European Energy Service Initiative EESI...Final brochure (1.000 copies) The English brochure was...
Transcript of European Energy Service Initiative EESI...Final brochure (1.000 copies) The English brochure was...
European Energy Service Initiative
EESI Publishable Report
2
The sole responsibility for the content of this publication lies with the authors. It does not necessarily reflect the opinion of
the European Communities. The European Commission is not responsible for any use that may be made of the information
contained herein.
http://www.european-energy-service-initiative.net
Author: Berliner Energieagentur GmbH
September 2012
Project Coordinator
Berliner Energieagentur GmbH, Französische Straße 23, 10117 Berlin (Germany)
Partners
Graz Energy Agency (GEA), Austria
Josef Stefan Institute (JSI), Slovenia
Norwegian Energy Efficiency Inc. (NEE), Norway
The Energy Efficiency Center (SEVEn), Czech Republic
Cenergie, Belgium
Romanian Agency for Energy Conservation (ANRE), Romania
Rhônealpénergie-Environnement (RAEE), France
Energy Center Bratislava (ECB), Slovakia
Swedish Environmental Research Institute (IVL), Sweden
3
Executive Summary
The European Energy Service Initiative (EESI) has broadly promoted the implementation of
Energy Performance Contracting (EPC), thus contributing strongly to the establishment of
effective energy service markets in Europe. Within EESI, existing standards and tools for EPC
and other energy services from earlier European projects such as ClearContract and
Eurocontract served as the basis for EPC promotion as well as for further development of
EPC models (such as EPC plus, EPC light, IEC).
Local and regional capacity-building has been achieved in the EESI project through national
online-help desks, frequent training events for local authorities, companies, and multipliers,
as well as consultancy for applying and advancing EPC-standard procedures and
instruments in concrete pilot projects. The promotional campaign implied the integration of
EPC issues in national trade fairs and the high-profile annual awarding events of the
“European Energy Service Award” (EESA). Based on the experience from pilot projects and
development of standards in all partner countries, policy recommendations were derived to
further support the energy services market in Europe.
EESI made a strong contribution to the further establishment and implementation of
standardized EPC models in Europe. This underlined the potential of EPC as a prime
instrument for the implementation of the Energy Service Directive, for the respective
National Energy Efficiency Action Plans (NEEAP) and for the further development of a
European Energy Service Market.
4
Contents
1 European Energy Service Initiative.........................................................................................5
1.1 Project Data...........................................................................................................................5
1.2 Project Partners ....................................................................................................................6
1.3 Results ...................................................................................................................................7
1.4 Performance Indicators.........................................................................................................8
2 Introduction to Energy Performance Contracting....................................................................9
2.1 Definition of EPC ...................................................................................................................9
2.2 Energy Audits ......................................................................................................................10
2.3 Determination of the Energy Costs Baseline ......................................................................12
2.4 Public Tender ......................................................................................................................13
2.5 Energy Performance Contracts ...........................................................................................16
2.6 Energy Savings Verification.................................................................................................17
2.7 Financing .............................................................................................................................17
2.8 Advanced Models of EPC ....................................................................................................19
3 Market Overview of EPC in the EESI Countries......................................................................21
4 EPC Barriers ........................................................................................................................29
4.1 Legislative and regulatory barriers......................................................................................29
4.2 Awareness and knowledge barriers....................................................................................33
4.3 Financial barriers.................................................................................................................35
4.4 Implementation barriers .....................................................................................................37
5 Success and impact of EESI ..................................................................................................38
5.1 Overall success stories ........................................................................................................38
5.2 Success and impact by country ...........................................................................................40
6 Policy Recommendations.....................................................................................................61
7 Further Information ............................................................................................................64
8 Abbreviations......................................................................................................................65
5
1 European Energy Service Initiative
1.1 Project Data
Project Duration: June 2009 – June 2012
Project Website: www.european-energy-service-initiative.net
Project Coordination: Berlin Energy Agency (BEA)
Target Groups:
• Representatives from public sector real estates and other decision makers in local
administrations with respect to communal building stock, e.g. representatives from
the Finance Department, Authorization Department, Planning and Housing
Department
• Private real estate companies
• Other public building users.
Key Actors:
• Energy Service Companies (ESCOs), Energy Agencies and Financial Institutions;
• Policy-Makers on National and European Policy Level;
• Climate Networks, National ESCO Associations, etc.
Main Objectives:
• Local and regional capacity-building through targeted
information and consultation for relevant decision
makers (e.g. real estate managers, local treasurers,
political stakeholders, financial institutions);
• Further development of a quality standards for EPC
projects;
• Broad promotion and implementation of EPC pilot
projects with the public sector as leading example;
• Advice to policy-makers on the potential contribution of
energy services to national energy efficiency objectives.
Fig. 1: EESI Countries
6
1.2 Project Partners
• Berlin Energy Agency (BEA), Germany
• Graz Energy Agency (GEA), Austria
• Josef Stefan Institute (JSI), Slovenia
• Norwegian Energy Efficiency Inc. (NEE), Norway
• The Energy Efficiency Center (SEVEn), Czech Republic
• Cenergie, Belgium
• Romanian Agency for Energy Conservation (ANRE), Romania
• Rhônealpénergie-Environnement (RAEE), France
• Energy Center Bratislava (ECB), Slovakia
• Swedish Environmental Research Institute (IVL), Sweden
7
1.3 Results
• 30 EPC pilot projects (classical & advanced models) in 10 countries initiated, resulting
in CO2 savings of more than 45.000 t per year;
• National EPC helpdesks in 10 countries;
• Websites on EPC online with constantly updated news, hotline contacts, good practice
examples and tools from 10 countries;
• Promotion of EPC in more than 80 events across Europe, among this three high profile
European Energy Service Award (EESA) events
• More than 60 EPC trainings carried out for municipalities, financial institutions and
ESCOs with more than 2000 participants;
• 195 national online newsletters, press releases and media coverings were placed to
promote EPC.
8
1.4 Performance Indicators
Specific objectives Target of success Action achieved
Information and capacity
building of local and
national decision makers on
existing EPC standards
Help-desks in 10 European
countries
All 10 helpdesks have been installed.
The contacts can be found on the
national websites and on the national
leaflets
1 central website (English)
10 sub-sites in national language
1 central website and 10 national
websites are online with constantly
updated news, hotline contacts, good
practice examples, and tools
40 national fairs or similar events Promotion at 88 events
52 training events with projected
520 participants
62 Training events carried out with
more than 2000 participants
Initiating pilot EPC projects 24 pilot projects in 10 countries 30 pilot projects have been initiated
during the project, 2 of them are
Advanced EPC
Policy recommendations 10 country specific policy papers
1 European position paper on EPC
10 national policy recommendation
papers were developed during the
project and 1 European position paper
European Information and
Promotion of EPC
3 European Energy Service Award-
EESA events (2009, 2010, 2011)
EESA 2009 bestowed in 6 categories in
Brussels
EESA 2010 was bestowed in September
2011 in BOZAR in Brussels
EESA 2011 was bestowed in the
framework of the EUSEW 2012 in
Brussels
47 national online newsletters 42 newsletters have been sent to
stakeholder groups. Visitors of the
website can subscribe to 10 national
newsletters
29 national press releases
95 media coverings
34 press releases and 125 media
coverings were placed
40 presentations at national and
European seminars / conferences
88 presentations were held and several
more are planned
Final brochure (1.000 copies) The English brochure was elaborated,
printed and distributed
9
2 Introduction to Energy Performance Contracting
2.1 Definition of EPC
Energy Performance Contracting is a proven and cost-efficient instrument for tapping
existing energy saving potentials in the buildings sector. An Energy Service Company (ESCO)
implements a customized energy service package, consisting of planning, building,
operation & maintenance, optimization, fuel purchase, (co-) financing and user behaviour.
The contract between ESCO and building owner contains guarantees for cost savings and
takes over financial and technical risks of implementation and operation for the entire
project duration of typically 5 to 15 years. The full EPC service or main share of it is paid off
by realized energy cost savings.
EPC deals with the optimization across the trades of automation installations in buildings
and building operation by an ESCO in the form of a co-operation based on partnership.
Typical modular performance components of the ESCOs services are financing, planning and
installation of components for energy generation, distribution and usage as well as their
operation and maintenance, see Fig. 2. Integration and training of the users are often part
of EPC as well.
Fig. 2 Typical modular structure of EPC projects.
Source: after Bleyl, Schinnerl, 2008.
10
Since there are various European model contracts and different approaches for EPC, the
EESI project defines the main distinguishing feature of EPC as the financing of the
investments via the guaranteed cost savings achieved through improved energy efficiency.
Fields of application for EPC are objects of existing buildings. The most favourable customer
group in Europe is the public sector. Several buildings may be combined into one contract
as a building pool.
The following sections 2.2 to 2.8 give a brief description of key issues when developing and
implementing EPC projects1:
• Energy Audits
• Determination of the energy cost baseline
• Public Tender
• Energy Performance Contracts
• Energy Savings Verification
• Financing
• Advanced Models of EPC
2.2 Energy Audits
When preparing a project on energy savings in buildings and facilities, it is necessary to
begin with determination of the initial situation of the facility. Based on such an analysis, (a
combination of) measures to improve the energy efficiency and effectiveness of the facility
can be suggested. The final combination of measures that will be implemented depends
mainly on the economic analysis of the suggested options. An energy audit is one possible
option of performing such an initial analysis. The energy audit can also provide
recommendations whether EPC is suitable for the respective facility.
In any case, if the customer decides to use EPC, an energy audit cannot replace the
following in-depth analysis, which an ESCO needs to carry out when implementing the
measures under EPC. The reason for this is that the analysis carried out by the ESCO is very often
more focused (neglecting e.g. windows or other building parts not likely to be included in EPC) than
is usually the case in “regular” energy audits, and at the same time the analysis has to be much
more thorough in the relevant areas. Furthermore, if the energy audit has been prepared before an
EPC tender process, the ESCO may need to review all the data in the audit and additional other facts
necessary for EPC.
1 For more detailed information, please see the ”Standard Documents” on the EESI website:
http://www.european-energy-service-initiative.net/eu/toolbox/standard-documents.html
11
With respect to EPC, the energy audit is therefore an important tool in the initial state of
the project. However, if not carried out by the ESCO itself for the purposes of EPC (or by an
external auditor, but with the view of the needs of EPC), it will always have to be
complemented by further analyses.
Content of Energy Audits
An energy audit as a tool for evaluation of the existing levels of energy use and
management in the facilities should contain:
• Identifying data;
• Description of the initial situation;
• Evaluation of the initial situation.
The description of proposed measures is accompanied by a calculation of the total amount
of technically attainable energy savings. The selected option which is then recommended
for realization should further contain:
• Economic evaluation;
• Environmental evaluation.
Outputs of the energy audit are:
• Evaluation of the existing energy management system;
• Total amount of attainable energy savings (in technical units);
• Proposal of optimum combination of measures (including economic evaluation);
• Recommendation of the energy auditor for the realization of an energy efficiency
project;
• Evaluation of the use of renewable energy (RE) sources and Energy Performance
Contracting for the specific audited subject (including economic evaluation).
