Our company is looking to hire an energy consultant to help optimize our portfolio across multiple TVA sites in Tennessee. We've got about $2.8M in annual energy costs and I've never worked with outside consultants before. What should I be looking for in terms of credentials, experience, and contract terms? Any horror stories or success stories to share?
Best practices for vetting energy consultants?
Gary - first thing I always check is whether they're certified energy managers (CEM) or have similar credentials. For a $2.8M portfolio you want someone with demonstrated experience in industrial accounts. I'd also ask for case studies from similar-sized clients, not just testimonials.
Rachel's right about credentials. I'd add - make sure they understand your specific utility territory. TVA has some unique rate structures and programs. Had a consultant from out of state miss a $40K opportunity in TVA's EnergyRight program because they weren't familiar with local incentives.
Good point Cecilia. Two of the consultants I'm interviewing are from out of state. Should I automatically disqualify them or just make sure they partner with local experts? One has impressive credentials but admits they've never worked in TVA territory.
Don't automatically disqualify but definitely dig deeper. I worked with an out-of-state consultant who partnered with a local firm for a PPL territory project. The collaboration worked well but make sure the local partner isn't just window dressing - they need real involvement in the analysis.
For contract terms, I always insist on payment tied to verified savings. Had one consultant want 50% upfront, 50% on delivery of report. Pushed back and got them to accept 25% upfront, 25% on report delivery, 50% tied to first year of actual savings measured against baseline.
Gerald's approach is solid. Performance-based contracts align incentives properly. Also make sure the contract specifies exactly how savings will be measured and who pays for any verification costs. I've seen disputes over whether weather normalization should be applied to savings calculations.
Thanks for the measurement and verification tips. Speaking of contract terms, what's reasonable for the consultant to retain rights to the analysis methods or recommendations? One firm wants to retain IP rights to any tariff optimization strategies they develop.
That's a red flag Gary. You're paying for analysis specific to your facilities - you should own the results. Generic methodologies, sure, they can keep those. But facility-specific recommendations and savings calculations should be yours to implement and modify.
Agreed with Cecilia. I'd also add a clause requiring them to provide all underlying data and calculations in formats you can work with (Excel, not just PDF reports). You might want to update the analysis annually or verify their work internally.
One more tip - ask about their ongoing support model. Some consultants disappear after delivering the report. Others provide quarterly check-ins to track progress. For a $2.8M portfolio, you want someone who'll help with implementation, not just hand you a binder and disappear.
All excellent advice here. Gary, I'd also suggest asking them to walk through a sample analysis using one of your smaller sites. Nothing proprietary, just show you their methodology and thought process. A good consultant should be confident enough in their approach to give you a preview.