Energy Savings Performance Contract
Energy Savings Performance Contracts (ESPCs), also known as Energy Performance Contracts (EPCs), are an alternative financing mechanism authorized by the United States Congress designed to accelerate investment in cost effective energy conservation measures in existing Federal buildings. ESPCs allow Federal agencies to accomplish energy savings projects without up-front capital costs and without special Congressional appropriations. The Energy Policy Act of 1992 (EPACT 1992) authorized Federal agencies to use private sector financing to implement energy conservation methods and energy efficiency technologies.
An ESPC is a partnership between a Federal agency and an energy service company (ESCO). The ESCO conducts a comprehensive energy audit for the Federal facility and identifies improvements to save energy. In consultation with the Federal agency, the ESCO designs and constructs a project that meets the agency's needs and arranges the necessary financing. The ESCO guarantees that the improvements will generate energy cost savings sufficient to pay for the project over the term of the contract. After the contract ends, all additional cost savings accrue to the agency. The savings must be guaranteed and the Federal agencies may enter into a multiyear contract for a period not to exceed 25 years.
Read more about Energy Savings Performance Contract: Federal Policies, Impacts of ESPCs, U.S. Department of Energy ESPCs, U.S Department of The Army ESPCs
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