12
2.3 Determination of the Energy Costs Baseline
The basis of the energy costs baseline is the energy consumption in a reference year (e.g.
past year before implementation of EPC) in connection with the energy supply prices
applicable to the client at a certain key date (e.g. 31.12. reference year). In some EPC
projects it might be reasonable to demand the inclusion of additional media in the baseline
such as water supply and sewage disposal. For reasons of convenience, the term energy
costs baseline will be used hereafter.
The baseline is to be provided to all bidders in the invitation to tender. They will prepare
their saving forecast on this basis. In the context of the implementation planning, the
baseline might be finally checked and confirmed by the contractually bound ESCO.
Here are some general remarks regarding the determination of the energy costs baseline:
• The energy costs baseline should be above a certain threshold (about €200,000 in
most countries) for a project to be suitable for EPC. Only then the relation between
basic expenditure and achievable savings will be interesting for ESCOs in economic
terms. Pooling of several buildings into a single EPC contract can be an option to
aggregate a reasonable volume for the baseline. In special cases, e.g. involving self-
financing by the client, smaller project sizes can also be realized.
• Higher energy prices are a better refinancing basis for efficiency measures. Therefore,
higher reference prices should rather be estimated for the baseline in the case of
price fluctuation or foreseeable price increases.
• Maintenance costs are usually not included in the baseline and, accordingly, any
maintenance cost saving (which may well be achieved) will not be rated as a cost
saving within the meaning of the saving guarantee. Exceptions are possible at the
client's request if the amount of the achievable cost saving can be forecasted in the
run-up to the invitation to tender.
• All consumption units should be stated in kWh (if applicable with the appropriate
factors/calorific values) to take account of possible changes of the energy sources
(e.g. from oil to gas). For the calculation of CO2 emission savings, the current CO2
emissions and factors have to be shown in the baseline as well.
Baseline Design
The consumption of the respective energy demand types of the most recent completed
calendar year preceding the EPC project will be used as the basis for the ESCO's saving
guarantee and the annual proof of savings to be provided later on. That year is called
reference year (baseline year).
13
To ensure that the selected year is representative, the underlying energy consumption
figures should be compared to those of the two preceding years. As an alternative, an
average consumption value of the three previous years may be defined as baseline. The
calculation methodology has to be defined in the EPC contract. As specific energy prices for
each metering point, if applicable broken down by price components such as kilowatt hour
rate and basic price, these prices should be shown explicitly as reference energy prices in
the EPC contract prior to the start of EPC.
Fig. 3 Baseline – step by step
2.4 Public Tender
Public organizations are usually required to carry out public tenders to implement EPC.
However, some essential parts of such procedures may also be useful for private customers
to obtain the best EPC bid (e.g. bid evaluation, demand definition, etc.). Based on the
acquired experience, it is recommended that the invitation for tenders for public contracts
takes place in the form of a negotiated procedure with disclosure. This method allows the
contracting authority to discuss with the best tenderers the final terms of the proposed
contractual relationship even after the bid submission and to select the future contractor
solely on the basis of these negotiations. Prequalification of eligble tenderers is
recommended since EPC is a complex energy service that needs experience for
implementation on both sides, client and ESCO.
14
Fig. 4 Schedule of EPC tender procedure (example of German procedure, differences in other countries are
due to national procurement regulations).
15
With respect to the long term duration of the EPC contract, it is always helpful to have the
decision on the future manner of the utilisation of the building or premises accepted by the
owner who is authorised to approve future commitments of the client. Public clients with
little experience in EPC may use the help of experienced organisations such as energy
agencies or consulting companies for project development and tender management.
16
2.5 Energy Performance Contracts
The Energy Performance Contract between an ESCO and the building owner usually
contains guarantees for energy (cost) savings and regulates allocation of financial and
technical risks for implementation and operation during the entire project duration of
typically 5 to 15 years.
Since there are various European model contracts and different approaches for EPC the EESI
project defines not ONE European model contract but the main distinguishing features of
Energy Performance Contracts and makes different proven model documents available
(please refer to the EESI website http://www.european-energy-service-initiative.net).
The main components of an Energy Performance Contract (based on the reviewed model
contracts) can be summarized as follows:
1. Guarantee of savings – the Energy Services Company guarantees a certain amount
of yearly savings to be achieved throughout the duration of the contract. The
contract also has to clearly define what happens,
• If the guaranteed savings are not achieved, i.e. there has to be a clear
description of how the ESCO settles the negative difference between
guaranteed savings and actual savings or;
• If the guaranteed savings are exceeded, i.e. there has to be a clear description
of how the excess savings are distributed between the client and the ESCO.
2. The volume of investment to realize the guaranteed savings and a commitment by
the client to pay for the investment after its installation (via the fee to the ESCO).
3. Clear definition of a baseline (reference scenario) of the future energy consumption.
It is set in physical units (e.g. kWh). For all financial and economic purposes, the
reference scenario is calculated in prices of the reference year.
4. Obligation of the ESCO to provide a report on yearly savings evaluation. In this
evaluation, the ESCO documents to the client the actual amount of achieved savings
in the respective year – in physical as well as monetary units.
5. Responsibility of the ESCO for correct design of the energy saving measures and
their realization.
6. Obligation of the client to provide proper conditions for realization of the energy
saving measures.
7. Planned duration of installation of the investment.
8. Way of transfer of the installed energy saving technologies to the ownership of the
beneficiary.
17
9. Means of payment for the services and savings. Usually these are paid as a monthly
fixed advanced payment agreed by both parties. At the end of each year of the
contract, after the savings evaluation (as in 4), the payments are settled.
10. Declaration of the purpose of operation of the facility on which the Energy
Performance Contract is effectuated.
11. Duration of the contract.
12. Method of recalculation of the guaranteed savings in case any of the input
parameters differs from the presumptions defined in the energy costs baseline.
2.6 Energy Savings Verification
In each contract year of the EPC, the ESCO has to provide a proof of energy savings. The
basis for this are the energy bills for the contract buildings which the client is obliged to
provide for the relevant settlement periods. If defined so in the contract, also meter reading
or reports of the energy management tools may be sufficient.
The ESCO then has to determine the adjusted net amount of savings actually achieved using
the calculation rules in accordance with the EPC contract, in a manner which is
comprehensible to the client, enter the amount and its remuneration claim into the
settlement sheet and present the sheet to the client.
The calculation method for the settlement is analogous to that for the baseline
determination. In addition, some adjustment steps are necessary (day, price, climate and
usage adjustment) that establish comparability between reference year and settlement
year. For the determination of the settlement, either the calculation file for the energy
costs baseline handed over upon signing of the contract is updated or the contractor uses
proprietary files/modules.
2.7 Financing
Availability of financial resources is one of the key success factors for the implementation of
EPC projects. (Pre-) Financing for energy efficiency investments has become increasingly
burdensome for ESCOs as well as their customers, because they put stress on their credit
lines, credit liabilities and fixed assets burden balance sheets. Various international
accounting guidelines (like Basel II, III, US GAP) cast their shadows to impede financing
routines.
18
As a consequence financing is not a stand-alone-issue, but must be customized to the given
project circumstances. Therefore we advocate a comprehensive look at the sum of all
business implications of any finance option. A sole look at direct financing cost as expressed
in interest rates or fees will not deliver your optimal financing solution. The best financing
package depends on the borrower’s background, subsidies as well as the specific project
cash flow. And it requires the integration of bookkeeping and tax consultancy into the
financing decision.
Customer Demand Profile – A Systematic Approach
For the selection of the right financing tool a close look at a variety of categories concerning
all players of a project and the project itself has to be taken. Only a comprehensive look at
the sum of the financing implications will allow deciding for the best financing option.
The goal of any finance planning is to minimize overall capital cost, secure liquidity and to
reduce transaction cost. But also legal aspects, tax implications and balance sheet issues
have to be considered.
Of course, financing needs depend on the individual circumstances of the borrower. And
they depend on the specific project. Nevertheless we aim at developing a customizable
methodology for describing generic characteristics of financing needs for energy efficiency
projects, which can be adapted to the specific situation. Here, we are talking about
properties such as financing cost and terms, legal implications, tax and balance sheet effects
as well as management expenditure.
These financing characteristics should be put into a demand profile, which can be used to
get a structured overview of the different implications of energy efficiency project financing
issues. This profile can be applied to different financing options offered on the market in
order to find the best suited fit, taking all aspects into account.
In order to structure financing implications, the relevant categories are:
1. Direct financing cost (financing conditions, interest rates, fees …);
2. Legal aspects (Rights and duties, ownership, contract cancellation, end of term
regulations …);
3. Required collateral (securities) by financing institution;
4. Taxation implications (VAT and purchase tax, corporate income tax, acquisition of
land tax …);
5. Balance sheet & accounting implications (who activates the investment (� on or off
balance?) balance sheet effects like credit lines, performance indicators Maastricht
criteria …);
6. Management expenditure (transaction cost, comprehensive consultancy …).
19
2.8 Advanced Models of EPC2
The idea of “Advanced EPC” is to develop and promote EPC models including new contract
models, additional services or specific objectives as quality-based products. This aims to
open up EPC to more customers groups by meeting their specific requirements. EESI
contributed to the cross-national establishment of such “Advanced EPC” with the following
models:
“EPC plus” – EPC with comprehensive refurbishment:
“EPC plus” extends the service of the ESCO to comprehensive
structural measures on the building shell like insulation or
window replacement. These services are usually not part of the
classical EPC because of excessively long pay-back periods. The
contractual arrangement contains special regulation on
financing. Usually the customer has to pay a share of the
investment through a grant or by combination of EPC with
subsidy programs. EPC plus is very suitable in buildings with
high need for renovation.
The combination of both structural renovation and energetic optimization leads to high
energy savings up to 50%. Examples have been developed in e.g. the Czech Republic and
France.
“Integrated Energy Contracting (IEC)”:
The Integrated Energy Contracting Model combines the objectives of reduction of energy
demand through the implementation of energy efficiency measures and efficient supply of
the remaining useful energy demand. The ESCO will take over implementation and
operation of the energy service package at its’ own expenses and responsibility according to
the project specific requirements set by the client. In return, the ESCO will get
remuneration for the useful energy delivered (i.e. per kWh), depending on the actual
consumption as well as flat rate service remuneration for operation & maintenance,
including quality assurance. IEC is a combination of elements of ESC and EPC. This model
has mainly been used in Austria so far.
“EPC light” – energy management with guaranteed elements:
EPC light aims at achieving energy savings mainly through optimization and organizational
measures with low or no investments in technical equipment. The ESCO acts as an external
energy manager taking over the responsibility to operate and optimize the energy related
installations (heat boilers, building automation, lighting control).
2 For more detailed information, please see the ”Advanced Models of EPC” on the EESI website:
http://www.european-energy-service-initiative.net/eu/toolbox/advanced-models-of-epc.html
20
Since pay-back of high investments on hardware is not necessary in EPC light, the contract
duration is short (2-3 years). In this model the energy savings are still guaranteed by the
ESCO. This model is very interesting for customers with little capacity or few resources for
sustainable energy management. The first EPC light pilot project was developed in Berlin.
