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Energy Savings Agreement

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ENERGY SAVINGS AGREEMENT

Parties and Recitals

This Energy Savings Agreement ("Agreement") is entered into as of the Effective Date set forth below by and between:

Service Provider:   Address:

Client Name:   Address:

Effective Date:

WHEREAS, Service Provider is experienced in the design, installation, commissioning and verification of energy conservation measures and related services designed to reduce energy consumption and operating costs; and

WHEREAS, Client desires to engage Service Provider to evaluate, install and implement specified energy conservation measures at the Client's premises and to guarantee certain energy savings subject to the terms and conditions set forth herein; and

WHEREAS, Service Provider and Client desire to set forth their respective responsibilities, the scope of services, guaranteed savings, measurement and verification procedures, payment terms and other material terms in this Agreement.

Scope of Work

Service Provider shall perform the services and deliverables described below in a professional and workmanlike manner consistent with industry standards. Service Provider shall furnish all labor, materials, equipment, supervision and services necessary to complete the Scope of Work.

Performance Guarantee and Measurement

Guarantee of Savings: Service Provider guarantees that implemented measures will result in annual energy cost savings equal to or greater than (the "Guaranteed Savings"), measured in accordance with the Measurement and Verification procedures below. If actual verified savings are less than Guaranteed Savings, Service Provider shall pay Client the deficiency amount as provided in this Agreement.

Payment Terms

Total Contract Price:

Late Payment: Any undisputed invoiced amount not paid within days of the invoice date shall accrue interest at the rate of or the maximum rate permitted by law, whichever is less.

Term and Termination

Term: This Agreement shall commence on the Start Date and shall continue until the End Date unless earlier terminated in accordance with this Agreement.

Start Date:   End Date:

Termination for Convenience: Either party may terminate this Agreement upon days' prior written notice to the other party. Termination shall be subject to payment for work performed, delivered materials and reasonable demobilization costs.

Termination for Cause: Either party may terminate if the other party materially breaches this Agreement and fails to cure such breach within thirty (30) days after written notice. Early termination by Client without cause may be subject to an early termination charge of .

Confidentiality

Each party shall maintain as confidential and shall not disclose to any third party any Confidential Information disclosed by the other party, except as required by law, court order or to perform the obligations under this Agreement. "Confidential Information" includes financial terms, baseline data, measurement results, proprietary designs, and other non-public information marked or reasonably understood to be confidential. Confidentiality obligations shall survive termination or expiration of this Agreement for a period of five (5) years.

Indemnification and Limitation of Liability

Each party shall indemnify, defend and hold harmless the other party from and against third-party claims arising from the indemnifying party's negligence or willful misconduct in performing its obligations. Except for claims arising from gross negligence or willful misconduct, neither party's aggregate liability under this Agreement shall exceed the total monies paid by Client to Service Provider under this Agreement.

Force Majeure

Neither party shall be liable for any delay or failure to perform due to events beyond its reasonable control, including acts of God, strikes, epidemics, government actions, utility interruptions or severe weather. The affected party shall provide prompt notice and make reasonable efforts to mitigate the impact.

Governing Law and Miscellaneous

Governing Law: This Agreement shall be governed by and construed in accordance with the laws of the State of , without regard to conflicts of law principles.

Assignment: Neither party may assign this Agreement without the prior written consent of the other party, except to an entity that acquires substantially all of the assigning party's assets or business to which this Agreement relates.

Notices: All notices shall be in writing and delivered to the addresses set forth in this Agreement or to such other addresses as either party may designate in writing.

Entire Agreement

This Agreement, including any exhibits, appendices and documents incorporated by reference, constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior discussions, proposals and agreements. Any amendments must be in writing and signed by authorized representatives of both parties.

