ABSTRACT
Financing has been a major barrier to energy performance contracting as the industry develops around the world. Financing is a major element in performance contracting and energy service company (ESCO) operations. Most ESCOs have an understanding with a financial house as to what constitutes acceptable credit standing for a customer. In addition to the customer’s creditworthiness, financiers are more inclined to loan money when larger ESCOs are involved. A financier’s due diligence carefully assesses the ESCO’s ability to make good on its guarantee and to control the variables that threaten the savings and the guarantee. Return on investment is usually the motivating force for the end-user, the ESCO and the financing source. The ESCO has to know in advance what the financing organization is looking for and what are its conditions for approval. Lease-based financing differs from debt financing primarily from a legal perspective. Costs of attorneys, financial advisors, consultants, and incidentals, are usually funded though the lease.
