What is an ESPC?

Energy Service Performance Contracts (Also Referred to as Energy Performance Contracts)

An ESPC or EPC is a financial mechanism used to pay for today’s facility upgrades with tomorrow's energy savings – without tapping your organization’s capital budget. An ESPC/EPC constitutes a partnership between a facility owner and an energy service company (ESCO), and is considered a time and cost‐effective method for completing comprehensive energy. 

The Basic ESPC/EPC Process:

  1. The building/facility owner competitively selects an ESCO, which completes an energy audit of the facilities.
  2. Once an ESPC is negotiated, the ESCO designs, installs, and commissions energy conservation measures selected by the owner.
  3. Energy savings are measured and verified, and the ESCO guarantees the savings.

The Advantages of an ESPC/EPC:

  • Pay for facility upgrades now with future energy and operational savings
  • Low interest financing options often are available, including tax‐ free municipal leases, which are considered “non‐appropriated funds”
  • The ESCO represents a single point of accountability, simplifying the upgrade process significantly
  • Select an ESCO based on the best value, not necessarily the lowest bid
  • The building owner participates in equipment and subcontractor selection
  • Annual energy savings are measured and verified according to the International Performance Measurement & Verification Protocol (IPMVP)
  • Guaranteed project cost, energy and financial savings, and equipment performance
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