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    Energy Savings Performance Contracting Technical Energy Audit Services

    What is an ESCO?

    An Energy Services Company (ESCO) provides a broad range of comprehensive energy solutions including design and implementation of energy savings projects, energy conservation, energy infrastructure outsourcing, power generation and energy supply, and risk management.

    ESCOs differ from energy-efficiency consulting firms and equipment contractors because they offer performance-based contracting where the company's compensation, and often the project's financing, is directly linked to the amount of energy that is actually saved. 

    What is an ESPC?

    An Energy Savings Performance Contract (ESPC) is a budget-neutral approach to make building improvements that reduce energy and water use and increase operational efficiency. Using this approach, an ESCO conducts a comprehensive energy audit for the facility and identifies improvements to save energy and/or create operational efficiencies. In consultation with the owner, the ESCO designs and constructs a project that meets the owner's needs and arranges or supports finding the necessary financing. The ESCO guarantees the improvements will generate energy cost savings sufficient to pay for the project over time. After the contract ends, all additional cost savings accrue to the owner.

    ESPCs allow building owners to accomplish energy savings projects with limited or no up-front capital costs. The savings in energy costs are used to pay back the capital investment of the project over a specified period or reinvested to allow for capital upgrades that may otherwise be unfeasible. If the project does not provide the specified return on the investment, the ESCO is responsible to pay the difference or make the necessary changes to achieve the guaranteed results.

    Benefits of ESPC

    ESPC PageProven Methodology: a widely accepted means of making facility improvements.

    Single Negotiated Contract: Enables the execution of multiple projects under one contract with a single point of accountability. 

    Alternative Funding Source: Funds that would have been spent on utilities are spent on facility improvements.

    Real Savings: ESCOs have to ensure savings are realized as they are obligated to pay for any shortfall.



    The City of Bellingham partnered with McKinstry to convert its streetlights to LED fixtures, cutting energy consumption by as much as 60% while saving $240,000 in annual energy savings. That’s 18,000 retired light bulbs that the city no longer has to pay for, power and maintain. Read the case study to learn more.