“Green EPC” – EPC with special focus on renewable technologies:
Since climate protection is one major concern of policy and
motivation to energy saving measures, advanced EPC models with
special focus on reduction of green house gas emissions are
essential. EESI developed in Sweden, Germany and France
standards, models and examples with special focus on the
implementation of primary energy savings and/or the technological
focus on renewable energy technologies.
21
3 Market Overview of EPC in the EESI Countries3
Germany
Germany has a growing market for energy services and is one of the pioneers for
developing the European market for EPC. There are already high market standards and
consistent market volume and growth for both primary types of energy services – Energy
Performance Contracting and Energy Supply Contracting (ESC). There is a huge economic
usable potential with about 1.4 million buildings or objects for energy services, but only
between 5 – 7 % is currently addressed. The annual turnover in the energy services market
has roughly been estimated to be between €1.8 and €4.5 billion in 2010.
In recent years, the German energy service market has become a significant business for
many energy service companies – ESCOs, also called “contractors” in German. Of approx.
500 existing vendors for energy services, about two thirds are utilities. Some of the most
important and well known large international ESCOs and a lot of medium and small ESCOs
are operating in Germany.
The share of EPC contracts is about 10 % of all energy service contracts. There were more
than 300 EPC agreements concluded since the mid 90s – with high-tech and complex
individual buildings like hospitals, as well as building pools of up to 100 separate buildings.
The public sector remains the most favourable customer group for EPC. In view of the
annual total energy costs for public buildings of almost €4 billion (3.58 billion in 2005)
performance contracting can tap considerable cost-saving and investment potentials. There
is a potential of investment volume for EPC in the public building sector of about €2 billion
with an annual savings potential of more than €200 million.
The challenges for a further development of EPC in the public sector are mainly lack of
information, long project duration, the integration of constructional refurbishment
measures, transaction costs, and the mere focus on financial aspects (self realization). To
achieve a stronger market development for ESCO services a further development of EPC
models and contracts is necessary. This includes models that integrate the use of renewable
energies and/or thermal insulation of the building shell. Another option is the provision of
standardized single energy efficiency measures as a modular system (i.e. lighting
contracting or compressed air contracting). Standardization, simplification, transparency,
flexibility, and further adaptation of customer needs are challenges for the actors of the
energy service market.
3 This chapter provides a description of the market overview of the EESI countries at the beginning of the
project. For more detailed information, please see the ”National Reports” on the EESI website:
http://www.european-energy-service-initiative.net/eu/toolbox/national-reports.html
22
Austria
The Austrian ESCO market includes 15 to 20 ESCOs offering EPC services. However, just
about 5 ESCOs cover about 70 to 80 % of all EPC-contracts. At present there are 8 ESCOs
organized in an umbrella association – called DECA – to communicate standardized
procedures for EPC to public customers.
The majority of objects in occupancy of the national government are in custody of the
Bundesimmobiliengesellschaft (BIG). Since 1999 a number of 500 buildings have been dealt
with in 12 EPC tenders. Plans for more tenders, which should bring cost reductions of 11
Mill Euro per year, are being prepared at the moment. About 60 Mill Euro is used for energy
efficiency measures every year, but is not likely to be utilized through standard EPC. There
is a chance through advanced models like comprehensive refurbishment.
Due to the 15A-B-agreement between state and federal state the public institutions in the
regions are obliged to expand the actions on energy services in direction of comprehensive
refurbishment.
The demand in cities and rural communes still exists, although various projects for cities
and pools of rural communes have been implemented in the past. Main barriers for further
development of this market are the high transaction costs of contracting in relation of the
typical project sizes in this sector.
In the residential sector buildings built between 1950 and 1980 from 10 apartments onward
are considered to be interesting for EPC. There are mainly 3 sectors:
• Rentals: The building owner is obliged by law (Mietrechtsgesetz) to make
conservation and improvement measures. EPC is legally possible, the main barrier is
that energy savings must be relayed to the tenant and cannot be transferred directly
to an ESCO. The solution to refinance the measures is to raise the rents (bilateral
agreement with tenant) and to use laybacks (if available). Both solutions bear
problems in their implementation because of the involvement of numerous parties.
• Housing associations: For housing associations the same obligations
(Wohnungsgemeinnützigkeits-gesetzes) count as for rental building owners (see
above). The conservation fee can be raised up to 15 years for measures with lifetime
more than 10 years. In case of comprehensive refurbishment the saved costs for
heating can be used for maximum 15 years for refinancing through an ESCO.
• Owner community: The owner community is obliged (Wohnungseigentumsgesetz) to
make conservation and improvement measures. The improvements have to be
approved with 50% majority of the shares of the owners.
23
The sector of hospitals has not been touched so far by energy services. Increased awareness
and necessity for energy efficiency can open a path for energy services.
Street lighting has been a theme for EPC since many years. Still there is market potential in
this field, especially with the ascending development of LED technology.
Slovenia
The Energy performance contracting market in Slovenia is small (due to the size of country
and economy). After a promising start-up and several years of status-quo situation, it can
be marked as rather undeveloped. There are only few national EPC and/or ESC players
present in the market (some 3-5 ESCOs, only two ESCOs among them implement EPC,and
few energy utilities). The EPC market is almost exclusively oriented towards the public
sector (e.g. street lighting in municipalities)and ESCOs financed through commercial credit
lines. Market competitiveness of the EPC business model is low comparing to structural
funding energy efficiency projects being predominately implemented in the public sector.In
case of ESCOsmost of the contracts are in the form of some kind of combined energy
performance contracting and energy supply contracting, while energy companies,
recentlyobligated as energy efficiency service providers, prefer energy supply contracting.
After the first EPC project implemented in 2001, in average only two EPC projects per with
guaranteed savings year are carried out,however,range of investmentsrealised through
these projects are significant at national level, reaching values up to 3 million EUR per year.
The reason for the limited number of the EPC projects realised lies in numerous legal and
financial barriers, small market and few domestic SMEs ESCOs, being the key EPC market
developers. There are no EPC facilitators. Recently the EPC has been introduced as a
horizontal measure in the framework of the 2nd National Energy Efficiency Action Plan
(NEEAP) as it was estimated that national energy savings target could not be reached
without strong development of the EPC, especially in the public sector where sits the huge
potential.
Recent energy policy developments are in favour of further development of EPC in Slovenia.
These developments are reflected in the Energy Lawenergy efficiency, renewable energy
and EPC relatedprovisions, for example: energy book-keeping and annual energy efficiency
targets are mandatory for the public sector;energy efficiency dividend is introduced for the
public sector (energy cost reductions not resulting in equally future operational budget
decrease);local communities have to prefer energy efficiency solutions and RES heat supply
in their acts and plans.
24
Interest in ESC has grown since 2009 as renewable energy sources and high efficiency CHP
are supported through electricity feed-in scheme.For the last three years the EPC model is
competing with cohesion grant financing.Brighter future for the EPC market in terms of
financing has beenestablished through energy savings obligation: energy supply companies
are providing subsidies up to 50% of energy efficiency savings investments, including EPC, in
order to achieve obligatory 1% savings of energy supplied. The impact of energy saving
obligation already resulted in several EPC projects being implemented in 2012. Utilities and
energy suppliers started to acquire existing ESCO and establish new ones. Significant
increase of the EPC market is expected in the near futureas the City of Ljubljana is preparing
through the EIB facility ELENA more than 50 million EUR worth pipeline of EPC projects to
be carried out in the period 2013 – 2016.
Norway
The Norwegian EPC market is immature and small. There have been sporadic occasions of
EPC or similar projects over the last 15 years. Various companies have offered versions of
“energy saving with guaranteed results”, but the market response was not high. Some pilot
projects on outsourcing or result based contracts have been initiated, mainly in the private
sector, but the contents differ from the EPC concept as defined by EESI.
Low energy prices over the last few years and expected for the coming years result in low
interest in energy measures, and the recent financial crisis has lead to less interest from the
banking sector. Over the last 2-3 years there has been increased focus on EPC among
municipalities. Focus on climate both in media and in municipalities through municipal
“Climate Plans” (not mandatory but strongly encouraged) has led to focus on energy use in
public buildings, where EPC can be a strong tool. Also the work done by EESI in combination
with the project “Green municipalities” has been important In this regard. The EPC concept
is better known through dissemination activities and training. Pilot projects have resulted in
positive experiences. Model documents and help desk activities have been important in
project facilitation. The development of a national standard for EPC contracts will play an
important role in further market development.
The main barriers are lack of knowledge, time and trust in EPC. Establishment of EPC
projects is time demanding. Marketing of success stories and templates and training will
counteract these, and funding for project establishment and facilitation would be a strong
positive force.
Czech Republic
The EPC market in the Czech Republic can be characterized as moderately developed in the
sense that the ESCOs have a good knowledge and experience in carrying out EPC.
Nevertheless, still the number of projects is not high and there are no rules for EPC
implementation in the public sector (namely institutions run directly by the state).
25
So far most projects have been realized in the public sector (more specifically in the
education and health care facilities). The first EPC projects were carried out already in 1993.
Since then, some 150 to 200 EPC projects have been already realized, representing savings
of approximately 800 TJ, of which approximately one third concern the private sector.
In the last few years before 2009, the average value of the projects was approx. 2 million
EUR (50 million CZK). In 2009, the volume of contracts was more than 4 million EUR (100
million CZK). The volume of contracts is thus increasing progressively. The main types of
measures under EPC are complex building refurbishments, which will typically include HVAC
(i.e. anything concerning heat management). In specific projects, the savings are typically
approx.20 – 30 %.
The main challenges and thus also space for improvements lies in the political framework of
EPC. More support on the policy level is needed, i.e. showing the good example in the case
of state property or making the energy service market one of the energy policy priorities.
On the EPC level, the development of standard documents and its dissemination would help
in developing the EPC market.
Belgium
Concerning the political framework, in Belgium, energy policy is 'regionalized'. This means
energy policy - including policy about energy services - is realized independently by the
three regions: the Brussels, Flemish and Walloon region. In this report, we focus on the EPC
situation in the Flemish region. In the energy policy declaration of the responsible Flemish
minister (dd 28/10/2008), EPC was not mentioned. In general, EPC is a relatively new
energy service in Flanders.
The economic framework is characterized amongst other by the following:
• In September 2009 household gas prices were, compared to January 2006, increased
in real terms by 22% while oil prices were increased by 99%. Electricity prices
decreased by 10% in the same period;
• Taxes take a share of 20-25% in electricity and gas prices for households and for the
industry.
In the legal framework, the barriers for EPC are the following:
• Legal and political complexity of the country;
• No specific legal framework for EPC;
• Belgian normalization institute (NBN) not involved in new standard EN15900 ;
• VAT rules for public ESCOs are subject to interpretation;
• Restrictive public tendering law;
26
• Total amount of internal and external debts of municipalities is legally restricted and
even limits the use of third-party financing (TPF)-services.
