Energy Performance Contracting

Welcome to Energy Performance Contracting (EPC)


For a listing of pre-qualified ESPs, click here.

The Virtual Assistant was developed to address frequently asked questions about Energy Performance Contracting (EPC) and to guide you through the 5-step process common to all EPC projects. The five steps have been vetted to help you successfully navigate turn-key projects at your facility. In addition to this Virtual Assistant guide, our staff offers free technical support including a pre-project on-site visit and unlimited telephone assistance on an as-needed basis.

EPC provides an alternative procurement method for design and construction services that reduce facility operating costs through energy conservation improvements. EPC is an attractive financing model that uses cost savings from the project to finance the construction work, sometimes with no upfront cost. Also, all EPC projects must be done using a qualified Energy Service Provider (ESP) whose qualifications have been vetted by the State; this helps ensure the ESP maintains a high standard of technical expertise and has sufficient financial resources to guarantee cost savings for project financing.

EPC offers a smart way to make energy improvements to public facilities even when there is no budget to fund the work. The public entity contracts with an ESP to identify and install cost-effective improvements and to guarantee the energy cost savings. The ESP can also facilitate financing for the project, where the financing is repaid from the energy cost savings.

EPC offers many benefits

  • Potentially no upfront cost
  • Guaranteed energy cost savings
  • ESPs can offer information on project financing
  • Single point of contact / accountability
  • Curbs volatile energy prices and long-term rising costs
  • Addresses deferred maintenance
  • Improves productivity via better air quality, lighting, and temperature control

What is Energy Performance Contracting

Energy Performance Contracting (EPC) is a construction procurement method where an Energy Service Provider (ESP) makes efficiency upgrades to your facility that yield cost savings from energy or water conservation. Ideally these cost savings are sufficient to pay for the total project cost which is typically financed over a 15 to 20-year term. The “Performance” term in “EPC” means the ESP measures and verifies the savings guaranteed in the contract are realized. Any difference between the measured savings and the guaranteed savings will be paid to you by the ESP. Figure 1 illustrates how the initial net savings increase once the financing is paid back. 


EPC project cost savings typically come from cost-saving measures (CSMs) by upgrading to more efficient equipment or controls, some example CSMs include:

  • LED Lights
  • Occupancy sensors
  • Boiler replacements
  • HVAC Improvements
  • New pumps, fans & drives
  • Equipment controls
  • Building envelope changes
  • Water efficiency equipment
  • Renewable energy installations
  • Street, traffic & other outdoor lighting

The 5-Step EPC Process



EPC Flowchart

Step 1- Provides guidance for evaluating an Energy Performance Contract (EPC) as a procurement option at your facility.



Step 2 - Helps you select an Energy Services Provider (ESP).



Step 3 - Is the Investment Grade Audit (IGA) phase where the ESP conducts a thorough and complete analysis of cost savings opportunities.


Step 4 - Is the Energy Performance Contract (EPC) phase where the ESP installs cost saving equipment.


Step 5 - Is the performance stage (also part of the EPC contract), where the ESP compares post-project measured savings to the projected guaranteed savings.


In Steps 3, 4, and 5 of the ESP provides services under contract.