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Energy Services Agreement

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Energy Services Agreement

This Energy Services Agreement (“Agreement”) is entered into as of by and between (Client) and (Provider).

Recitals

WHEREAS, Client owns or operates the premises located at and desires to procure energy efficiency, energy supply and related services;

WHEREAS, Provider represents that it has the technical skill and experience to perform energy assessment, design, installation, operation and maintenance services described herein; and

WHEREAS, the parties desire to set forth the terms and conditions under which Provider will provide the services and Client will pay for such services.

Scope of Work

Provider shall perform the services set forth in the Description of Services, including without limitation: energy audits, system design, supply procurement, installation of equipment, commissioning, monitoring, and routine maintenance. Provider shall perform all work in a professional manner consistent with industry standards and applicable codes.

Payment Terms

Provider shall submit invoices in accordance with the Payment Schedule. Client shall pay undisputed invoices within days of receipt. Payments shall be made in U.S. dollars unless otherwise agreed in writing.

Any amounts not paid when due shall accrue interest at the rate specified above and Client shall be responsible for reasonable costs of collection, including attorneys' fees.

Term and Termination

The term of this Agreement shall commence on and continue until unless earlier terminated in accordance with this Agreement.

Either party may terminate this Agreement for convenience upon days' prior written notice. Either party may terminate immediately for cause upon written notice if the other party materially breaches any obligation hereunder and fails to cure such breach within thirty (30) days after receipt of written notice.

Confidentiality

Each party acknowledges that it may receive Confidential Information of the other party. “Confidential Information” means non-public information that is designated as confidential or that reasonably should be understood to be confidential. Receiving party shall: (a) use Confidential Information solely to perform its obligations under this Agreement; (b) restrict disclosure to employees, contractors or agents with a need to know who are bound by confidentiality obligations no less protective than those set forth herein; and (c) exercise at least the same degree of care to protect Confidential Information as it uses to protect its own confidential information, but no less than reasonable care. Confidential Information shall not include information that: (i) is or becomes publicly available through no fault of receiving party; (ii) is rightfully received from a third party without breach of any obligation of confidentiality; or (iii) is independently developed without use of or reference to the disclosing party's Confidential Information.

Notices

Change Orders and Modifications

Any material change in the scope of services, schedule or price shall be set forth in a written change order signed by authorized representatives of both parties. Provider shall not be required to perform services beyond the agreed scope until a change order is executed.

Force Majeure

Neither party shall be liable for delay or failure to perform to the extent caused by events beyond its reasonable control, including acts of God, fire, flood, epidemic, labor disputes, governmental actions, or failures of energy supply, provided that the affected party promptly notifies the other and uses commercially reasonable efforts to resume performance.

Indemnification

Each party shall indemnify, defend and hold harmless the other party from and against claims, liabilities, losses and expenses (including reasonable attorneys' fees) arising out of bodily injury or damage to tangible property caused by negligent acts or omissions of the indemnifying party or its personnel in the performance of this Agreement, except to the extent caused by the negligence or willful misconduct of the indemnified party.

Governing Law

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

Entire Agreement

This Agreement, together with any exhibits or written change orders signed by both parties, constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior and contemporaneous understandings, proposals and communications, whether written or oral. No amendment shall be effective unless in writing and signed by authorized representatives of both parties.

Severability; Waiver

If any provision of this Agreement is held invalid or unenforceable, the remaining provisions shall remain in full force and effect. The failure of either party to enforce any right shall not constitute a waiver of that right.

Client Name:

By:

Date:

Provider Name:

By:

Date:

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What an Energy Services Agreement covers

An Energy Services Agreement (ESA) is a contract between an energy service company (ESCO) and a facility owner or customer that defines the scope, responsibilities, and payment structure for energy efficiency upgrades, distributed generation, or demand management projects. Typical ESAs cover performance guarantees, measurement and verification (M&V) procedures, project scope, timelines, payment mechanisms such as shared savings or fixed fees, and maintenance obligations. In the U.S., ESAs are often used for performance contracting, federal and state incentive compliance, and capital-constrained clients seeking off-balance financing for efficiency improvements.

Why an ESA matters for project certainty

An Energy Services Agreement aligns project risk and incentives, documenting guaranteed energy savings, payment terms, and maintenance obligations. It provides certainty for budgeting, supports access to incentives or financing, and creates measurable accountability through M&V standards and defined remedies for underperformance.

