Performance-Based Solutions

Performance-based solutions (PBS) consist of a range of ways in which a private energy service company takes responsibility for funding an upgrade project, taking its remuneration based on the success of the project. In this way, the company transfers the risk from the building owner onto itself. This allows the building owner to put more of his or her time, energy, and limited financial resources into the services provided.

One of the forms of a PBS is an Energy Performance Contract (“EPC”) which is a contract between the energy user and an ESCO for evaluation, recommendation, implementation and measurement/verification of one or more energy efficiency measures. There are two types of contacts. In the first, contracts are structured such that savings are guaranteed by the ESCO to meet or exceed total annual contract payments. In the second, the costs are shared with payments based on energy and operational savings and a stipulated maximum energy consumption level over the life of the contract.