How Energy Savings Performance Contracting (ESPC) Works
ESPC (Energy Savings Performance Contracting) or simply, Performance Contracting, is a way to reduce energy use and cost, renew facilities and building systems without expending capital funds. Under an Energy Savings Performance Contract, an energy services company (ESCO) such as Ameresco pays all costs involved in identifying, installing, operating and maintaining new or upgraded energy-efficient equipment. The ESCO is compensated by receiving a share of the cost savings resulting from these improvements over a set term. At the end of the Energy Savings Performance Contract, the Customer owns all of the improvements and receives all of the continuing savings.
The concept is best illustrated by showing the impact on utility bills. Before the Performance Contract, the Customer pays its full bill. During the contract, the Customer achieves savings due to energy improvements and pays either the entire savings or a portion of the savings to the ESCO. The Customer's share of savings can flow into operating cost reductions or be used to fund additional improvements. At the end of the Energy Savings Performance Contract, the Customer receives all of the savings, enjoying reduced energy costs for the life of the equipment.
