Undoubtedly, “green” has increasingly been highlighted as the color of choice for bottomline business results. In the construction industry, recently, ESPCs (energy savings performance contracts) have been noted as a common alternative financing mechanism that allows federal, state, county, and city agencies, as well as higher education and K-12 institutions, to pay for capital improvements throughout time with utility and operational savings, rather than with traditional government appropriations, taxes, or debt.

An ESPC enables a public agency or school to form a partnership with an ESCO (energy service company) that develops and designs the infrastructure project, secures private sector financing to cover upfront costs, and then installs and maintains the system. The public agency then pays back the private investors throughout the life of the contract, often between 10 to 25 years, with surplus funds created by energy savings. The ESCO guarantees savings by paying the difference if savings fall below expectations.

Schneider Electric www.schneider-electric.com, Andover, Mass., has seen an acceleration of southern communities leveraging ESPCs to help fund critical infrastructure renovations that they could not otherwise afford. This financial vehicle allows cities and schools to pay for capital improvements throughout time without increasing taxes or their debt load, which is critical since many communities have no financial alternative.

These energy partnerships are yielding both significant economic and environmental impact. Throughout the last few years, Schneider Electric has helped its municipal and education customers in the South implement energy-efficiency projects that will save nearly $300 million in utility costs that can be reinvested in capital improvement such as building renovations, technology upgrades, and enhanced security. These public-private partnership projects will have a total economic impact of more than $600 million in just five states throughout the next 20 years, including: the creation of 2,125 new jobs; $300 million in business sales; and nearly $12 million in additional state and local taxes.

The great value of ESPCs? They have a long-term impact on both the local economy and the environment. Schneider Electric alone has helped more than 550 clients transform communities and schools and save more than $1 billion.