Pay-for-Performance

– Rewarding savings instead of measures

Making buildings more energy efficient is critical to meet climate goals, avoid the construction of new power plants, reduce grid infrastructure costs, and save customers money on energy bills.

Pay-for-Performance (P4P) links payment to proven savings. P4P schemes make use of an innovative mechanism to deliver energy savings through a flexible approach allowing innovation, reduction of costs and increasing customer value.

Most current energy efficiency programs work through rebates and incentives paid upfront for specific technical measures and estimated energy savings. In P4P schemes, those who deliver energy efficiency are only paid after the efficiency improvements have been implemented and based on proven and measured savings.

P4Ps are emerging in the US as an innovative way to increase energy savings by engaging energy providers, attracting investors and motivating consumers to cut energy consumption. With increased confidence in its performance, energy efficiency can be rewarded as an energy system resource.

How does it work?

Here are two examples of P4P schemes from the US: