ABSTRACT
Since soaring energy prices and the growing need for energy efficiency hit the center of our radar screen in the 1970s, there has been growing recognition that using energy more efficiently is good for the economy and the environment. Since performance contracting risks are primarily managed through the project's financial structure, effective risk management presents a major point of differentiation among energy service companies (ESCOs). Many of them in recent years, however, can be traced to the assumption by fledgling ESCOs and customers alike, that performance contracting is a technical procedure. Performance contracting is primarily a financial transaction. Administrators around the world are burdened with obsolete, money-hungry schools, hospitals. built in the low-energy-cost era of the 1950s and 1960s. Performance contracting has matured into a viable and reliable way of doing business in North America and many countries around the world. In the United States and Canada, federal law allows—even encourages—federal agencies to use performance contracting to cut operating costs.
