In practice, under a performance contract, an Energy Services Company (ESCO) provides a comprehensive building retrofit, which can include the replacement of boilers, insulation, cooling systems, lighting and temperature automation controls, as well as the integration of energy data management software and on?site renewable energy systems.
The ESCO takes complete “turn?key” responsibility for the project, meaning it covers all aspects of the project from start to finish: preliminary energy audits, detailed design and engineering, business case, analysis, installation, commissioning, and performance measurement and verification.
The ESCO acts as an overall project manager and will divide the retrofit works into specialised areas, which will be contracted to local specialised partners, the ESCO keeping the overall responsibility for the work and the guaranteed energy savings. For that reason, EPC projects are using local Small and Medium Enterprises (SMEs) and in turn this contributes to the development of the local job market.
Moreover, the most important for this model is that the ESCO assumes performance risk for the project in the form of a long?term financial guarantee to ensure that the projected energy and operational cost savings materialise and are preserved over time. If promised energy savings are not realised, the ESCO must pay the difference to the building owner.