Energy savings performance contracting (ESPC) is a method of finance that allows a facility to complete energy-saving improvements within an existing budget by paying for them with money saved through reduced utility expenditures. Facilities make no up-front investments and instead finance projects through guaranteed annual energy savings.
In accordance with Tex. Govt. Code §2166.406, a state agency that is considering a guaranteed ESP contract must notify SECO of its intent, issue a request for qualifications and select a performance contractor, usually an energy service company. After identifying eligible projects, the contractor designs and installs the needed improvements. The agency pays for the financed project out of savings realized by the improvements. By law, the contractor must guarantee that the savings will always be at least equal to the payments for the cost of the improvements.
Current Texas law also allows institutions of higher education, public school districts and local governments to enter into energy savings performance contracts.
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