CBO Report – “A variety of laws and executive orders require federal agencies to improve the energy efficiency of their facilities and to pursue a range of other energy-related goals. Because the availability of annual appropriations is limited, the Administration encourages federal agencies to use other types of financing—such as energy savings performance contracts (ESPCs)—to fund investments related to energy efficiency. Under an ESPC, a private party agrees to pay to design, acquire, install, and, in some cases, operate and maintain energy-conservation equipment—such as new windows, lighting, or heating, ventilation, and air conditioning (HVAC) systems—in a federal facility. In return, the federal agency agrees to pay for those services and equipment over time, as well as for the vendor’s financing costs, on the basis of anticipated and realized reductions in the agency’s energy costs. Such contracts are examples of third-party financing, in which vendors privately fund investments for federal agencies. In the case of an ESPC, the vendor is usually an energy service company (a business that focuses on projects and technologies to reduce energy use). Similar arrangements exist, called utility energy service contracts (also known as UESCs), in which the services and equipment are provided by a utility. Although data about the characteristics and results of utility energy service contracts are less readily available than similar data about ESPCs, the discussion of ESPCs in this report generally applies to those other contracts as well.”