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Minimize capital investment risk.

Performance contracting lets you lower energy and operating costs, reduce carbon emissions and create jobs through guaranteed savings

Performance contracting has been a successful model for procuring energy efficiency retrofits in the public sector for more than twenty years, and is gaining momentum in the private sector. In this program, energy and operational savings over a specified time period are used to fund infrastructure improvements through a financial arrangement provided by a third-party financial institution. The projects are designed so that the annual energy and operational savings are greater than or equal to the required payments over the term of the contract, leaving a net neutral impact on budget. Performance contract retrofits are typically performed by an Energy Services Company (ESCO).

 

With performance contracting, you can:

  • Minimize risk through guaranteed performance. Some or all of the energy and operational savings are guaranteed by the ESCO over the term of the contract. If the guaranteed savings are not realized, the ESCO pays the customer the difference between what is saved and the guaranteed savings amount. Using performance contracting, the risk of performance belongs to the ESCO.
  • Maximize savings. An ESCO uses performance contracting for a comprehensive approach by analyzing all parts of a building environment – lighting, HVAC systems, building management systems, water efficiency, etc.— to create a project that will maximize the efficiency, savings and carbon reductions. This distinguishes ESCOs from most contractors who focus on a core competency or single portion of an efficiency project, such as lighting.
  • Validate success. A significant benefit of using performance contracting as a project delivery method is the programmatic component of annual validation of customer savings. Measurement and verification ensure projects are successfully managed. This critical component of the performance contracting program provides customers with the annual data to share for the life of the contract.

 

To achieve an even greater impact, combine performance contracting with other incentives. Alternative sources of funding, such as grants, loans, incentives, rebates, bonds, and innovative financing structures, provide you with affordable energy efficiency solutions. Diverse funds provide low-cost financial support to reduce total cash outlay and achieve quicker paybacks through the purchase of new and more efficient equipment to move forward with retrofit work.

 

To learn more about performance contracting visit our website.

 

Read our white paper:  Using Performance Contracting and Incentives to Accelerate Energy Efficiency Projects (PDF)

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