Adding Value through ESPCs

Adding Value through ESPCs

This piece was originally posted in the June 2017 issue of electroindustry.

As energy efficiency gains increasingly more attention on local, national, and international fronts—often enabled and assisted by NEMA member products—many companies are opening business arms related to efficiency or founding new efficiency-minded businesses. The prime example of this is the Energy Service Company (ESCO) model where business is generated in servicing, improving, and monitoring a building or facility or municipal power grid.

A favored vehicle to undertake capital improvements such as these is through an Energy Savings Performance Contract (ESPC) whereby the business performs retrofitting and improvements for no charge, and in turn is awarded a percentage of the operating funds saved by the facility owner post-completion over a designated period of time.

ESPCs are attractive to federal agencies because they increase efficiency and thereby reduce their energy costs using private sector funding and expertise. Using an ESPC eliminates the need for appropriated dollars for equipment replacement and for operations and maintenance of the energy-using equipment.

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