A Performance Contract is a business agreement that includes a guaranteed outcome, or performance, as an essential part of the deal.  Within the practice of energy services, a performance contract is often used to delivered a long-term energy savings benefit to a facility owner.  This type of agreement holds the energy services company responsible for the facility upgrades and long term outcome of an efficiency project. It reduces risk and responsibility for the facility owner.

For example, Commonwealth Energy Services can enter into a Performance Contract with a school district to upgrade facilities and reduce that district’s energy consumption by 20%, and maintain that reduction percentage for a pre-defined number of years.

That kind of a contract opens the door for special financing programs available from a variety of lending sources – to allow customers to use guaranteed savings to pay for those upgrades instead of  additional funds from tax dollars.  This is a widely used financing tool used by public sector clients.

A performance contract is recognized as an authorized process to administer funds that come from grants and capitol budgets, as well as federal stimulus dollars. It is very different from normal government procurement because it demands quality and performance over lowest first cost as seen in lowest bid procurement.

Commonwealth Consulting Services can provide up-front financing for retrofits and upgrades, and the debt service payments by the customer can be paid from verified savings.  Or we can structure a customized energy services agreement and arrange project financing with a lender favored by our customer.