As soaring energy costs increasingly affect the bottom line of U.S. businesses, the “energy performance contract” has become an enticing resolution for industrial building owners. This contract may be a financing or operating lease offered by an energy service company, conjointly called an ESCO, to help businesses improve the energy efficiency of their buildings or facilities.

The key to energy performance contracting is to use long-term utility savings to fund the improvements. The ESCO often guarantees energy savings that will meet or exceed annual payments to hide all project costs, usually over a contract term of seven to 20 years.

“A building owner either pays a utility for an inefficient building, or they will pay an ESCO to enhance their building,” says Jeff Stokes, a vice chairman at World Energy Solutions, a publicly traded ESCO (image: WEGY) based in St. Petersburg, Fla.

World Energy Solutions strives to cut back kilowatt usage by up to thirty percent. The corporate offers a variety of services, including utility billing and rate analysis, energy auditing, installation of building improvements, building systems maintenance and ongoing monitoring and verification of the energy savings.

ESCOs will give versatile and distinctive ways in which to finance their services. For example, World Energy Solutions offers to pay the

total up-front value of installation with equipment maintenance in return for an 80 % share of the actual savings realized over a minimum ten-year period.

“In some cases, our company will fund the entire installation, at no charge to our customer, and live off the savings we have a tendency to generate over a bound quantity of your time,” says Ben Croxton, chief govt officer of World Energy Solutions.

ESCOs not only determine energy-saving opportunities, however also develop engineering designs and specifications and manage the complete process. They additionally can provide staff coaching and ongoing maintenance services.

Even the centralized has gotten into the act, and for smart reason: Government orders that require federal agencies to use thirty five percent less energy by 2010 compared to 1985 levels will require $5 billion in energy projects. Much of that will visit “Super Energy Savings Performance Contracts,” offered by the Department of Energy.

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