Information for State Agencies

Resources and guidance for selecting and initiating energy performance contracts.

Selecting an Energy Performance Contracting Project

Technical factors to consider when selecting a project site for an energy performance contracting project include:

  • Does the facility have high annual energy and water use?
  • Does the project provide sufficient energy and water saving opportunities to generate the necessary cash flow to amortize all project costs over the contract term?
  • Does the project have a size and scale that would attract an energy service company’s (ESCO) interest? Some ESCOs are willing to implement projects for smaller facilities, but they make those decisions on a case-by-case basis.

Risk Factors associated with an Energy Performance Contracting Project

Federal, state, and local government agencies have implemented energy performance contracts for many years. But there are risk factors that should be considered before proceeding with a project:


  • Interest rates affecting project costs and scope
  • Construction costs
  • Confidence in measurement and verification calculations
  • Energy vs. non-energy cost savings
  • Possible delays
  • Impact of major facility changes
  • Budget obligations


  • Facility operating hours
  • Changes to equipment loads
  • Weather
  • User participation


  • Short- and long-term equipment performance
  • Operations performance and procedures
  • Long-term maintenance
  • Equipment repair and replacement

Required Documents and Resources:

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