An Energy Savings Performance Contract (ESPC) is a contract with guaranteed results. In the standard contracts for delivery, installation and commissioning of energy-efficient equipment, the investment is financed entirely by the customer and there is no guaranteed result. In this type of contract, the risk is borne only by the customer. Thе contract with guaranteed results is a means of making an investment that will be 100% returned from energy savings. The initial investment is funded entirely by the Contractor. In ESPCs, the Contractor provides engineering, procurement, installation and commissioning of energy saving equipment and also a financing scheme according to which the investment risk is borne by the Energy Service Company (ESCO). In this new type of contract it is not necessary for client to invest its own money because the investment is entirely financed by the Contractor. The funds invested in the energy efficient equipment are returned only due to the guaranteed savings resulting from the implementation of this new energy efficient equipment. The contractor specifies and reconciles with the customer the investment and thus determines the final contract price. The Contractor, based on measurements and analysis, defines the cost savings per unit of energy. After that a payback scheme is developed and agreed with the customer. The customer pays back to the Contractor the cost of the investment entirely from savings.
Principle methodology of the Energy Savings Performance Contracts
- Includes measurements and analysis of production and consumption of energy for a certain period of time and leads to the identification of investment, savings and payment scheme;
- Includes delivery, procurement and commissioning of energy-efficient technologies and all other necessary activities for the implementation of the contractual agreements;
- Includes monitoring and control of production costs and energy consumption and payment of the contract value by the customer according to the agreed scheme.