State and County agencies face increasing energy costs and the need to replace or upgrade aging, inefficient, and obsolete energy- and water-consuming systems. Capital improvement and operating budgets have typically been inadequate to fund the needed upgrades. Energy Performance Contracting (EPC) is an innovative approach to implementing energy and water efficiency projects using guaranteed energy savings to pay for the projects.


Energy performance contracting is an agreement between a building owner (or facilities manager) and a private energy services company (ESCO) that future operational cost savings (such as for annual electricity, water, sewer, or solid waste charges, as well as equipment maintenance service contracts) can be used to pay for the entire cost of a building’s energy and water efficiency retrofits (also known as energy conservation measures, or ECMs). A building owner contracts with an ESCO to assist in getting third-party financing for mutually agreed-upon ECMs and (after the third-party financing is secured by the building owner) the ESCO implements the mutually agreed-upon ECMs under “design-build” work (which includes design, purchase, installation, and construction of the ECMs).