Legal instruments that will stimulate the development of EPC are the following:
• 2020 objectives of the European Commission translated to Belgium;
• European directives EPBD and ESD transposed in 3 regions, thus also Flemish region.
Concerning the financing framework, the Flemish economy suffers from financial and
economical crisis. Currently, it is more difficult for companies and ESCOs to get access to
money amongst other because of the restrictive granting of credits by banks. There are no
special national programs dedicated to EPC. Fedesco currently takes the lead in promoting
EPC-projects in Belgium and Flanders.
Concerning the technical and economical potential in public buildings Fedesco foresees for
the buildings of the Belgian federal government a CO2-reduction of 22% in 2013 compared
with 2008. The economic potential is highly dependent of the energy price. As a rule of the
thumb, one can say that a doubling of the energy price generates at the long term a halving
of the energy consumption.
The most promising target groups and buildings for EPC in the Flemish region are the
following: the public buildings of the Belgian government, the public buildings of the
Flemish government and of the big cities and health care facilities and other buildings with
high specific energy consumption (e.g. swimming pools).
Romania
The Romanian ESCO market is in an “embryonic state”, with few companies willing to enter
the market. In spite of efforts, the ESCO market has not been able to get off the ground
because of a number of strong barriers.
The cooperation between Romanian Government and European Commission is a very
efficient driving force for creating necessary conditions to speed up the energy services
market development in Romania.
In order to create an energy services market in Romania, the government addressed both
sectors: the offer for energy services by identifying and encouraging ESCOs and in the same
time the demand for services by increasing awareness and encouraging energy consumers
to understand the ESCO concept.
Having in mind the energy consumption amount and energy saving potential, the most
interesting public buildings are hospitals. In this case the target group can be the Ministry of
Health together with Local Councils or County Councils having the responsibility for
payment of energy bill.
27
France The ambitious Grenelle Laws in 2009 and 2010, national transcription of the Energy
Efficiency Action Plan, has positively influenced the EPC market by :
setting up ambitious targets for reducing consumption (building refurbishments to achieve
an objective of 38 % of savings by 2020)
naming specifically EPC as solutions to implement for energy renovation.
The public contracting regulations have been changed in 2011 and 2012 to facilitate EPC
and model contracts have been published at national level.
The conditions are now favorable for EPC market development and ESCOs have set up new
offers. However, EPC market is still quite small and more dedicated to standard EPC.
The most important barrier is that the investment capacity of public bodies is poor and the
amounts needed represent several billion Euros. Investment partnership is essential but
public bodies are afraid of Public-Private-Partnership and the payback time for envelope
refurbishment is too long to attract private investors. To overcome this financial difficulty,
some French authorities like the regional Council of Rhône-Alpes are setting up public
ESCOS like FEDESCO in Belgium in order to support and finance advanced EPC projects.
Slovakia
Energy Performance Contracting in Slovakia is a quite known, but not widely used form of
ensuring energy efficiency in various sectors of the economy. As the relative energy
intensity of Slovak economy is significantly higher than European average, there is
substantial market for EPC applications. This is even more stressed by the low volume of
available financial resources for investments in public sector, caused by the worldwide
financial and economical crisis.
Although the EPC concept is not widely applied in Slovakia, the basic legislation exists and
creates good conditions for further development of ESCOs activities also in this type of
energy services.
Sweden
Sweden is one of the northernmost and also least densely populated countries in the EU.
Policy responsibility for energy and energy efficiency resides with the Ministry of Enterprise,
Energy and Communication and to some extent also the Ministry of the Environment. The
Swedish Energy Agency is the government agency responsible for energy policy issues. In
accordance with the Energy Service Directive (2006/32/EG) Sweden has developed a
national Energy Efficiency Action Plan. One of the instruments identified in the plan for
further energy efficiency in the housing and service sectors, is continued support for energy
services. Energy Performance Contracting is mentioned in particular.
28
Important economic instruments in the area of Swedish energy and climate policy are
energy tax, CO2 tax, emissions trading, electricity certificates and various time-limited
investment programs or grants. While these are not geared directly towards energy
services, in many cases they form an incentive structure for energy efficiency. Energy use in
the Swedish housing and service sector, which includes public properties, is mainly
comprised of electricity and district heating. Electricity prices in Sweden are well below the
EU15 average. Prices for district heating vary considerably across the country.
Sweden has a well-functioning financial sector. The majority of public sector EPC customers
take out bank loans themselves for the upfront investments in EPC projects. It is up to the
EPC customers to determine what payback time they require for their EPC projects.
Sometimes the political decisions in local authorities pose an upper limit for the payback
time of any investments in the municipalities.
The new Public Procurement Act came into force in 2008 as an implementation of EU
regulations. Many public authorities or public property owners have used EPC and the
Public Procurement Act is deemed to accommodate the procurement of EPC, while in some
instances being a complication (WSP Environmental, 2006; Miljöstyrningsrådet, 2009).
29
4 EPC Barriers4
A number of barriers to the progress of the EPC market, creating the “EPC gap” hindering
more cost-effective investments in energy efficiency in a faster timeframe, have been
identified during the EESI project implementation. As the advanced EPC business models
are a variation of ‘standard’ EPC, the majority of identified barriers are typical EPC barriers
already identified by numerous studies, market researches and projects, but still not
resolved. Barriers vary in importance between member states. For example, awareness and
governmental support for development and financing of initial projects play an important
role in less-developed EPC markets, whereas implementation of business models like
advanced EPC and innovative financing mechanisms (for example leasing, on bill financing)
are likely to be the biggest challenges in markets that have more experience in EPC.
Observed barriers to the implementation of EPC, predominantly in the public sector, are
divided into the following categories:
• Legislative and regulatory barriers
• Awareness and knowledge barriers
• Financial barriers
• Implementation barriers
These will be discussed in the following sections.
4.1 Legislative and regulatory barriers
Lack of clarification in the legal framework for implementing EPC
National primary legal frameworks are in place for EPC, and this provides the base for the
public procurement of energy services, the public private partnership and financing.
Adoption of the standardized approach to the accountancy treatment of EPC that would be
valid for all public private EPC contracts, have yet to be defined in some Member States.
The EU framework (directives and standards) provides different definitions for energy
services, EPC and ESCOs.
4 For more detailed information, please see the ” Aggregated European position paper on EPC” on the EESI
website: http://www.european-energy-service-initiative.net/eu/toolbox.html
30
However, national energy legislative frameworks are incomplete, not supportive and
favourable for the EPC. Existing relevant legal frameworks, regulating public procurement,
public-private partnership, public finance, taxes, etc., are not directly addressing EPC
projects, causing different interpretations and therefore imposing barriers to straight-
forward implementation of these projects. A low level of confidence in EPC exists due to
absence of specific solutions for EPC or solutions enabling implementation of EPC. It is
necessary to bring greater clarity to legal frameworks currently hampering the deployment
of EPC and amend or even repeal some legislative provisions and regulations which impede
or restrict the use of the EPC.
There is a lack of secondary and tertiary legislation and the corresponding practical
guidance for practitioners, removing EPC constraints and clearly providing information that
EPC is allowed, and introducing all related procedures needed. Accounting rules, especially
in terms of operational and finance lease are in some Member States considered unsuitable
for the EPC models. The lack of legal clarity has led to a high perception of risk among public
decision makers, financing institutions and ESCOs. EPC procurement procedures, contracts,
public budget financing legislation and accounting are perceived very sophisticated, too.
Definitions, even at EU level, are not harmonized, causing legal uncertainty and confusion.
There is still a need for common understanding of energy contracting definitions when
designing EU and Member State policies, measures and legal framework. This goes
especially for definitions of energy efficiency services vs. energy services, energy
contracting and ESCOs vs. Energy Service Providers. Ambiguous legal definitions of the
service provided by EPC contracts often have important negative impacts, especially related
to the taxation status of EPC projects.
31
Lack of official national EPC model contracts
Hundreds of projects all over Europe have proven EPC to be an effective, flexible and
market related product-service-system model providing energy efficiency retrofits and
capital improvements. The bread and butter sector for the EPC in all EU markets has been, it
is and it is going to be the public sector. For full activation of the EPC potential in this sector
it is necessary to provide a legal status for EPC contracts at Member States level that makes
their approval possible by public decision makers at the administrative level. The first step
towards this target has been done – numerous standardized model EPC contracts were
provided at the EU level (not yet harmonized models) and Member States level (mostly
unofficial ‘demonstration’ models, there are some shining examples e.g. few German
States), including advanced EPC models provided by the EESI project. The second step is
missing in the majority of the Member States: There should be a clear and strong
government support at all levels providing not just models but official federal/regional/local
EPC model contracts customized according to the national legal framework of each Member
State and approved by the relevant ministry, probably the Ministry of Finance. This should
be accompanied by tailor made contract packages assisting and guiding relevant authorities
through specific issues and procedures related to model contracts. Additional support to
the EPC-Market Facilitators and ESCOs to ensure that contractual framework is continuously
developed to reduce complexities that hinder companies providing EPC to the public sector
is unfortunately rare.
Uncertainty on how to procure EPC according to the public procurement rules
Energy performance contracting projects in the public sector are subject to public
procurement and therefore need to follow public procurement rules. Public procurement
acts in Member States seek to make good use of public funds by taking advantage of
competition in the relevant market and to ensure fair competition for suppliers. EPC
projects for all publicly funded institutions whose value exceeds a value (exclusive of value-
added tax) set in national procurement rules must be publicly tendered.
Unfortunately, the public procurement legislation hinders the development of the EPC
market, being very extensive, detailed, not flexible in terms of new business models and
non-supportive. Procurement rules and evaluation criteria in the public tendering process
remain a barrier for EPC projects development due to the following issues:
32
• Responsibility and competency for energy efficiency public procurement is
fragmented and shared between central and regional/local governments in almost all
Member States, causing ambivalent information and slowing down EPC projects
implementation;
• Absence of EPC procurement models and generally applicable documents and
procedures, raising a transparency of rules and certainty in tendering procedures,
easy accessible to all stakeholders;
• Lack of experience, information and qualification on the public sector side in the area
of procurement of long-term energy services;
• Reluctance of local authorities to initiate necessary approval processes for launching
the EPC tendering missing policy acceptance of EPC;
• Complex and time consuming procurement procedures, increasing transaction costs
of projects;
• Tendering regulations requiring the applicants to have experience in all relevant
project specific sectors, hindering the entry of new actors and consortia;
• Rules and regulations not allowing EPC on government property, tendering
procedures requiring separate bids for the project preparation and implementation,
not eligible long term service contracts, energy companies being restricted to provide
specific energy efficiency services (in some Member States);
• Lack of clarity regarding which procedures to follow where there is an element of a
public private partnership (PPP);
• Restricted possibility to use PPP model for EPC - in some Member States PPP for EPC
is allowed only in case specific requirements are fulfilled;
• Restricted possibility to use EPC if not PPP (in some Member States) - PPP is
considered complex and not appropriate for small size EPC projects;
• Procurement guidelines often strictly demanding a precise and complete ex-ante
analysis of all measures to be performed, resulting in relatively low degree of
flexibility for gradual refinement of the project concept through on-going negotiations
between the ESCO and the customer in order to develop the best solution;
• Public authorities forbidden to deviate from an agreement once made which limits
the scope for a search for better solutions;
• Lack of specific guidelines on energy efficiency and energy savings as an assessment
criterion in competitive tendering for public contracts;
• Non-transparent inclusion of criteria for energy efficiency under existing public
procurement frameworks like green, sustainable and smart public procurement;
33
• Procurement decisions often focused on assets rather than energy services and based
only on the "the lowest price" assessment criteria and not on "the most economically
advantageous tender" criteria taking into account the life-cycle costs including
maintenance and energy costs, and environmental characteristics;
• Missing specific indicators for energy efficiency public procurement to monitor
progress in terms of energy savings achieved and cost-effectiveness of services
provided;
• Absence of EPC targeted dissemination of information and training on public
procurement, including, for example the exchange of best practices on energy
efficiency and green public procurement.