Signatures

Service Provider

Printed Name:

By:

Date:

Client

Printed Name:

By:

Date:

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What an Energy Savings Agreement Is and when it applies

An Energy Savings Agreement (ESA) is a contractual arrangement between a property owner and an energy service provider that funds, installs, and maintains energy efficiency measures in exchange for shared or guaranteed cost savings. ESAs define baseline energy use, the scope of upgrades, measurement and verification (M&V) protocols, contract term, payment structure and remedies if guaranteed savings are not achieved. The agreement commonly includes inspection rights, reporting schedules, and transfer or assignment provisions for future property sales; it may also document whether incentives or rebates are assigned to the owner or the service provider.

Why organizations use an Energy Savings Agreement

An ESA delivers measurable cost certainty and aligns contractor incentives with performance. It reduces upfront capital outlay, clarifies responsibility for operations and maintenance, and codifies M&V to verify savings. ESAs can preserve incentive eligibility when structured correctly and are enforceable under ESIGN (15 U.S.C. ch. 96) and state e-signature law such as UETA where applicable.

Why organizations use an Energy Savings Agreement

Typical parties and stakeholders

ESAs are used by diverse organizations when energy upgrades are delivered under performance guarantees.

  • Commercial property owners and facility managers seeking capital-efficient upgrades and ongoing performance guarantees.
  • Energy service companies (ESCOs) that design, finance, install, and guarantee savings from efficiency projects.
  • Public agencies, municipalities, and universities pursuing long-term energy cost reductions and regulatory compliance.

Parties often include financiers, utility program administrators, and third-party M&V providers listed as additional signers or notice recipients.

Core components to include in a professional ESA

A well-drafted Energy Savings Agreement addresses scope, guarantees, measurement, payments, duration, and remedies with clear responsibilities and reporting.

Scope of Work

Precise list of equipment, services, and performance standards; attached exhibits and technical specifications for installers and inspectors.

Guaranteed Savings

Formula or baseline methodology that defines guaranteed energy or cost reductions, including adjustments for weather or occupancy changes.

Measurement & Verification

M&V plan describing methods, frequency, accepted standards (e.g., IPMVP), data sources, and responsibility for measurement costs.

Payment Terms

Timing and calculation of payments tied to realized savings, escrow or reserve accounts, and treatment of rebates or incentives.

Term & Transfer

Contract duration, renewal options, and procedures for assignment or transfer on property sale, including notice to mortgagees.

Remedies & Liability

Remedies for shortfalls, dispute resolution (mediation/arbitration), caps on liability, and termination rights.

Essential data points and compliance considerations

Parties: Legal entity name and authorized signer details.
Project Address: Street, city, state, ZIP for site-specific obligations.
Baseline Data: Historic energy use metrics and measurement period.
Guarantee Terms: Savings metric, calculation method, and adjustment rules.
Reporting Schedule: Frequency and delivery method for M&V reports.
Compliance Flags: HIPAA, FERPA, or utility-program conditions noted.

Step-by-step: Completing an Energy Savings Agreement

Follow these steps when preparing, executing, and implementing an ESA to minimize disputes and ensure enforceability.

  • 01
    Gather baseline data: Collect at least 12 months of utility usage and billing records.
  • 02
    Draft scope and M&V: Attach technical specs, IPMVP approach, and M&V responsibilities.
  • 03
    Review payment structure: Confirm calculation of guaranteed savings and reconciliation timing.
  • 04
    Execute and archive: Have authorized signers sign, notarize if required, and retain signed copies.

How to set up the online workflow for signatures and delivery

Configure the digital signing workflow so parties receive fields in the right order and M&V exhibits are attached before signature.

Field Configuration
Template Create reusable ESA template with exhibits and M&V clauses.
Conditional Fields Show payment clauses only if financing option selected.
Signer Order Set ESCO, owner, and financier signing sequence.
Authentication Require email link plus SMS code for key signers.

Where to file, send, and retain executed agreements

An executed ESA should be distributed to all parties and stored in secure records with controlled access and an audit trail.

  • Owner copy: Provide signed PDF and M&V schedule to the property owner.
  • ESCO copy: Retain an executed copy linked to project records and warranties.
  • Financier copy: Send to lenders or escrow agents if financing is used.
  • Archive: Store in secure document repository with retention policy.

