Using ESPCs to Finance Federal Investments in Energy-Efficient Equipment

Energy savings performance contracts (ESPCs) allow federal agencies to finance investments in energy-efficient equipment through private vendors, using anticipated reductions in energy costs to pay for investments over time. Given constraints on discretionary appropriations, ESPCs may help agencies to invest in energy-efficient equipment and reduce energy costs. However, compared with paying for such investments up front with appropriated funds, such contracts result in greater financing costs to the government.