4.2 Awareness and knowledge barriers
Limited awareness and knowledge asymmetries between customers and ESCOs
Energy end-users have limited information and technical, economic, financial and legal
knowledge on EPC, resulting in low awareness and priority of energy savings realisation,
notably at decision making level. They can hardly grasp what EPC entails, and hence are not
in a position to judge the benefits of outsourcing energy efficiency services for their
institutions/enterprises specifically. Lack of a sufficient level of understanding energy saving
potentials and the EPC concept and its financial benefits is immanent to policy decision
makers and third-party financing institutions, resulting in the perception that energy
efficiency and renewable energy investments are complicated and risky.
ESCOs usually inform and educate customers but this to some extent makes the customers
dependent on ESCOs. This dependence may lead to a caution to embark on EPC projects in
terms of mistrust concerning the range of energy savings and revenue mode. An additional
deficiency is caused by ESCOs’ limited information policies due to their incapability or
unwillingness to deliver specific types of energy efficiency measures and/or renewable
energy technologies, and their ignorance of rapidly advancing technological and business
models development. Information on bad experiences with EPC in the past led some
customers to the perception of high technical and business risks, too.
34
On the other hand, some potential customers have unrealistic expectations of energy and
cost savings potentials and are disappointed when they face ESCO proposals not meeting
these expectations. Many customers cannot foresee the efforts needed and the amount of
transaction costs which may arise during EPC project preparation and implementation. The
complexity of contracting is often misjudged. The integration of experienced consultants
and project developers as neutral EPC project facilitators can help to avoid these problems
and uncertainties providing quality information and expert knowledge.
The EPC market development in Europe is demand side driven. The information and
knowledge shortfall is especially problematic in the public sector, considered to be a key
trigger for the successful ESCO market development. The EPC customers are not ‘educated’.
Taylor made EPC training sessions, customers and information forums, needed to
strengthen demand-side competence on EPC and providing standardized tools and
documents, are scarce and not continuously available. Focused and independent
information on EPC financing options and legal aspects of contracts is hard to obtain. All
that leads to lower number of requests for EPC proposals put on the market. Often these
requests are not as ambitious, in terms of energy and cost savings, as they could be.
Therefore, EPC-Market Facilitators are needed in order to underpin EPC market
development by provision of information on EPC, performing awareness campaigns,
disseminating information on financial instruments, tendering procedures and legal aspects
of contracting, making available model contracts, and training of customers, policy makers,
ESCOs and financing institutions.
Public buildings deep renovation EPC pilot projects needed
Hundreds of projects all over Europe have proven EPC as effective, flexible and market
related tool for energy efficiency. Best practice examples such as the ‘Berlin Saving
Partnership’ outline the advantages of EPC for more than 15 years. However, the public
building sector as role-model for necessary deep renovation is just at the beginning of its
mission and ESCOs have a short track record in deep renovation. Deep renovation EPC pilot
projects in the public sector, essential to increase awareness and knowledge of EPC,
establish standard procedures as well as trust in ESCOs among other potential customers
are scarce.
35
4.3 Financial barriers
Financial barriers can be at the demand side (customer side), the supply side (ESCO side)
and/or financial institution side.
Customer side
At the customer side problems arise because EPC energy efficiency measures and
renewable energy technologies suffer from long payback times or even longer pay-back
time than the economic life-time (5 to 15 years are standard payback times in the ESCO
industry) and insufficient internal rate of return. Another barrier is strong competition
between EPC investments and core business related investments, paying for themselves
within 3-5 years, resulting in low priority of EPC investments. Investment assessments are
based on investment costs rather than on an integrated approach comprising life-cycle
costs (investment, operation, and maintenance), so investments in energy efficiency
measures and renewable energy technologies are put out on tender based on the
investment cost.
That hampers EPC projects because they are usually based on capital intensive upfront
investments enabling lower operating energy costs. Customers often face lack of internal
capital and have constrained operational budgets. Lack of access to finance on acceptable
terms due to perceived high EPC project risks and lower proportion of collateral asset value
due to high portion of ‘soft’ costs (project design and development) are the most common
financial barriers on the customer side. On the other hand, customers who have access to
finance do not tender financing services for a best offer.
Supply side
At the supply side it is an observed trend that for many new EPC projects ESCOs provide for
upfront investment costs placed on the asset side of their balance sheets, for instance as
financial fixed assets. This is influencing the credit risk rating of ESCOs and limiting their
capacity to implement new projects. Smaller ESCOs without support of a larger parent
company and without appropriate credit ratings are especially vulnerable, being not in
position to attract third-party financing.
36
Financial institution side
At the financial institution side limited knowledge and experience of EPC market is an
impediment. Short or no track record of (domestic) EPC projects, comprising monitored and
registered achieved energy savings, set-backs, risks and returns, makes financial institutions
less willing to participate in their financing. Another barrier is a required high level of due
diligence of insolvency risks and creditworthiness of the ESCO and/or the customer,
performance risk, and volatile energy price risk, leading to high project development and
transaction costs and resulting in high cost of capital neutralizing the risks. The fact that EPC
projects are hardly standardized and often relatively small puts additional pressure on the
costs and makes EPC projects less attractive for financial institutions. The EPC-Project
Facilitators who could aggregate scaled bankable projects are lacking. Financial products
available at the financial market mainly are not customized to remove specific EPC financing
constrains. Public funds often are not used to leverage private financing.
Discontinuation of public grants
Public grants for investment in energy efficiency measures in publicly owned buildings have
not only lowered the energy efficiency measures and renewable energy technologies
investment costs for the local authorities and improved profitability of EPC projects and
allowed more improvement measures to be included in the EPC projects. The grants have
also urged action and spurred decisions in local authorities. Therefore, the discontinuation
of these grants may mean that EPC projects are not undertaken even if they would be
profitable. However, some publicly-backed grant support schemes, even from EU funds, are
distorting the commercial financing EPC market.
37
4.4 Implementation barriers
Limited number of ESCOs
The number of ESCOs active in the market has been assessed to be insufficient or limited to
large actors. Their marketing activity is not very visible. The emergence of additional utility-
owned ESCOs and small and medium size ESCOs is too slow. At the moment there are no
specific incentives (fiscal, financial, etc.) for starting-up ESCOs nor technical assistance
facilities providing capacity building and training. However, it is expected that a number of
ESCOs will start to grow, considering the introduction of obligations for the comprehensive
renovation of central government buildings and Energy Savings Obligations. Yet it is
questionable if ESCOs are going to be able to provide the needed EPC services, in terms of
technical and especially financial capacity. ESCOs are rarely organized in a national
association of energy service companies that assesses and accredits its members.
Lack of reliable energy consumption data
The availability of baseline energy data for the screening, planning, monitoring and
verification of EPC projects remains low due to a low level of basic energy book-keeping
and/or energy management and high immanent measurement costs. The process before an
EPC contract can be seen as complicated and expensive because extensive amounts of
information have to be collected to develop tendering documents. Inclusion of external
factors influencing the energy consumption in guaranteed energy savings calculations
additionally hampers the establishment of contractual agreement. Absence of accepted
standardized EU measurement and verification procedures functionally linked to
recommended measurement and verification methods in the framework of Directive
2006/32/EC on energy end-use efficiency and energy services (ESD) is symptomatic.
Lack of reliable energy audits
There is a lack of transparent and neutral detailed energy audits on which prioritised energy
efficiency measures and renewable energy technologies could be developed. Obligatory
energy audits are observed in some Member States (Czech Republic, Romania) and have
proven to be crucial for scaling-up of the EPC introduction. There is no financial support for
the preparation of energy audits, necessary to secure needed information for the
establishment of baseline energy consumption and identify economically viable
investments and their energy and cost savings impact over project life-cycle, upon which
ESCOs can base their EPC proposals and guarantees.
38
5 Success and impact of EESI
5.1 Overall success stories
Success story 1: “Impact of the development of pilot project”
One of the most important and visible outcomes of the project was the initiation of 30 pilot
projects in the partner countries and the resulting CO2 reduction. With these projects, EESI
reduced more than four fold its CO2 saving target from 12 000 t CO2/y to more than 45 000
t CO2/y.
The pilot projects comprise different kind of buildings including schools, hospitals,
universities and some historical buildings. The duration of the contract varies among the
projects between 2 and 15 years and the guaranteed savings between 10 and 58 %. EPC
advanced models were also used in some projects. As an example, the EPC light model was
applied for the first time during the EESI project.
The most important contribution of the pilot projects is that more and more local
authorities and key actors are aware of the advantages of EPC. With these projects EPC is
visible, tangible and explainable, increasing the interest of further development.
In section 0, a project example for each of the partner countries is presented.
Success story 2: “Raise awareness of EPC”
The EESI website and their country sub-sites also played an important role in the promotion
of all the activities, dissemination of tools, national reports and standard documents to the
key actors of each country. With nearly 200 newsletters, press releases and media coverings
EPC is now much better known in Europe.
However, the “face-to-face” dissemination such as presentations at national and
international seminars and conferences seems to be the most successful dissemination
channel and arouse the further interest on EPC. In many cases, the participants asked for
further EPC trainings.
A very successful high profile event to raise the awareness of EPC was the European
Energy Services Award (EESA), which honors outstanding efforts and achievements
for the development and success of energy services for energy efficiency in Europe.
The main objective of EESA is to highlight the ability and openness of the public
sector towards innovation, as well as the responsiveness and equally innovation on
the side of those driving processes and providing energy services.
39
It is a means to increase awareness of options and opportunities of energy services and to
promote energy efficiency. In addition to the EESA, the European Energy Service Media
Award has been awarded as well. The Media Award honors the performance of committed
journalists who promote and illustrate the subject of energy services to the large public as
well as expert audiences and, hence, contribute to its stronger dissemination.
