Policy Profile

Energy Savings Performance Contracting

Policy description:

Energy Savings Performance Contracting (ESPC) sometimes also referred to as Utility Energy Service Contracting (UESC) or simply Performance Contracting is mainly a financing mechanism for retrofitting commercial buildings with more efficient technologies (HVAC, lighting, building controls, etc) and, more recently, distributed renewable technologies (solar, ground source heat pumps, etc). The new equipment is paid for over time through the utility bill savings of the measures themselves. “Performance Contract” means that the savings from the performance of the energy investment is committed to repayment of the loan. While this method of financing could be applied in any application, the target market for investors is generally large institutions where risk is low and the investment timeframe is generally longer than in the private sector. For more information, see the full policy brief.

Download Full Policy Brief View Policy Component Questions

  1. Is there clear legislative or executive authorization?
  2. Is there a program/project administered by a state agency?
  3. Is a third party involved in oversight for the program?
  4. Are model contracts available?
  5. Is a list of pre-approved energy service companies available?