An ‘Energy Management Contract’ is a multi-year agreement between a client (large corporation or city) and an Energy Management Contract Company (EMCo). The task of the latter party is to provide lighting replacement for their client’s existing set-up which is considered as obsolete and outdated. Incandescent, Halogen, Fluorescent, High Intensity Discharge and High Pressure Sodium Light set-ups are often replaced with LED Lighting technology.
The premise of an EMC contract comes from the fact that the client does not have to initiate capital to replace their existing lighting infrastructure. EMCo will be responsible in providing all LED Lighting equipment with their best intention to maximize energy savings for the client. It is only when these energy savings are realized does the end client have to repay the cost of the newly installed lighting devices. At the same time, EMCo will not be at risk as banks or investors often provide the financing for the new equipment.
An EMC contract is expected to last at least several years and upon expiration of its tenure, clients are given the choice of renewing their contract, in which new lights would be replaced for the client with a new contract determined upon signing.
EMC contracts are seen as an agreement where the client is able to upgrade their lighting facilities with minimal financial burden and risk, creating a beneficial scenario for both parties.
