What is energy performance contracting?

Energy performance contracting is a strategic approach to funding energy efficiency projects where the anticipated savings generated from implementing these projects are used to cover the costs associated with them. This means that organizations can invest in energy efficiency upgrades without an upfront capital expenditure, as they pay for the project over time through the savings achieved on their energy bills.

This method incentivizes both the service provider and the client to ensure that the energy savings are realized, as the service provider is typically responsible for guaranteeing the performance and results of the implemented energy solutions. This aligns the interests of both parties and promotes the adoption of energy-efficient technologies, ultimately contributing to reduced energy consumption and costs over the long term.

In contrast, the other options focus on different aspects of energy management or energy procurement and do not capture the essence of how energy performance contracting specifically operates in financing efficiency improvements through realized savings.