoach will bee reviewed oon a case-by--case basis
and m
must be pre--approved by
y program reepresentativees. In order tto be considered for a cuustom savinggs threshold
(i.e.,, other than a 15% reduction in total building sou
urce energy consumptionn), the projeect must invoolve:


A manuffacturing facility, includiing such indu
ustries as plaastics and paackaging, chhemicals,
petrochem
micals, metaals, paper and pulp, transsportation, bbiotechnologgy, pharmaceeutical, food and
beveragee, mining and
d mineral pro
ocessing, geeneral manuffacturing, eqquipment maanufacturers and
datacenteers.
Manufacturing and/o
or process-reelated loads, including daata center coonsumption, consume 500% or more
of total facility
fa
energ
gy consumption.
Custtom savings threshold will require a minimum en
nergy savinggs of 100,000 kWh, 350 MMbtu or 44% of total
facillity consump
ption, whicheever is greatter.
Indu
ustrial/Manufacturing buildings may participatte in Pay forr Performancce. The entirre building m
must be
conssidered, inclu
uding all pro
ocess equipm
ment, and min
nimum savinngs must be achieved thhrough multipple
meassures. If the project scop
pe is limited to one speciific improvem
ment (e.g. coonveyor beltt controls), aand/or the
miniimum energy
y savings is not
n feasible,, the project should applyy for incentiives under thhe Prescriptive and
Custtom Measurees componen
nt of NJ SmaartStart Buildings.
Watter/Waste-W
Water Treattment sites, landfill sitess, and similar
ar open-plan facilities maay participatte in Pay for
Perfo
formance. Th
he entire site must be treaated as one project,
p
all bbuildings andd process eqquipment muust be
conssidered, and minimum saavings must be achieved
d through muultiple measuures. Incentivve #1 will bee based on
totall site square footage, whiich will inclu
ude the totall square feet of all buildiings and proocess equipm
ment bound
by prroperty liness. Aerial pho
otos or site-p
plans demonstrating the ttotal square footage musst be submittted with the
Appllication. If the
t project scope is limitted to one sp
pecific improovement (e.gg. VFDs on ppumps), andd/or the
miniimum energy
y savings is not
n feasible,, the project should applyy for incentiives under thhe Prescriptive and
Custtom Measurees componen
nt of NJ SmaartStart Buildings.
Dataacenters maay participatee in Pay for Performance
P
e. The entiree building, daatacenter inccluded, mustt be treated
as onne project, an
nd minimum
m savings mu
ust be achiev
ved through multiple meeasures. The project shouuld apply forr
incenntives underr the Prescrip
ptive and Cu
ustom Measu
ures componnent of NJ Sm
martStart Buuildings if:
aa. The projeect scope is limited to on
ne specific im
mprovementt (e.g. HVAC
C controls), and/or the m
minimum
energy saavings is nott feasible, orr
bb. The dataccenter is a sttand-alone faacility (i.e. is not part off a larger offi
fice building, or other complex, or
cc. The dataccenter is parrt of a larger building, bu
ut improvem
ments are lim
mited to the ddatacenter.
Multtifamily Buildings
Shou
uld I enroll my multifa
amily buildin
ng in the Ho
ome Perform
mance Proggram or Payy for Perforrmance
Proggram?
Dow
wnload the multifamily
m
fllow chart to determine whether
w
yourr multifamilyy building fiits into the R
Residential
Hom
me Performan
nce Program
m or the Com
mmercial Pay
y for Perform
mance Prograam. If you believe your pproject has
fallen into the wrong categorry please con
ntact program
m representaatives at 8666-NJSMART
T.
Whaat if my mulltifamily bu
uilding consiists of multiiple garden--style buildiings?
Gardden style apaartment comp
plexes usuallly consist off multiple loow-rise aparttments, coopperatives, condominiumss
and/oor townhousses surround
ded by landsccaped ground
ds.
Thesse types of complexes will
w be treated
d as one projject under Paay for Perforrmance. In oother words, if there are
10 garden-style buildings
b
thaat are part off one multifaamily comm
munity, all 100 will be agggregated intoo one Pay forr
formance app
plication. Th
he 100kW paarticipation threshold
t
willl be met thrrough this agggregation (iincluding
Perfo
comm
mon area an
nd in-unit billling). The 15% savings requirementt (as well as all other proogram requirrements) willl
be acchieved in ag
ggregate, as well. The same
s
processs will apply for affordabble-rate housing, except ffor the fact
that tthey will not need to meeet the 100kW
W requiremeent to particiipate. Only oone set of incentives willl be paid perr
projeect, and all in
ncentive cap
ps apply. Alll other progrram rules appply.
Otheer
Willl Pay for Performance have a porttal?
It is not currently
y planned. Communicati
C
ion will be via
v email thrrough P4P@
@trcsolutions.com
Whaat is the estiimated timeeframe for receiving
r
inccentive mon
ney?
Betw
ween 45 and 60 days from
m incentive authorizatio
on.
Wou
uld a loan program help Pay for Performancee to be moree successful?
A loan program (MEEIP) is currently established forr New Jerseyy Housing aand Mortgage Finance A
Agency’s
propperties. Contaact NJHMFA
A directly orr visit their website
w
for m
more informaation. The E
Economic Deevelopment
Authhority does provide
p
finan
ncial assistan
nce for qualiified projectss from time to time. Pleaase see the ““EDA
Proggrams” page for more infformation.
Can an ENERG
GY STAR ra
ating be ach
hieved throu
ugh Pay forr Performan
nce?
u
Pay fo
or Performan
nce could ressult in the buuilding beingg eligible forr the
Yes, the measurees installed under
ERGY STAR
R Label.
ENE
Can the partnerr seek work
k through th
he program or must theey wait to be contacted
d by a potential
partticipant?
Partnners are enco
ouraged to seek participaants and brin
ng them intoo the program
m.
As oone of the 5 special classes of P4P exempt
e
from
m the 100 kW
W requirem
ment,





Hospitals
Nonprofits
Public Universities/Colleges
Governmental entities not receiving Direct Energy Efficiency and Conservation Block Grants
Affordable multi-family housing (“affordable” is defined as low income, subsidized, HUD, etc.)
when should we apply for Direct Install (DI) and when should we apply for Pay for Performance (P4P)?
If you have the option of pursuing either P4P or DI, consider TWO things:
1) Diversity of measures – DI has a very specific equipment list for which it provides incentives and currently
does not include building envelope measures. The P4P Program is open to a wide range of energy efficiency
upgrades as long as they result in measurable energy savings and meet minimum performance requirements.
2) Budget - P4P is time intensive, which translates to a bigger investment. There really needs to be considerable
savings involved to make P4P worthwhile - especially for smaller facilities.
Here are some cases where Direct Install would be better for smaller nonprofits:
1) Most or all of the work involves lighting, HVAC or smaller internal measures OR
2) You have a “tight” budget OR
3) You have a “short” deadline OR
4) The scope of work is somewhat standard (to a point where modeling a facility would be a waste of time).
Here are some cases where Pay for Performance would be better:
1) The scope of work involves lighting, HVAC and more intricate type improvements OR
2) The scope of work involves building envelope OR
3) You are interested in pursuing Combined Heat & Power OR
4) You have complex technologies in the building
When in doubt, have a preferred Direct Install contractor perform a free energy assessment and evaluate the
results. If the results are not meeting your needs, then Pay for Performance may be a better route. Keep in mind
that some of the Direct Install contractors are also P4P partners.