Year Categories Winners
Best Project
- Vellinge Municipality (Sweden)
- Town of Hnúšťa (Slovakia)
- Lorac Imtech Effizienz Programm –LIEP
(Germany)
Best Promoter - The Greater London Authority – GLA
(England)
2011 - 7th
EESA at the European
Union Sustainable Energy Week
(EUSEW) 2012 in Brussels
Best Provider - RENESCO (Latvia)
Best Project
- Sello shopping mall (Finland)
- Jewish Museum Berlin (Germany)
- Middlefart Municipality (Denmark)
Best Promoter - ICF Group (France)
Best Provider - SERVELECT (Romania)
2010 - 6th
EESA at the European
Convention 2011 of ICLEI – Local
Governments for Sustainability
Media Award - Bernward Janzing – Financial Times
(Germany)
Best Project
- Category Public Sector: Stewards
Hospital Energy Efficiency Project
(Ireland)
- Category Commercial Sector:
Elektromotory Mohelnice (Czech
Republic)
- Category Lighting: Staatstheater
Hannover (Germany)
Best Promoter - Klimaschutz- und Energieagentur Baden-
Württemberg (Germany)
Best Provider - ENESA a.s. (Czech Republic)
2009 - 5th
EESA at the
“European Energy Service Day -
Think European – Act Regional”
and the 20th
anniversary of
FEDARENE in 2010
Media Award - Joachim Mahrholdt – ZDF.Umwelt
(Germany)
40
The innovative applications at the 3 European Energy Service Awards have demonstrated
the wide possibilities to develop energy services and their spreading throughout Europe.
The ceremonies had high profile guests including Günther Oettinger, EU Commissioner for
Energy at EESA 20111, David Cadman, President of International Council for Local
Environmental Initiatives (ICLEI) at EESA 2010 and Connie Hedegaard, Commissioner for
Climate Action at EESA 2009.
Success story 3: “Capacity building on EPC”
Due to the complexity of Energy Performance Contracting, information and specialized
capacity building are necessary for its successful implementation.
The European Energy Service Initiative offered these through trainings, workshops and
seminars. These were very successful and highly demanded: more than 2000 participants
took part of the capacity building offered by EESI, surpassing its target of 500 participants
by far.
Besides the knowledge-transfer and capacity-building a fair number of project initiatives
were the result of the EESI-trainings. Part of them has been dealt with in feasibility studies
and some are already in deeper discussion of project development. However, the journey
has only just begun and capacity building activities should continue.
5.2 Success and impact by country
The success of EESI is not only reflected in the outcomes, deliverables and results of the
project itself, but also by its impact after the end of the project.
During EESI, the partners started the cooperation with municipalities and regions through
workshops, trainings and initial consultations. In most of the cases, the contact and
execution of these activities will continue after the end of the project.
EESA Winners 2009 EESA Winners 2010 EESA Winners 2010 EESA Winners 2011
41
The preparation and adaptation of national standard documents will also continue. With
these, building owners will use “safe” and proven models with a minimum of risk and will
ease the further development of EPC projects.
In summary, most of the countries will continue encouraging the further implementation of
EPC in their countries. However, for the continuous development support of EPC in Europe
a framework project like EESI has proven extremely valuable.
The following sections describe the results, success and impact of EESI in the participating
countries. In order to show the impact on the ground, descriptions of selected projects
initiated during the course of EESI have been included, too.
Germany
On the European level BEA’s activities within the EESI project have focused mainly on
capacity building, know-how transfer, and the promotion of Energy Performance
Contracting. One of the main promotional activities was the bestowal of the European
Energy Service Awards (EESA) for 2009, 2010 and 2011.
BEA has been active in organizing European-wide training events on EPC: for start-up ESCOs
the “ESCO University” as a side event of the ESCO Europe conference 2009 - 2012; for
municipalities from Denmark, Serbia, Portugal and Germany to support their development
of EPC projects and for the European Investment Bank (EIB) on “ESCO Financing”.
Furthermore BEA has participated in a lot of European and national events and presented
EESI and the EPC concept and developed a European network of experts and contributors of
EESI.
On the national level, BEA has used findings and models from EESI to update the national
“Hesse”-Guideline on EPC. Furthermore BEA strongly worked on developing Advanced EPC
models. Currently BEA promotes three different models of advanced EPC:
• EPC with comprehensive refurbishment (EPC plus): Initial consultations and
workshops to develop the first pilot project have been organized, however decision to
tender one pilot projects has not been done within EESI;
• EPC light: a form of external energy management with an energy saving guarantee.
BEA has successfully started a pilot project for 15 schools in Berlin;
• “Green EPC”: an advanced version of the classic EPC model focusing on the reduction
of CO2 emissions by including renewable energy technologies for heating and
electricity in the model contract. However, a pilot project in Berlin (Police Station
Friesenstraße) did not go on tender during the course of EESI, due to the decision of
the building owner to switch to Energy Supply Contracting.
Classic EPC projects have been tendered successfully for one hospital
(Wenckebachklinikum) in Berlin and for the University of Applied Sciences in Hamburg, the
latter with newly designed M&V methodology.
42
Activities such as workshops and/or initial consultations in some German regions have the
clear focus to lead to EPC projects, so the long-term impact of EESI on the German market
development will be important. European wide, EESI was a perfect means to disseminate
the BEA experiences on EPC and cooperations have been started e.g. with municipalities or
institutions in Ireland, Portugal and other countries, that will most probably sustain.
In summary, BEA was able to initiate activities to almost double the targeted results on the
national and international level, specifically in the field of information and dissemination.
The international trainings together with the shared information and training material will
help to get more European EPC projects started.
Project example Germany: EPC-light in Pankow, Berlin
Facility:
- District of Pankow, 15 buildings:
• 12 schools
• 1 youth facility
• 1 cultural institution
• 1 public service building
Initial situation:
- Administration has no staff capacities to undertake adequate (technical) support /
energy management of the buildings
- No constant consumption control / existing saving potentials, particularly a possible
optimization of operations
- Classical EPC is not suitable:
• Too low project volume (energy costs)
• Buildings without long-term perspective of constant use
• No investment requirements (e. g. new buildings or modernized objects)
Goals of building owner:
- To reduce energy consumption by mid-2012 in schools and administration buildings
Measures (selection):
- Energy management: reducing energy consumption and energy costs through
external know-how
- System optimization and continuous monitoring
- Extension of existing savings potential (without investment)
- Guaranteed energy savings contract
43
Project example Germany: EPC-light in Pankow, Berlin (continued)
Facts:
Austria
GEA has succeeded to perform approx. 25 initial consultations and several feasibility studies
for the implementation of energy efficiency through EPC. 3 projects on IEC have been
tendered and the negotiations have already been concluded, one additional project on IEC
in the tendering phase. Moreover 4 projects for Rail Cargo Austria are in the preparation
phase for tendering and will presumably be awarded until December 2012.
In parallel, activities on the national level are running: the Bundesimmobiliengesellschaft
has tendered two federal pools of schools for EPC.
The 3 meetings of the national steering committee produced a number of
recommendations for policy makers while in trainings with building managers, national and
international experts EPC has been brought onto discussion level with inputs from all sides.
In these trainings, the basics of EPC and energy services in general as well as advanced
topics such as financing in EPC, the use of Integrated Energy Contracting and
comprehensive refurbishment with EPC were taught.
Accompanying a number of useful documents for energy services have been developed and
made public, ranging from measurement & verification guidelines, model contracts to
guidelines for performing financing in EPC, EPC for comprehensive refurbishment and a
manual for integrated energy contracting (IEC).
Type of contract EPC-light
Duration of contract 2 years
Investment No investment
Energy costs (Baseline) 882.714 €/a
Guaranteed savings 90.037 €/a
Guaranteed savings (share of baseline) 10.2 %/a
Reduction of CO2-Emissions 300 t/y
44
Project Example Austria: IEC at Residential School, Knittelfeld
Facility:
- The building consists mainly of two parts: school
building and residential part for pupils
- Year of construction: 1980
- Heated area: 11.000 m2
Initial situation:
- Heat supply through district heating
- Heat distribution system and controls in need of
renovation
- No efficiency measures have been established in the last few years
Goals of building owner:
- Renovation of heating system
- Outsourcing of maintenance of the heating system
- Reduction of energy demand, -cost and CO2 through demand side energy efficiency
measures
Possible Measures (selection):
- Installation of high-efficient pumps and thermostatic valves
- Efficient regulation controls
- Lighting and light controls
Facts:
(*)Preliminary estimations, tender in progress
Type of contract Integrated Energy Contracting
Duration of contract 15 years
Investment 170 k €*
Energy costs (Baseline) 131.7 k €/a
Guaranteed savings tbd
Guaranteed savings (share of baseline) tbd
Reduction of CO2-Emissions 340 t/y
45
Slovenia
The EESI project brought EPC back on the agenda in Slovenia - the whole spectrum of EESI
project activities has made EPC more visible.
The national website has become the focal hot spot for EPC in Slovenia, providing all
relevant information and playing the backbone role of the national EPC knowledge centre.
Information and dissemination was supported via national newsletters distributed to more
than 2.000 addresses. Almost 200 energy managers, energy experts and experts from
utilities and local energy agencies, civil servants and experts from financing business were
trained, including in-depth elaboration of EPC elements and introduction of advanced EPC
business models. One training was provided for municipalities from Serbia, too. Based on
information gained through the training, the Ministry of Justice and Public Administration
decided to start the preparation of EPC deep renovation projects for more than 200
buildings.
National standard procedures and documents were identified and made available to the
public. The standard EPC contract was upgraded according the recent legal framework
development. In order to establish long term performance of EPC in Slovenia, the EESI
project has supported the Ministry of Economic Development and Technology in
introduction of EPC in the 2nd National Energy Efficiency Action Plan for the period 2011-
2016 and 1st
National Renewable Energy Action Plan for the period 2010-2020. Bottlenecks
for the implementation of EPC were identified, resulting in an open dialogue with the
Ministry of Finance and design of follow-up pilot EPC project for the establishment of
national approved procedures, models and standard contracts.
The EESI project has supported the City of Ljubljana and University of Ljubljana in
preparation of two pools of EPC projects with a volume of more than 86 million EUR. In case
of the implementation of one of these two EPC projects, the existing EPC market is going to
expand for more than forty times. This potential was recognized by the SID Bank which
started market assessment activities in order to provide guarantees or finance for the
implementation of an EPC pilot project. Besides the aforementioned pool projects, the EESI
project has assisted to the advanced EPC project dealing with energy supply and demand
side energy efficiency measures and renewable energy technology implemented at the
Municipal Administration Facility in Kranj. Start-up ESCO support was provided for the
initiation of the EPC internal lighting project in Gorenje Households Appliances.
