Model ESCO Performance ContractsPerformance Contracts • October 29th, 2003
An energy services company (ESCO) is defined as a company engaged in developing, installing and financing comprehensive, performance-based projects centered on improving the energy efficiency of facilities owned or operated by commercial, industrial, institutional, and other types of customers. Projects are performance-based because the ESCO’s compensation, and often project-financing, are meaningfully tied to the amount of energy actually saved. For this reason, ESCOs are fundamentally different from consulting engineers specializing in identifying potential efficiency improvements, who are typically paid a fee for their advice and undertake no risk that their recommendations will yield results.
