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What is Energy Performance Contracting?

Here's how it works:

Piechart.gif (6273 bytes)You enter into an agreement with a private energy service company (ESCO). The ESCO will identify and evaluate energy-saving opportunities and then recommend a package of improvements to be paid for through savings. The ESCO will guarantee that savings meet or exceed annual payments to cover all project costs—usually over a contract term of seven to 10 years. If savings don't materialize, the ESCO pays the difference, not you. To ensure savings, the ESCO offers staff training and long-term maintenance services.

Many types of building improvements can be funded through your existing budgets— new lighting technologies, boilers and chillers, energy management controls and swimming pool covers, to name a few.

A qualified ESCO can help you put the pieces together:

puzz1.gif (234 bytes)Identify and evaluate energy-saving opportunities;

puzz2.gif (253 bytes)Develop engineering designs and specifications;

puzz3.gif (280 bytes)Manage the project from design to installation to monitoring;

puzz4.gif (243 bytes)Arrange for financing;

puzz5.gif (248 bytes)Train your staff and provide ongoing maintenance services; and

puzz6.gif (244 bytes)Guarantee that savings will cover all project costs.

 puzzle.gif (1846 bytes)

The Many Benefits

Better Buildings
By updating or replacing equipment that is old and obsolete with newer, more efficient technologies, you will have higher-quality systems, fewer breakdowns and reduced maintenance.  When building occupants experience improved lighting, better air quality and more comfortable room temperatures, they are likely to be happier and more productive.

A Wise Investment
Energy performance contracting allows you to divert funds that would be spent on energy bills into investments in your buildings. For governments, this means limited budgets can stretch further, putting taxpayers' money where it really counts. For all building owners, more modern, efficient energy systems can increase your property value and improve marketability of your buildings.

Improvements Without Sacrifice
Energy performance contracting allows you to tackle energy efficiency projects now even if no funds are available. This means you can still afford improvements when faced with budget cuts or competing priorities. And, with energy performance contracting, you can take a comprehensive approach that will optimize your benefits.

Cost Savings
New systems and equipment can lower your energy costs.  Many building owners see energy savings of 15 to 35 percent and also reduce their long-term maintenance costs. You keep all the savings once the equipment is paid off, plus any excess savings during the contract term.

Proven Technology and Expertise
Since the late 1970s, performance contracting has become a widely accepted and reliable way to make energy improvements. Today's ESCOs use industry-standard practices and proven energy-saving technologies and have excellent track records for satisfying their customers. ESCOs have a financial incentive to make sure savings are achieved throughout the contract term.

One-Stop Shopping
Performance contracting offers a streamlined approach to making facility improvements because, with a single contract, you can tackle multiple energy-efficient projects throughout your facility, rather then doing one project at a time. Your ESCO can provide a full range of services and continue working with you once the projects are complete to ensure that you get optimal long-term energy performance.

The Fundamentals

This link connects you to an educational description of the fundamentals of the industry and how they can help insure long term program or project success. Learn More 

Frequently Asked Questions

How do I find those energy savings?
By working in partnership with a professional energy service company (ESCO), you can tap its expertise to determine what building improvements make the most sense for improved comfort, easier maintenance and your budget. An ESCO's recommendations might include replacing lighting equipment, modifying or replacing boilers and chillers, installing modern energy management control systems, replacing motors or even installing pool covers or more efficient kitchen equipment.

Can't I do this myself?
Sure, if you have the time, money and expertise. But an ESCO can work with you to put together a complete package of services that meets your needs and saves you time and money. An ESCO can identify and evaluate energy-saving opportunities, provide engineering services, order and install equipment, and manage all phases of construction. To complete the package, the ESCO can guarantee the savings and even arrange financing.

How risky is this for me?
ESCOs typically work under a performance guarantee that shifts the risk to the ESCO. Your guaranteed energy savings pay for the upgrades, so you have no up-front costs. If energy savings don't materialize, the ESCO pays the difference, not you.

What can I do to get started?
It's simple: Contact the Energy Services Coalition. Act today and get those energy savings working for you.

Click here for 5 steps to successful energy performance contracting.