Digital signing and technical delivery options

Use platforms that preserve an audit trail, support attachments, and integrate with your document systems.

  • Integrations: Connectors to NetSuite, Salesforce, Google Workspace supported.
  • Formats: Accepts PDF, Word DOCX, and Excel exhibits.
  • Authentication: Options include email link, SMS code, and advanced methods.

For regulated workflows choose solutions that provide tamper-evident signed PDFs, detailed audit logs, and optional signer authentication compatible with your compliance needs.

Typical timelines, deadlines, and reporting cadence

Plan timelines to include baseline collection, installation period, M&V start, interim reporting, and annual reconciliations.

Baseline Completion:

Complete historic energy baseline before project approval.

Installation Window:

Contract usually sets a fixed installation completion date.

M&V Start:

Begin measurement period on the agreed effective date.

Interim Reporting:

Provide monthly or quarterly savings reports per contract.

Annual Reconciliation:

Conduct yearly reconciliation to resolve variances.

Common preparation mistakes to avoid

  • Using an imprecise baseline period that fails to account for weather or occupancy changes, which creates disputes over measured savings.
  • Leaving the M&V methodology undefined or relying on informal meter reads rather than documented IPMVP-equivalent protocols.
  • Failing to define responsibility for data access and metering, which delays verification and monthly reporting.
  • Omitting assignment or transfer provisions for mortgages and escrows, complicating property sales and refinancing.

Risks and consequences of incorrect or incomplete ESAs

Performance Shortfall: Owner may seek damages or credit for unmet guaranteed savings.
Payment Disputes: Missed reconciliations can trigger withholding or arbitration.
Incentive Forfeiture: Misallocated rebates may be lost or require repayment.
Regulatory Noncompliance: Utility program violations can lead to penalties.
Lien Risk: Improperly recorded interests can affect title clearance.
Data Privacy: Improper handling of usage data may violate privacy rules.

Who can sign and bind the parties

Owner — Authorized Signer

An officer, managing member, or other individual with authority per corporate resolution or operating agreement. Confirm signing authority via board minutes or certified corporate resolution to avoid later ratification issues.

ESCO — Contracting Representative

The ESCO's designated signatory must have the legal capacity to bind obligations, warrant performance, and accept liability. If financing or assignment is involved, include financier signature or joinder if required.

Notarization, witness, and authentication flow for execution

Follow a clear sequence for signature collection, notarization (if needed), and recording to maintain chain-of-title integrity.

01

Prepare Final Draft

Complete exhibits and ensure attachments are appended before signature.

02

Confirm Signers

Verify authorized signer names and ID requirements in advance.

03

Send for Signature

Use ordered workflow with authentication for key parties.

04

Notarize if Required

Arrange in-person or RON notarization per state law.

05

Obtain Witnesses

If state or lender requires witnesses, collect their signatures concurrently.

06

Record Instrument

Record liens or notices with county recorder when appropriate.

07

Distribute Copies

Provide executed PDFs to owner, ESCO, and financier.

08

Start M&V

Begin measurement period per the agreed effective date.

How to update or amend an Energy Savings Agreement

Use formal amendment procedures to change guarantees, scope, or payment terms and ensure all parties execute written amendments.

01

Draft Amendment:

Describe changes and reference the original agreement.
02

Review Approvals:

Obtain internal approvals and financier consent if needed.
03

Execute Amendment:

Have same authorized signers sign and date.
04

Notarize if Required:

Notarize to match original execution practice.
05

Distribute Updated Copies:

Send to all stakeholders and update document repository.
06

Update M&V:

Revise baseline or measurement rules if scope changed.

FAQs and troubleshooting for Energy Savings Agreements

Answers to common execution, M&V, and compliance questions encountered when preparing or implementing an ESA.


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eSignature vendor comparison for executing Energy Savings Agreements

Compare common capability and pricing criteria for eSignature providers. signNow is listed first to align column order requirements.

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Audit Trail Yes Yes Yes Yes Yes
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