What Is a Green Performance Contract?

Performance Contract, Energy Efficiency   November 6, 2008

Today’s tip is about a way that facility executives can cheaply and easily finance green upgrades in their facilities: green performance contracts. The idea of a green performance contract is that they expand the scope beyond the energy upgrades normally included in a performance contract to focus on a facility’s sustainability holistically. Green performance contracts are a terrific option for facility executives who don’t have the upfront capital to pay for major renovation projects.

Most green performance contracts, which almost always include energy efficiency projects as well, work similarly to straight energy performance contracts – a third-party service company pays for and handles the installation of green retrofits and then is paid back by the savings from the projects. Green performance contracts can include projects that cover water use reduction, green purchasing, renewable energy and emissions offsets, indoor environmental quality, recycling and many other facets of sustainability beyond just energy savings.

Facility executives in either public or private organizations can use green performance contracts, and local, state and federal legislation is being passed more and more frequently to smooth the process and provide even more incentive.


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