Savings pay for the upgrade.
Learning Track · Module 12: Contracts and tenders · Step 99 of 101
Showing content for Europe. Change the region at the top of the page.
An energy service company (ESCO) pays for the retrofit and often the controls. The owner pays the ESCO from the savings over a fixed period.
Europe: In the EU, this is an energy performance contract (EPC). The Energy Efficiency Directive encourages it in the public sector. Terms of 8 to 15 years are common.
Middle East: Government ESCO programmes are active, for example Etihad ESCO in Dubai and Tarshid in Saudi Arabia. Low tariffs make long terms common.
South Asia: India's EESL used an annuity model in the Street Lighting National Programme. The city pays from verified savings over the contract period. Many state and city tenders follow a similar model.
USA: Energy savings performance contracts (ESPC) are common for public agencies. Where the utility owns the lights, cities often negotiate an LED tariff with the utility or buy the lights first.
- Deemed savings: both sides agree the saving per light at the start. Simple, less accurate.
- Measured savings: meters measure energy against the baseline. More accurate.
Risks to check
- Who pays when lights fail during the contract?
- What happens if the tariff or burn hours change?
- Who owns the luminaires, nodes, and data at the end?
Sources
- Directive (EU) 2023/1791 (Energy Efficiency Directive)
- IPMVP
- EESL Street Lighting National Programme documentation
Changes: 30 October 2026: First publication: guides for Europe, the Middle East, South Asia, and the USA; failure library; tender clause library; comparisons; tools; downloads. See the changelog. Found a mistake? Report it.