Energy Management Agreement Definition
Energy management agreements (EMAs), also known as energy performance contracts (EPCs), are contractual arrangements between an energy services company (ESCO) and a client. The agreement typically entails the ESCO taking responsibility for improving the energy efficiency of a client`s facilities, reducing its energy consumption and lowering operating costs, all while guaranteeing a certain level of energy savings.
EMAs are often used in commercial, industrial, or public sector building settings, where they can provide significant benefits in terms of energy efficiency and cost savings. In these settings, energy consumption can account for a significant portion of operating costs, making efficient energy management a critical factor in overall business success. EMAs provide businesses with a way to address this issue, allowing them to invest in energy efficiency improvements without having to commit large amounts of capital upfront.
Under an EMA, the energy service company (ESCO) conducts an energy audit of the client`s facilities to identify potential energy savings opportunities. The ESCO then recommends a series of energy efficiency upgrades that are designed to reduce energy consumption and costs. These upgrades may include improvements to lighting systems, HVAC systems, and building envelope sealing.
Once the upgrades have been identified and approved by the client, the ESCO will undertake the necessary work to install and implement the improvements. The ESCO is typically paid over time from the energy savings generated by the improvements, with the client retaining ownership of the equipment installed.
One of the key benefits of an EMA is that it allows businesses to invest in energy efficiency without having to commit large amounts of capital upfront. This means that businesses can free up capital for other business operations, without sacrificing energy efficiency. Additionally, by guaranteeing energy savings, EMAs provide businesses with a clear return on investment, which makes energy efficiency a no-brainer for many businesses.
In conclusion, energy management agreements are contractual arrangements between energy services companies and clients to improve energy efficiency, lower costs, and guarantee energy savings. EMAs are an excellent way for businesses to invest in energy efficiency without committing large amounts of capital upfront, providing a clear return on investment and freeing up capital for other operations. If you`re a business owner or facility manager looking to improve energy efficiency and reduce operating costs, an EMA may be the right choice for you.