What is a Energy Performance Contract?
Energy performance contracts (EPCs) offer facility owners and operators a unique way to make energy efficiency improvements without upfront capital investment. In effect, an EPC is a financial agreement between the owner and contractor where the contractor provides the financing for the energy efficiency projects, and the owner pays back in savings. But what does this mean for businesses? How do EPCs work, and how can they benefit companies looking to make their operations more cost-effective and sustainable? Read on to find out more about Energy Performance Contracts and how they can benefit your business.
What is an Energy Performance Contract (EPC)?
An Energy Performance Contract (EPC) is a contract between a energy service company (ESCO) and a customer that specifies the terms of energy efficiency improvements to be made to the customer’s facility. The EPC typically includes a guarantee by the ESCO that the specified energy savings will be achieved.
How does an EPC work?
An Energy Performance Contract (EPC) is a contract between a customer and an energy services company (ESCO). The ESCO agrees to provide energy efficiency improvements, guaranteed energy savings, and other benefits to the customer. The EPC is typically structured as a shared savings agreement, in which the ESCO shares a portion of the energy savings with the customer over the term of the contract.
The ESCO conducts a comprehensive energy audit of the customer’s facility to identify opportunities for energy efficiency improvements. The ESCO then designs and implements a customized package of energy efficiency measures that are tailored to the needs of the customer. The ESCO guarantees that the implemented measures will result in specified levels of energy savings over the term of the contract.
The customer pays for the cost of implementing the energy efficiency measures through their monthly utility bills. The utility bill savings generated by the implemented measures exceed the monthly payments, resulting in net positive cash flow for the customer over time. At the end of the contract term, ownership of all installed equipment and systems remains with the customer.
What are the benefits of an EPC?
An Energy Performance Contract (EPC) is a contract between a customer and an energy service company (ESCO). The ESCO guarantees to improve the energy efficiency of the customer’s facility, usually by installing energy-saving equipment and/or making operational changes. In return, the customer pays the ESCO based on their actual energy savings.
The benefits of an EPC are:
-Improved energy efficiency: An EPC can help you save money on your energy bills and reduce your carbon footprint.
-Flexibility: EPCs offer flexible financing options that can make energy efficiency upgrades more affordable.
-Long-term savings: The guaranteed energy savings from an EPC can provide long-term cost savings for your business.
-Improved competitiveness: By becoming more energy efficient, you can improve your competitiveness in the marketplace.
Are there any drawbacks to an EPC?
Yes, there are a few drawbacks to an EPC. First, the upfront cost can be significant, although this is typically offset by the savings generated by the improvements. Second, not all types of energy efficiency improvements are eligible for an EPC – only those that meet certain criteria set by the government. Finally, there is always some risk involved in any type of energy efficiency improvement project, as it is difficult to predict exactly how much energy will be saved.
How can I get started with an EPC?
If you’re interested in starting an energy performance contract (EPC), the first step is to find an energy services company (ESCO) that can help you assess your needs and develop a plan. Once you’ve found an ESCO, you’ll need to sign a contract that outlines the scope of work and sets forth the terms and conditions of the agreement. After that, it’s time to get started on your energy efficiency project!
Conclusion
Energy Performance Contracts are a great way for businesses to reduce their energy costs and improve the efficiency of their operations. By entering into an Energy Performance Contract, businesses can take advantage of the latest technologies, receive expert advice on making improvements, and benefit from lower energy bills in the long run. With careful planning and execution, an Energy Performance Contract can be used to create a more sustainable future for your business while also saving money in the process.
