A recently released 'Talking Points Memo' in July by the financing solutions company, Hanson Armstrong, talks of asking for support for the legislation that would extend Energy Performance Contracting into the commercial real estate market.
After reading the memo it was hard to miss one large point that was identified in a small foot note regarding the definition of performance risk. The foot note states "Performance risk includes price, schedule and completion, as well as the guarantee of savings over time. Under a performance contract, all these risks are guaranteed by the contractor."
The reason this is a large point of focus is that until energy service companies have real skin in the game then performance risks on savings is a thing of interpretation.
Imagine a energy service company that actually invests their own capital into the energy projects that they are contracted? Having skin in the game is the only true way to guarantee costs, schedules, the completion of the project and the SAVINGS of the energy efficiency project.
It all comes down to who is making the investment into the energy project and how is the investment structured.