Energy service companies (ESCOs) develop, design, build, and arrange financing for projects that save energy, reduce energy costs, and decrease operations and maintenance costs at their customers' facilities. In general, ESCOs act as project developers for a comprehensive range of energy conservation measures (ECMs) and assume the technical and performance risks associated with a project.

ESCOs are distinguished from other firms that offer energy-efficiency improvements in that they use the performance-based contracting methodology. When an ESCO implements a project, the company's compensation is directly linked to the actual energy cost savings.

The substantial energy-efficiency retrofits and renewable energy technologies inherent in energy savings performance contract (ESPC) projects typically require a large initial capital investment and may have a relatively long payback period. Debt payments are tied to the energy cost savings guaranteed for the project, so the agency pays for the capital improvements of the ESPC project with the money saved by the project (i.e., the difference between pre-installation and post-installation energy use and other related costs).

“ESCO” means a firm / company engaged in providing technical consultancy & other support / solutions to the Host with the objective of achieving savings in energy through an underlying ESPC.

The ESCOs empaneled with Bureau of Energy Efficiency (BEE) shall be eligible under the PRSF. Further, the JVs / Consortia of entities shall also be eligible subject to the following: