Energy Savings Performance Contracts (ESPCs) and Utility Energy Service Contracts (USECs), collectively known as performance contracts, enable government agencies to procure energy savings and facility infrastructure improvements with no up-front capital costs or appropriations.
Through performance contracts, private sector companies finance and install new energy efficient equipment in federal buildings, reducing energy and operating costs and addressing maintenance backlogs. In exchange for a pre-determined price, the chosen ESCO guarantees future energy savings, which are used to pay for the energy efficiency upgrades with excess savings accrued to the federal government. In fact, payment to the ESCO is contingent upon realizing that guaranteed annual savings stream.