Why an ESA matters for project certainty

Who typically enters Energy Services Agreements

Organizations that commonly enter ESAs include public agencies, commercial property owners, and energy service companies coordinating projects and financing.

  • Public sector facilities and municipalities managing utility budgets and long-term infrastructure investments.
  • Commercial property owners and managers seeking capital-efficient upgrades and measurable operating cost reductions.
  • ESCOs, contractors, and financiers establishing performance guarantees, M&V protocols, and payment structures.

Signatories often include procurement, facilities, legal, and finance representatives who jointly review scope, risk allocation, and payment terms.

Representative roles that complete or sign an ESA

Facilities Director

A Facilities Director evaluates ESAs for capital-constrained campuses, coordinating technical review, budget approval, and long-term maintenance plans. They compare vendor guarantees, ensure procurement compliance, and secure finance arrangements to align energy upgrades with operational priorities.

ESCO Project Manager

An ESCO Project Manager manages installation, M&V execution, and warranty coordination. They prepare technical exhibits, liaise with financial partners, document baseline adjustments, and respond to performance shortfalls with corrective measures or recalibration of systems.

Core sections to include in a professional ESA

Core sections of a professional Energy Services Agreement clarify responsibilities, performance metrics, financial terms, risk allocation, and remedies for shortfalls.

Scope of Work

Define equipment, installation tasks, performance targets, baseline energy usage, project schedule, and acceptance criteria. Attach technical specifications and manufacturer warranties as enforceable exhibits to avoid ambiguity.

Performance Guarantee

Specify guaranteed energy or cost savings, measurement method, reporting cadence, minimum performance thresholds, and remedies such as monetary adjustments, extended service, or corrective measures for shortfalls.

Payment & Financing

Describe pricing model—shared savings, fixed fee, or lease—payment schedule, invoicing, interest on late payments, responsibility for taxes, incentives, and conditions for early termination or buyout.

Measurement & Verification

Detail M&V protocol (IPMVP or agreed method), data sources, baseline adjustments, meter ownership, data access rights, and dispute resolution procedures for contested savings calculations, and independent verification options.

Operations & Maintenance

Assign O&M responsibilities, spare parts provisioning, routine inspection schedules, emergency response obligations, and performance testing intervals to ensure sustained efficiency and to preserve warranty coverage.

Liability & Insurance

Allocate liability caps, indemnities, required insurance types and limits, force majeure treatment, and limitation of consequential damages; specify certificates of insurance and naming conventions for additional insureds.

Required data elements to include

Parties: Full legal names and entity types.
Effective Date: Use MM/DD/YYYY for start date.
Scope: Detailed equipment and service descriptions.
Compensation: Payment model, schedule, invoicing terms.
M&V: Protocol, baseline, meters, reporting cadence.
Signatures: Authorized signers, titles, dates required.

Step-by-step: completing an ESA

Follow this sequence to complete and execute an Energy Services Agreement accurately and retain required records.

  • 01
    Prepare Documents: Gather proposals, technical specs, and incentive paperwork.
  • 02
    Define Baseline: Agree on historical usage and measurement period.
  • 03
    Set Financials: Document payment model, term, and finance costs.
  • 04
    Execute & Record: Obtain signatures, notarization if required, and store copies.

How to configure an online ESA workflow

Configure an online workflow to collect signatures, route approvals, and record M&V attachments securely with audit trail.

Field Configuration
Signer Order Sequential or parallel routing options
Authentication Email, SMS code, or KBA
Conditional Fields Show or hide fields by signer role
Attachments Attach technical exhibits, plans, and M&V reports

Where to send executed documents and records

Identify recipients and filing destinations for the executed Energy Services Agreement and its supporting documentation.

  • Customer Records: Store executed copies with procurement and facilities departments
  • Vendor Files: Provide ESCO with signed agreement and technical exhibits
  • Finance & Accounting: Submit invoices and payment schedule to accounts payable
  • Regulatory Filings: File required incentive paperwork and rebate claims with agencies

Digital signing, formats, and security considerations

Digital signing and secure distribution reduce execution time and centralize records for Energy Services Agreements.

