Since the Energy Policy Act 1992 became law, Energy Savings Performance Contracts (ESPCs) and Utility Energy Service Contracts (UESCs) (collectively, performance contracts) have been authorized alternative financing mechanisms for implementing energy and water conservation measures on federal facilities. Over the past decade, federal agencies have been increasingly using these contracts over direct obligations mechanism. However, UESCs have received less attention despite having similar goals and processes as ESPCs, with the investment ratio between them being as skewed as 1:10. This paper provides a cost comparison of three performance contracting models along with the tradeoffs that should be considered when choosing between the two to achieve similar scope of work. It is found that UESCs are flexible and collaborative in nature, offer similar energy savings as ESPCs at reduced project costs, and represent and ideal way of technology transfer in a public-private partnership. Overall, our analysis suggests that UESCs may offer a number of financial, contractual, and strategic benefits relative to ESPCs and deserve greater attention from federal agencies in the future.
