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Pay for Performance

A Pay for Performance program goes beyond the simple lighting or equipment replacements that are the focus of most current efficiency programs and specifically targets whole-building energy savings. The program will determine an energy-savings threshold for the entire building and provides incentives for energy savings beyond that threshold, providing encouragement to find deeper savings than might otherwise have been pursued.

For example, a large office building participating in the program might target energy savings of 30 percent for the entire building, and receive incentives for each verified kWh reduction. Creating a win-win profit dynamic for developers and contractors alike while helping meet higher efficiency targets and help drive market transformation. Participating owners and design teams will need to pursue energy savings by addressing multiple systems, and model and analyze the building as a whole. Done properly, this can create a more predictable efficiency resource at a scale of savings that can be quite impactful.

This type of program is more common in the US but has the potential to offer a more attractive business case for an important market segment and improves the alignment between the financial reward structure and the long-term persistence of energy savings in facilities’.

Pay for Performance is an important lever that taps the knowledge and innovation of energy experts and building managers to find the deeper energy savings possible in buildings. This new approach will not only benefit those running the programs, but ratepayers, service providers, and energy-using customers.