46
Project example Slovenia: City of Kranj EPC plus
Facility:
- Municipal administration buildings (3 buildings)
- Year of construction: 1957
- Roof renovation: 1989
- Area: 9.265 m2
Initial situation:
- Heat supply through inefficient heavy oil fuelled
district heating system to be shut down in
autumn 2012
- Split cooling, heat distribution system and controls inefficient
- Energy efficiency measures performed from the year 2012 through EPC
Goals of building owner:
- Heat and cool supply through highly efficient combined heat and power (CHP) and
renewable energies
- Refurbishment of central heating system including introduction of centralised
cooling system, refurbishment of air conditioning and ventilation systems for halls
- Outsourcing of heat and cool supply and maintenance of the heating and cooling
system
- Reduction of energy demand, -cost and CO2 through demand side energy efficiency
measures for heat replacement of the central heat-generation plant
Measures (selection):
- CHP gas engine, photovoltaic power plant, geothermal heat pump
- Heating and cooling convectors, air conditioning unit
- Efficient regulation controls and highly efficient pumps
- Remote monitoring and regulation system
- Sun shades
Business Model:
- Combination of energy performance and energy supply contracting
- EPC savings guarantee
- Malus-system for performing worse than allocated
- Awarding: Combined competition of price and ideas on the bases of a functional
service description
47
Project example Slovenia: City of Kranj EPC plus (continued)
Facts:
Type of contract EPC Plus
Duration of contract 15 years
Investment 1.500 k €
Energy costs (Baseline) 131.7 k €/a
Guaranteed savings 13 k €/a
Guaranteed savings (share of baseline) 16 %
Reduction of CO2-Emissions 167 t CO2 eq. /y
48
Norway
In Norway the EPC activity has increased significantly over the last years. This can be seen
directly in the number of EPC projects announced on the public tendering tool Doffin as
well as in interest in training etc. Active promotion by the EESI project and its partners has
played an important role in this. In addition, the general increase in focus on climate issues
and energy planning has caused an increased interest in new tools and methods for the
implementation of energy efficiency measures.
The municipalities are starting to see EPC as a valuable tool in reaching goals for energy
savings set in climate plans. EESI has cooperated actively with the national energy agency
Enova SF and KS (The Norwegian Association of Local and Regional Authorities) in
promoting EPC and assisting individual municipalities in preparing EPC projects. The role as
“project facilitator” has been crucial both for development of pilot projects and other
announcements.
A main result of the project is the work with Standards Norway to develop a formal national
standard for EPC contracts. This is foreseen as a draft by the end of 2012, with formal
adaptation in a years’ time. The standard will be built on the model documents developed
in the Eurocontract project and revised by EESI and KS. This has made the standardization
process significantly faster than normal.
In addition the training and dissemination activities have led to increased knowledge of EPC.
The pilot projects have paved the way for other municipalities to realize projects, and
helpdesk activities have provided valuable input in several projects that has been and will
be published for tenders.
The established cooperation is likely to remain based on the experiences made, but funding
is vital to ensure activity.
Project example Norway: Elverum kommune
Facility:
- Elverum has 20 152 inhabitants
- 40 buildings in EPC pool
Initial situation:
- High energy costs
Goals of building owner:
- 20 % energy reduction
Measures (selection):
- New ventilation system for 2 halls
- Optimization for ventilation of shower areas
49
Project example Norway: Elverum commune (continued)
Measures (continued):
-
- Air/water heat pump (hot water and heating)
- Energy monitoring
- Insulation in boiler room
- Water saving
Facts:
Czech Republic
National activities have focused on building know-how on EPC at stakeholders
(municipalities as well as the EPC supply side) and promoting the use of the method in the
Czech Republic. The main activities included 1) trainings and conferences, 2) dissemination
activities (leaflets, articles and competition on EPC) and 3) conceptual work (foundation of
the “Association of ESCOs”, strategic work with the Ministry of Industry and Trade). The
Association will continue to operate also after the end of the EESI project and SEVEn continues to
communicate with and support the activities of the Association.
Type of contract EPC
Duration of contract 9 years
Investment 3.162.500 €
Energy costs (Baseline) 1.600 k €/a
Guaranteed savings 400.000 €/a
Guaranteed savings (share of baseline) 25 %
Reduction of CO2-Emissions 541 t/y
50
Trainings and conferences: 6 training events have been organized during the project. The
trainings have been very successful in terms of attendance – some of the trainings have
attracted almost 100 participants each, the rest about 20-40 participants each. As an
additional activity, series of 10 seminars have been organized together with Siemens and
Enviros in spring 2011. Additionally, EPC has been presented by SEVEn in several events.
Further training events and conferences are planned at least for the rest of 2012
During the project, several information leaflets on EPC have been published reaching more
than 10 000 people.
The leaflets have provided information on the basics on EPC, but one edition was
specifically tailored towards municipalities and towns, providing a “cookbook” through the
whole EPC process. Tens of articles on EPC have been published in general as well as expert
media and two years (2011, 2012) of competition on the best EPC project preparation have
been organized.
Conceptual work: SEVEn has been closely cooperating with the
Ministry of industry and Trade (MoIT) who has EPC in their gesture.
As a result, MoIT has recently (finally) adopted EPC in its agenda,
providing in 2012 for the first time support for EPC initiation and
cooperating on the preparation of EPC standard documents. In 2012
the support scheme was launched for the first time and is likely to
continue in next years.
Project example Czech Republic: Jihlava Hospital
Facility:
- Continuous operation
- 780 beds
- Approx. 1200 employees
- 9 medical pavilions and other buildings for
operation of the hospital
Initial situation:
- High energy costs
- Need for reconstruction
Goals of building owner:
- Lower energy costs
- Better environment for patients and employees
- Heating system refurbishment
Fig. 5 EPC project in the
State Opera in Prague
51
Project example Czech Republic: Jihlava Hospital (continued)
Measures (selection):
- New gas boiler
- Cogeneration units and refurbishment of heat exchange stations
- Optimization of cooling system
- Heat recovery from waste air
- Energy saving measures in lighting (replacement, motion controls, day and night
operation)
- Water saving measures
- Individual heat regulation, energy monitoring and management system
Facts:
Type of contract EPC
Duration of contract 10 years
Investment 2.7 Million €
Energy costs (Baseline) 1 454 k €/a
Guaranteed savings 441 k €/a
Guaranteed savings (share of baseline) 26 %
Reduction of CO2-Emissions 1661 t/y
52
Belgium
The main results and achievements for Belgium are the following:
• An efficient EPC-promotion and dissemination campaign composed amongst other
out of 6 Newsletters, 13 National media coverings, 12 presentations at conferences
and 17 initial consultations;
• The development of a bilingual Belgian EPC-website containing the currently best
available EPC key-documents (manuals, model documents, market information,…)
needed for Belgian EPC-facilitators, local authorities and ESCOs for developing an EPC-
project;
• The availability of a brand new and highly innovative Belgian EPC-contract that meets
all requirements of Fedesco, and in general the Belgian market;
• The tendering of the first two Belgian EPC-projects in the public sector and the
expected rapid growth of the Belgian EPC-market starting from the second half of
2012.
Project example Belgium: Fedesco
Facility:
- 14 offices of the Belgian Federal Government
- Main occupant: Ministry of Finance
Initial situation:
- The maintenance contract of the mentioned buildings had to be renewed. This
opportunity was taken to implement a maintenance and energy performance
contract (MEPC).
Goals of building owner:
- Cost efficient maintenance
- Acceptable comfort
- Saving energy
- Saving costs
Measures (selection):
- Not available, tender in progress
53
Project example Belgium: Fedesco (continued)
Facts:
(*)Preliminary estimations of March 2012
Romania
EESI was one of the most important supports for the development of the energy service
market in Romania, especially for promotion of performance contracting in the public
sector.
Starting with concept dissemination and ending with successful implementation of pilot
projects, EESI addressed important barriers and is characterized by relevant results such as:
• Establishment of a well structured National Steering Committee coordinated at the
parliamentary level and having relevant representatives able to help project
implementation: representative of the ministry in charge with coordination of Energy
Efficiency Action Plan (including a specific task “Promotion of the development of
Energy Service Companies”);
• Establishment of strategic documents starting with country report - presenting a
comprehensive analysis of existing situation (political, economic, legal and financial
framework and a summary of the bottlenecks, challenges and opportunities) – and
ending with evaluation report, policy recommendation and position paper;
Type of contract EPC
Duration of contract 15 years
Investment 1.000 k € (*)
Energy costs (Baseline) 1.200 k €/a
Guaranteed savings 150 k-250 k €/a (*)
Guaranteed savings (share of baseline) 15 - 25 %*
Reduction of CO2-Emissions 700 t/y *
54
• Substantial transfer of know-how by translation and adaptation of model contracts
and related standard documents; this transfer was focused on both sides: central
administration responsible for legal framework clarification and improvement and
also local administration responsible for project identification and preparation of
tender procedure; additional and very efficient support have been offered by the
European Bank for Reconstruction and Development (EBRD) by preparation of the
“Energy Efficiency Program in Romanian Public Sector”; as a result, important legal
clarifications have been included in the minute signed by relevant institutions (ANRE,
ANRMAP and Ministry of Public Finance);
• Substantial training and dissemination activity based on the EESI website and
seminars organized all around the country, in 4 main cities, with the participation of
163 representatives of various institutions: municipal energy & procurement
departments, ESCOs, banks, ministries, etc.; an additional dissemination activity was
developed by presentations in different 12 national events, by the EESI newsletters,
good practices, more than 10 media coverings and the final brochure.
The most important impact have been obtained by the pilot projects: 4 pilot projects have
already finalized their investment activity (Agricultural Scholar Group “M.Kogalniceanu”-
Miroslava, Pulmonary clinic – Bisericani, Comlosul Mare School, University “Politehnica”
from Timisoara), 1 project is in the final stage of investment implementation (Municipal
Hospital from Medias) and 1 new project is in evaluation (Municipal Hospital from Giurgiu).
Many other projects are identified: a feasibility study is finalized for hospitals managed by
Bucharest municipality, meetings have been organized with hospital managers in the N-E
area of the country and different other actions have been reported by various ESCOs.
Project example Romania: Pulmonary clinic - Bisericani
Facility:
- Former monastery, built around 1650. With further
expansion stages from the 1920's and 1970's
- The building complex is the oldest of the three lung hospitals
in Romania
- Capacity: 350 beds
Initial situation:
- High energy costs
- Need for reconstruction
Goals of building owner:
- Redevelopment or replacement of the central heat-
generation plant
55
Project example Romania: Pulmonary clinic – Bisericani (continued)
Measures (selection):
- Installation of new boilers, incl. expansion vessel, hot-water tank (3000 liters)
connection with the plate heat exchangers, hydraulic connections, water softening
and pressurize unit, safety facilities, measuring and control devices, elements for
automation.
Facts:
France
The EESI project and activities have had an impact on the regional and national EPC context
at different levels.
First, EESI has contributed to a better EPC information collection and dissemination through
the website, the newsletters and the best practice examples which are the first
communication level. The presence in many events at regional but also at national level
allowed to reach different audiences.
As the government was working on EPC promotion at the same time, EESI has contributed
to national work with inputs from regional and European experience in the national EPC
Grenelle working groups: EPC definition, contracts models, EPC guidelines, regulation
adaptation.
Type of contract EPC
Duration of contract 15 years
Investment 158 000€
Energy costs (Baseline) 74 k €/a
Guaranteed savings 15.3 k €/a
Guaranteed savings (share of baseline) 29.5 %
Reduction of CO2-Emissions 4770 t/y
56
The regional committee and the training sessions have initiated discussions and exchanges
between the different EPC stakeholders leading to a common understanding of EPC
definitions and a real share of stakes and priority. A real cooperation between EPC regional
stakeholders has been initiated.
