Performance Contracting

Frequently Asked Questions

Frequently Asked Questions

What is Energy Savings Performance Contracting (ESPC)?

Energy Savings Performance Contracting (ESPC) is a financial mechanism used to pay for facility upgrades with future energy savings. Without needing a large upfront capital budget, building owners can partner with an Energy Service Company (ESCO) to audit, design, and install energy-efficient improvements like HVAC, lighting, and building controls.

How does an ESPC work?

In an ESPC, an Energy Service Company (ESCO) evaluates your facility and proposes energy-saving upgrades. The ESCO provides a turnkey solution that includes design, installation, and ongoing measurement of the improvements. The project costs are financed and repaid over a specified term using the cost savings generated by the lower utility bills.

What happens if the energy savings fall short?

A core feature of performance contracting is the savings guarantee. The ESCO guarantees that the energy and operational savings will be enough to cover the project costs. If the actual savings fall short of the guaranteed amount, the contractor is typically responsible for paying the difference, significantly reducing your financial risk.

Why should we choose performance contracting over traditional funding?

Performance contracting allows for “budget-neutral” modernization of your infrastructure. It is an excellent choice when you need critical maintenance or energy retrofits but lack the immediate capital budget. It helps accelerate sustainability goals, improve facility comfort, and reduce deferred maintenance backlogs without requiring new funding.