Energy Performance Contracts

An Energy Performance Contract (EPC) is an innovative form of contractual partnership, developed to overcome the major barriers of delivering cost-effective energy efficiency.

In a performance contract, the energy services contractor identifies and can guarantee a specified level of energy savings. These and other savings are used to finance energy efficiency improvements.

Businesses are operating in a difficult economic environment which is getting tougher due to:

  • High energy costs
  • Limited available capital for energy infrastructure upgrades
  • Stretching carbon targets
  • Plethora of sophisticated energy technologies which require expert 3rd party design, installation and maintenance

Basic principles

  • An EPC overcomes the need for upfront capital investment and can guarantee future energy or carbon savings
  • It is an innovative approach to reduce finance and technology risks for the customer
  • EPCs are long term contracts (up to 20 years) depending on the type and mix of measures installed
  • The EPC contractor will be responsible for the on-going operation and maintenance
  • The capital repayment is designed to be equal to or lower than the identified energy savings
  • A comprehensive Monitoring & Verification plan runs in parallel for the duration of the contract to verify the savings and ensure appropriate calibration of the energy consumption baseline
  • Savings will continue to be realised after the end of the contract

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