Partnership in building energy performance contracting

Building energy performance contracting is a business strategy to assist building owners overcome the financial barriers for improving the energy performance of their buildings. In return for the investments made into the energy-saving measures, the energy service contractors would share with the building owners the energy cost saving. Although the contractual arrangement is meant to create a win-win situation, disappointments could arise due to mismatches between the expected and actual outcomes. From a micro-economics viewpoint, the key factors contributing to the failure of a building energy performance contract are reviewed. To solve the commonly encountered problems in building energy performance contracting, it is proposed the conventional performance contract is replaced with a partnership formed jointly by the building owner and the energy service contractor, with the latter assuming the role of the performance contractor. This would unite the goals of the two parties and cultivate genuine cooperation between them. The key features for this new contractual arrangement are described along with how this arrangement could resolve typical energy performance contracting problems.