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Chapter 4

Financing

Energy Projects through

Performance Contracting

Shirley J. Hansen, Ph.D.

Since soaring energy prices and the growing need for energy ef-
ficiency hit the center of our radar screen in the 1970s, there has been
growing recognition that using energy more efficiently is good for the
economy and the environment. It’s just good business. Yet survey after
survey reveals that many organizations put off energy-efficiency work
for one major reason: money.
Organizations either lacked the money, or those that had the
funds were inclined to spend their money elsewhere. The reasons are
legitimate: “We must use the money to invest in new production equip-
ment. We must buy new math books. The payback is not short enough,”
etc., etc. For years many of us thought it was due almost entirely to
the discomfort top management felt when the subject of “energy” was
introduced. It certainly played a part, but in retrospect we now realize
that other concerns were at play.
The horrible truth is that much of top management is not inter-
ested in ENERGY! They don’t want to hear about gigajoules or British
thermal units. CEOs and CFOs do not buy energy; they buy what it
can do. How can they worry about the efficiency of something that is
virtually non-existent in their lives? The only time it seems to reach their
consciousness is when there is a shortage, a sudden power outage, or
a spike in prices.
Many years ago, a dear friend who was in top management in a
major corporation, gave me some sage advice, that is fundamental to