Introduction: Understanding the Three Main Models of Contract Energy Management

Contract Energy Management, or CEM, has become a popular way for businesses to optimize their energy consumption and reduce costs. There are three main models of CEM that companies can choose from, each with its own set of benefits and considerations. In this article, we will delve into these three main models to help you better understand how contract energy management can work for your organization.

Shared Savings Model

The first model of Contract Energy Management is the Shared Savings Model. In this arrangement, a third-party energy management company implements energy-saving solutions in a facility or organization. The cost of the improvements is covered by the energy management company, and the client pays for the services provided from the energy savings achieved. This model is attractive for businesses looking to reduce energy costs without any upfront investment.

Guaranteed Savings Model

The Guaranteed Savings Model is another popular option for businesses interested in contract energy management. In this model, an energy services company guarantees a certain amount of energy savings over a specified period. If the savings are not achieved, the company will reimburse the client for the shortfall. This provides a sense of security for businesses looking to implement energy efficiency measures.

Performance Contracting Model

The Performance Contracting Model is a comprehensive approach to contract energy management. In this model, the energy services company not only identifies and implements energy-saving measures but also guarantees the results. Payments are typically based on the actual energy savings achieved, providing a strong incentive for the energy management company to deliver on their promises. This model is suited for organizations looking for a hands-off approach to energy management.

Contract Energy Management offers businesses a way to improve energy efficiency and reduce costs without the need for significant upfront investment. By choosing the right model that aligns with their goals and resources, organizations can achieve significant savings and contribute to a more sustainable future.

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