Contracting helps save on energy costs

Contracting Helps Save on Energy Costs

To improve energy efficiency, some companies are doing more than just turning out the lights at the end of the day.

Performance Contracting Helps Save on Energy Costs

To improve energy efficiency, some companies are doing more than just turning out the lights at the end of the day.

As soaring energy costs increasingly affect the bottom line of U.S. businesses, the "energy performance contract" has become an attractive solution for commercial building owners. This contract is a financing or operating lease offered by an energy service company, also known as 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 cover 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 can pay an ESCO to improve their building," says Jeff Stokes, a vice president at World Energy Solutions, a publicly traded ESCO (symbol: WEGY) based in St. Petersburg

 

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