Energy Performance Contracts

Energy Performance Contract is where a service provider installs energy efficiency equipment for a business and guarantees a return on investment. The business pays it back over time. The service provider may pay for the installation.

Stay in control of your finances

  • Guaranteed savings by the energy service company.
  • Long payment period of 4–15-year contract with a 3–9-month agreement period.

Potential tax benefits

  • You may be able to claim tax on depreciation and interest on your repayments.
  • On the balance sheet.

Suited to big businesses with high-energy use

  • Energy provider installs equipment of more than $500,000 in value.
  • You own the equipment.
  • Ownership or long-term tenancy of sites is required.
  • The energy service company manages the whole process for you.
  • Projects often involve replacing old equipment for new energy efficient equipment.

How it works

  1. Find an energy service company (ESCO). A good place to start is the Energy Efficiency Council’s list of providers.
  2. The energy company gets funding from a bank or financier, who pays for your energy efficiency upgrade.
  3. You make monthly payments to the energy company or the financier.
  4. If you don’t get the savings you were expecting, the energy company will pay the shortfall.
  5. At the end of the agreement, you’ll own the equipment.

It’s advised to always seek advice from your accountant.

For a list of simple tips to save energy in your business, visit the Victorian Energy Saver website.

Want to know more? Get in touch with:

Vivek Kotak

Sustainable Finance Lead

+61 3 8626 8781

vivek.kotak@sustainability.vic.gov.au