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Energy Savings Improvement Program (ESIP)

With the “Energy Savings Improvement Program” (ESIP), government entities in New Jersey can pay for energy-related improvements to their facilities using the value of energy savings that result from the improvements. The ESIP law, enacted in 2009, governs a type of performance contract. It provides all types of government entities – from school boards to municipalities to state governments – with a flexible tool to lessen their environmental impact, save money, and reduce their energy usage for minimal costs.

What's Your Retrofit Strategy?

ESIP can help accomplish any retrofit strategy (major HVAC, minor HVAC, onsite generation, facility improvements, etc.), but can also leverage multiple strategies. Previously, ESIP was mainly used as a way to find energy savings and upgrade equipment. Today it is also used to help upgrade facilities to mitigate air quality concerns heightened by COVID-19, through enhanced building HVAC systems. As government entities struggle to offset these costs, a performance contract can be a solution to afford the upgrades. ESIP is based on financing today’s improvements off of tomorrow’s savings for little to no cost.

The first step to commencing an ESIP project is to perform an energy audit. This assessment of your facilities allows the auditor to recommend energy conservation measures (ECMs). ECMs have different costs, savings and lifespans, and depending on the budget, the entity can consider any or all of the measures for implementation. Certain ECMs are also eligible for rebates or incentives through New Jersey’s Clean Energy Program (NJCEP) or Board-approved utility energy efficiency programs.

NJCEP offers a free Local Government Energy Audit (LGEA) that meets the ESIP criteria. Entities can also choose to perform their own ASHRAE Level II audit (Energy Survey and Analysis) and a Level III audit for lighting (Detailed Analysis of Capital Intensive Modifications). Whichever audit the entity chooses, the assessment will be utilized in determining the project’s scope, in both the RFP and eventually in the Energy Savings Plan (ESP), which are both submitted to the NJBPU for approval.

Implementation of ECMs from Energy Audit: Is this something your agency can handle itself using an engineer or architect of record (DIY)? Do you need to hire an Energy Services Company (ESCO)? Perhaps a combination of the two (Hybrid)? Whichever path you choose, reach out to NJBPU’s ESIP Coordinator for an initial meeting via email at ESIP@bpu.nj.gov. The ESIP Coordinator will be involved in the process from the RFP to the ESP and through the evaluation, measurement, and verification steps. The Coordinator can also help with resources and answer questions about process.

For agencies interested in pursuing multiple efficiency incentives, this NJCEP and ESIP Interaction Memo offers recommendations on when to submit incentive applications to various NJCEP programs, relative to ESIP project timelines.

The 2011 Local Finance Notice shows how local governments can develop and implement an ESIP project for their facilities. These are still the governing rules set by the NJ Department of Community Affairs (DCA) related to ESIP projects.  

Ready to get started? If the retrofit strategy involves hiring an ESCO to perform the work, below are the current RFP templates for municipal and school district ESIP projects. In addition, Governor Murphy's Executive Orders (EO) 122 and 142 relating to COVID-19 (also provided below) must be included as attachments to the RFP. 

Regardless of the retrofit strategy, if an RFP is being issued, the entity must seek NJBPU approval prior to issuance. No RFP may be advertised without NJBPU approval. All entities must submit the draft RFP and final ESP to ESIP@bpu.nj.gov for the Board’s approval.

The goal of an ESIP is to save energy and money through ECMs and equipment upgrades. These projects are performance contracts, which means there are performance metrics that must be followed to achieve the savings. Per the ESIP law, entities should use NJBPU’s protocols for measuring savings to benchmarking the results. The protocols are reviewed and updated annually by NJBPU.

As an additional resource, NJBPU partnered with Sustainable Jersey to create an ESIP Guidebook that explains how to implement the program, and includes case studies of successful projects as well as a list of helpful resources. Entities that are pursuing Sustainable Jersey certification may find the ESIP program useful in securing their designation. 

The ESIP approach may not be appropriate for all energy efficiency improvement goals. Agencies that are considering an ESIP project should carefully review the program materials and consult with qualified professionals to determine the approach that best meets their needs.

The Energy Savings Plan (ESP) is the cornerstone of the ESIP program. It lays out what measures will be implemented to save energy, the expected payback period, and how it fits into the overall plan to reduce consumption. The ESP gives a snapshot of the project financial structure. Furthermore, the ESP must be approved by the Board and remain cash flow positive throughout the term of the project. These plans have a lifespan of 15 to 20 years depending on the ECMs being installed. To submit your ESIP Energy Savings Plan, please email ESIP@bpu.nj.gov to request a link to the dropbox for your entity. No ESP may be acted upon without prior approval by the Board.

2020 BPU Approved Energy Saving Plans:

2019 BPU Approved Energy Savings Plans:


Program Literature

Applications and Brochures - Download Program Materials

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Find a Trade Ally

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Clean Energy Learning Center


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