  • Accepted Formats: PDF, Word DOCX, and Excel
  • Integrations: Salesforce, NetSuite, Google Workspace supported
  • Security: AES-256 at rest; TLS 1.2/1.3 in transit

eSignature vendor pricing and capability snapshot

Common vendor pricing and feature comparison for eSignature providers relevant to executing Energy Services Agreements.

signNow DocuSign Adobe Sign PandaDoc HelloSign
Starting Price $8/user/mo $15/user/mo $14/user/mo $19/user/mo $15/user/mo
Free Trial 7-day free trial Varies Varies Varies Varies
Bulk Send Yes Yes Yes Yes No
Audit Trail Yes Yes Yes Yes Yes
HIPAA Compliant Yes Yes Yes No No
Envelope Cap No cap 100 envelopes/user/year Varies by plan Varies Varies

How to save and preserve executed ESAs

Once signed, preserve multiple formats and supporting exhibits to ensure retrievability, compliance, and compatibility with incentive or audit requests and legal review copies.

PDF Archive

Save a PDF/A-compliant copy for long-term archiving; include an audit trail and embedded signatures or certificates to preserve tamper-evident proof of execution and signer attribution.

Editable Source

Keep the original Word or native contract file with tracked changes and version history to allow amendments and to document negotiation history for legal review.

Spreadsheet Data

Export M&V meter data and savings calculations to CSV or Excel; store raw measurements, formulas, assumptions, including timestamps and units for independent verification.

Supporting Docs

Attach equipment cut sheets, manufacturer warranties, permitting approvals, incentive award letters, and any lease amendments affecting responsibility or cost allocation and insurance certificates for contractor.

Timelines and deadlines to watch

Key deadlines and processing expectations for negotiation, execution, and claims under an Energy Services Agreement are listed below.

Negotiation Period:

Typical 30 to 90 day negotiation window before signature.

Execution Deadline:

Sign within agreed timeline to lock pricing and incentives.

M&V Reporting:

Regular reports monthly or quarterly per contract schedule.

Incentive Claims:

Submit rebate or incentive paperwork by program deadlines.

Warranty Claims:

Initiate claims within warranty periods specified in the agreement.

Project milestones from proposal to verification

Sequential milestones from proposal to performance verification help manage risk and track progress for Energy Services Agreements.

01

Proposal Submission

ESCO submits technical proposal and savings estimate.

02

Contract Negotiation

Parties finalize scope, pricing, and M&V methodology.

03

Execution & Funding

Signatures secured, financing closed, and deposits made.

04

Commissioning & M&V

Systems commissioned, M&V begins, and reporting starts.

Common preparation mistakes to avoid

  • Failing to define baseline energy consumption precisely leads to disputes over guaranteed savings and can result in payment adjustments or litigation.
  • Using vague performance metrics or omitting M&V methodology undermines enforceability of savings guarantees and complicates validation by third-party auditors.
  • Neglecting to assign responsibility for O&M, spare parts, and routine testing causes service gaps and may void manufacturer warranties.
  • Failing to secure clear authority and corporate approvals before signing can make the agreement voidable and expose parties to contractual risk.

Key risks and potential contractual consequences

Performance Shortfall: Financial adjustments or liquidated damages.
Termination Risk: Early termination fees apply.
Regulatory Noncompliance: Loss of incentives or penalties.
Warranty Void: Improper installation or unauthorized changes.
Data Disputes: Conflicting M&V results require arbitration.
Credit Exposure: Financing defaults affect credit.

Representative use cases and outcomes

Examples show how ESAs are implemented across public and private projects with varied financing and M&V approaches.

Municipal Streetlighting

A mid-sized city replaced streetlights with LED under an ESA that promised 45% energy savings and no upfront capital from the city.

  • City payments matched realized savings monthly.
  • The ESCO installed meters and provided quarterly M&V reports; the city escrowed payments until acceptance, achieving verified savings sooner than projected and preserving municipal budget through a performance-based payment structure.

Commercial Office Retrofit

A commercial landlord implemented an ESA across three office buildings, using shared-savings financing to replace chiller systems and LED lighting without capital expenditures.

  • Lease amendments allocated savings to tenants.
  • Tenants agreed to adjusted utility credits; the ESCO provided annual M&V and warranty support, enabling higher occupancy rates and documented cost savings that improved property valuation for refinancing in subsequent appraisal cycles.

Frequently asked questions about Energy Services Agreements

Answers to common questions about drafting, signing, and enforcing an Energy Services Agreement in U.S. jurisdictions.


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