Energy Savings Performance Contracting is an alternative financing mechanism designed to allow a facility to complete energy savings improvements within their existing budget by financing them with money saved through reduced utility expenditures.
Performance contractors are the commercial or industrial facility owner / managers acting partner, working alongside the owner to provide engineering design, procurement, construction, and commissioning services. The firm arranges the financing for the entire project so the building owner / manager doesn’t make a payment until savings begin to accrue, and offer a guarantee that the savings will exceed the cost of the project including the financing costs over the term of the financing. Performance contractors also know how to obtain any available tax or utility rebate subsidies available in the local area. Projects can usually be designed so that the owner experiences savings from the commissioning of the first elements of the upgrade project. This allows a building owner to create savings from within an existing budget allocation, without having to allocate internal capital. This has made performance contracting particularly attractive to governmental entities, which might have to request legislative appropriations for upgrades otherwise. Still, capital improvements have shrunken in the private sector as well, making performance contracting of greater interest as well.
For general information about performance contracting, see A Guide to Performance Contracting with ESCOs, and A Guide to Performance Contracting with ESCOs, Volume 2, Appendices, or about performance contracting for public entities in Texas visit SECO’s page on Energy Savings Performance Contracting.
SPEER has also recently released a briefing that provides a history and status update on performance contracting for Texas state agencies and universities: Performance Contracting Legal and Regulatory Update,
The National Association of Energy Service Companies, or NAESCO, provides three levels of certification for Energy Service Providers, Energy Service Companies, and Energy Efficiency Contractors