Energy Savings Performance Contracting (ESPC)

Energy Savings Performance Contracting (ESPC) is an arrangement where an energy service company (ESCO) implements energy-efficient upgrades—like better lighting, insulation, or HVAC systems—at no upfront cost to the building owner. The ESCO then guarantees that the energy savings from these improvements will cover the project's costs over time. If savings fall short, the ESCO absorbs the difference. This approach helps organizations improve their energy efficiency and reduce operating costs while minimizing financial risk, promoting sustainable building management without significant initial investment.