Energy Performance Contracting is an innovative financing technique that uses cost savings from reduced energy consumption to repay the cost of installing energy conservation measures. Normally offered by Energy Service Companies (ESCOs), this innovative financing technique allows the capture of benefits from energy savings without up front capital expenses on the part of the building owners, since the costs of the energy improvements are borne by the performance contractor and paid back out of the energy savings. Other advantages include the ability to use a single contractor to do necessary energy audits and retrofit and to guarantee the energy savings from a selected series of conservation measures.
This Guidebook was developed to explore and clarify the use of energy performance contracting by Public Housing Agencies and Indian Housing Authorities (PHAs and IHAs). It defines how performance contracting may be done in accordance with regulations governing HUD's Performance Funding System for Public and Indian Housing. The Guidebook begins with an explanation of energy conservation incentives available in HUD's Performance Funding System. It continues with a general description of performance contracts, HUD procurement requirements, and step-by-step guidance for contractor selection, negotiation and monitoring.