Energy Savings Performance Contracting (ESPC) is a construction method that allows a facility to complete energy-saving improvements within an existing budget by financing them with money saved through reduced utility expenditures. Facilities make no up-front investments and instead finance projects through guaranteed annual energy savings.
To enter into a guaranteed ESPC, a state agency must notify SECO of their intent, issue a Request for Qualifications (RFQ), and select a performance contractor, usually an energy service company (ESCO). 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 enables institutions of higher education, state agencies, public school districts, and local governments to enter into energy savings performance contracts.