Otherwise, EESI has initiated and assisted the first EPC public projects in the Rhône-Alpes
with a wide range of EPC types: EPC light (services), standard EPC (only on energy
production) and EPC Plus with comprehensive refurbishment. The feedback of experience
from these projects has been used to adapt methods and tools like audits specification,
facilitator’s missions and to set up subsidies for the first’s projects assistance.
Last but not least, the first projects have shown a real lack of financing for ambitious
projects (EPC Plus) which led to the work to define a regional public third-party financing
tool. This new regional tool in form of a public company will propose assistance/facilitator
missions and third party financing (conception / realization / financing / maintenance).
Project example France: Museum of Modern Art in St Etienne
Facility:
- Saint Etienne Metropole manages a portfolio of 40
buildings including:
• High ceiling storage room
• 19 000 art works
• Conference room - Library
• Restaurant – Administrative area
Initial situation:
- In 2008, the community has initiated a Regional Climate Plan. To fulfil its
commitment to this comprehensive approach, the local authority opted to use the
Energy Performance Contracting (EPC) to renew the energy systems of the Museum
of Modern Art in St Etienne.
Goals of building owner:
- Need to renovate the heat production (9 000 m)
Two gas boilers at the end of life and a chiller for cooling
- Standard maintenance contract
- Goal of reducing energy consumption
Measures (selection):
- New boilers and chiller
- New automation system and implementation of a brand new BMS
- Electrical cabinets retrofit
57
Project example France: Museum of Modern Art in St Etienne (continued)
Facts:
Slovakia
The EESI implementation in Slovakia has been based on intensive cooperation with relevant
stakeholders from different sectors. This approach has provided important results on
different levels.
On the national policy level, the activities started with elaboration of national report on EPC
implementation status in Slovakia. The most important barriers have been identified within
this step. These barriers have been consequently addressed within other project activities
that have resulted in establishment of informal working groups (on the platform of National
Steering Committee) focused on respective EPC barriers (budgetary limitations, public
procurement, price regulation). The practical output of this area of activities has been
provided in form of Policy Recommendations that have been provided to relevant national
authorities (Ministry of finance, Ministry of Economy).
At least partial implementation of the proposed recommendations has been facilitated
through including the "Support of Energy Services Utilization" as one of horizontal measures
in the National Energy Efficiency Action Plan for years 2011 – 2013. It is expected that the
adapted EESI model documents will be further promoted in the public sector.
Type of contract EPC
Duration of contract 10 years
Investment 430 000€
Energy costs (Baseline) 95 k €/a
Guaranteed savings 23.9 k €/a
Guaranteed savings (share of baseline) 46 %
Reduction of CO2-Emissions 64% = 152 t/y
58
Important achievements have been reached also on the micro level. Here the activities
aimed at identification and development of pilot EPC project have been supported by
intensive promotion, awareness rising and trainings. The support activities have been caped
by series of training events organized (in cooperation with ESCOs and financial institutions)
in all eight regional capitals in Slovakia that have attracted a high number of stakeholders
and potential clients from the side of the municipalities, state and regional authorities and
others.
Contacts acquired within these trainings formed a base for further intensification of
communication with prospective EPC clients which was followed by detailed analyses of
energy efficiency and EPC potential in several cases. These analyses enabled the ECB to
create a pipeline of possible EPC projects. Various reasons (mentioned in previous parts of
this report) have slowed down the market development and thus none of these projects
has been promoted to the realization stage within the EESI duration. Although the slower
progress, the tenders for at least two projects have been published and for one project will
be published (by ECB) in July 2012. Realization of these projects is expected in second half
of 2012.
As these projects are based (or are in line) with the EESI model documents, it is expected
that they will serve as the so much needed references for further EPC market development
in Slovakia.
Sweden
IVL’s activities within the EESI project have focused on independent promotion of powerful
energy efficiency improvement mainly addressing networking, capacity building, trainings
and transfer of knowledge. Despite a target of three educations IVL total delivery amounts
to eight educations and trainings. One reason for this is the positive evaluation of the first
educations that clearly showed the need for and benefit of increased EPC know-how. The
last five trainings were arranged by the Swedish Energy Agency with IVL/EESI as co-
organizer. Another success story is the large number of good practice examples published
on the Swedish EESI website – as many as 62 examples are presented and we get regular
feedback and questions about these.
Dissemination through presentation at several national and international conferences and
seminars has also contributed to the increased awareness of EPC as a model for powerful
energy efficiency improvement generally and the EESI project specifically. Very important
for communication and dissemination is of course the Swedish EESI website which has been
very frequently visited. We have gathered general information on EPC and not only specific
EESI related information. Two press releases have been published; one after a two-day
education and one regarding the good practice examples. The latter, resulted in substantial
media covering and several journalists who were interested in writing more detailed
articles. Model documents and pilot projects are also very important achievements.
59
IVL has co-operated with ESCOs in developing and evaluating pilot projects and an
advanced EPC model with focus on environmental issues and primary energy savings have
been developed.
Project example Sweden: AB Väsbyhem
Facility:
- Mainly residential buildings
Initial situation:
- High energy costs and energy consumption
- Taking part in Skåneinitiativet since 2008 with the aim of 20 % decrease in energy
consumption by 2020
- Investments funds available due to prior sales of property
- Positive attitude towards EPC amongst politicians, management and officials
Goals of building owner:
- Reduction in maintenance costs
- Modernize existing buildings
- Final goal is 20% reduction in energy use by 2020, as undertaken in Skåneinitiativet
(2008)
Measures (selection):
- Additional insulation e.g. roof insulation
- Measures for warm water economization e.g. individual measuring and debiting
- New heat pipes
- Ventilation recovery
60
Project example Sweden: AB Väsbyhem (continued)
Facts:
Type of contract EPC
Duration of contract 3 years
Investment ca 5.7 million €
Energy costs (Baseline) ca 7 million €/a
Guaranteed savings ca. 600 000 €/a
Guaranteed savings (share of baseline) 15.3 %
Reduction of CO2-Emissions 850 t/y
61
6 Policy Recommendations
According to the European Commission, more than 20% of EU’s energy consumption is
wasted through inefficiency. This potential can be effectively targeted using energy services
and other market based efficiency measures. Despite this huge economically feasible
potential the European market development of energy services such as Energy Performance
Contracting is still poor. Efforts to foster energy services especially Energy Performance
Contracting by policy should consider the following recommendations5.
Introduction of supportive policy and legislation
• As the strong policy support for EPC market development is needed, it is
recommended to anchor EPC and related public supporting programs into Member
States National Energy Efficiency Action Plans and National Renewable Energy Action
Plans.
• Additionally, a deep renovation (comprehensive refurbishment) roadmap should be
prepared, allocating technical and financial energy savings and renewable energy
potential to be reached through EPC which is an important tool in the renovation of
buildings.
• EPC implementation processes should be streamlined through secondary and tertiary
legislation dedicated to EPC, standardized EPC Terms of Reference and model
contracts for EPC at national level (including EPC Plus, EPC Light, IEC, Green EPC).
• A change of tenancy/property law, energy and tax legislation is required, permitting
the refinancing of energy efficiency and renewable energy investments via
contribution by/charges to tenants, and linking EPC contracts to the building or utility
meter rather than to the owner.
• Support greater number of 3rd party EPC-Project Facilitators and EPC-Market
Facilitators (i.e. institutions that develop EPC-projects and support their
implementation).
• Mandatory checks if EPC is economically feasible and regulation for feasible EPC
implementation should be introduced.
• Obligatory energy audits should be introduced in the public sector or included in
energy management systems, in order to identify and quantify cost-effective energy
efficiency measures and renewable energy technologies as the crucial input to the
EPC.
5 For more detailed information, please see the ” Aggregated European position paper on EPC” on the EESI
website: http://www.european-energy-service-initiative.net/eu/toolbox.html
62
• Considering poor availability of energy data and exemplary role of public bodies
buildings, obligatory energy management should be introduced, taking into account
relevant standards, such as EN ISO 50001 (Energy Management Systems).
Availability of information and know-how
• In order to support the establishment of public procurement processes enabling
implementation of EPC projects, clarifications of potential pitfalls and performance of
tailor made supportive activities are needed.
• Member States should make available officially approved standardized EPC tools to all
parties interested. These tools should include model contracts, too. The goal is to
minimize perceived energy contracting implementation and contractual arrangements
risks, transaction costs and time needed for the preparation of projects as well as to
enable the entry of new actors into the EPC market.
• Training sessions for a variety of officials in local authorities, as well as politicians, are
needed to strengthen demand-side competence on EPC.
• In order to remedy the lack of knowledge among potential EPC customers, and
knowledge asymmetries between customers/potential customers and ESCOs, a forum
is needed where customers may exchange experiences.
• The lacking availability of websites providing much needed information on EPC in
long-term, such as good practice examples, needs to be remedied and a longer term
solution established.
• The reported shortage of competent staff could be alleviated by further scientific
studies on the topic, preferably interdisciplinary (engineering, financial issues, etc.).
• A protocol and accompanying tools for the assessment of applicability of possible
business models, for deployment of energy efficiency measures and renewable
energy sources in the building environment, should be developed.
Provision of financing
• Budgetary provisions favourable for EPC should be established, based on positive
outcome of cost benefit analysis of the introduction of this market-oriented
instrument.
• Potential value of establishing EPC dedicated credit lines by a public entity (such as a
government agency and\or donor organization) should be assessed, in order to
provide low-interest loans to local financing institutions (LFIs) to encourage them to
offer sub-loans to implementers of EPC project. Inclusion of technical assistance to
the participating LFIs to enhance their technical capacity should be planned, too.
• Member States should consider establishment of risk-sharing facility by a public entity
(such as a government agency and\or multilateral banks), providing partial risk or
63
partial credit guarantee to absorb some EPC project risks and facilitating involvement
of LFIs in EPC financing. Targeted technical assistance supporting both LFIs in the
marketing and delivering of financing services and EPC project developers in the
preparation of projects for investments should be planned as a part of the risk-sharing
facility activities.
• In order to increase the share of profitable energy efficiency measures and renewable
energy technologies, policy makers need to consider investment subsidies for local
authorities to undertake EPC.
• Member States should consider boosting of the deep renovation of the building stock,
both public and private, by introduction of specific financing facility, i.e. a deep
renovation fund and implementing public buildings deep renovation EPC pilot
projects.
• Financial support for further structuring of the EPC market should be provided by
financially supporting the establishment and first start-up activities of EPC-specialized
associations and federations, and EPC-information activities within existing
institutions. Due to high EPC transaction costs, especially at the inception phase of the
project, subsidizing of EPC preparation costs can decrease the reluctance towards this
business model.
• Member States and regions should make full use of the Structural Funds and the
Cohesion Fund to supplement EPC Plus financing, contributing to deep renovation of
public buildings and housing.
Further development of the market
• To achieve a stronger market development for ESCO services a further development
of EPC business models and related model contracts is necessary.
• EPC Light can be the first step into an external energy management, introduction for
EPC projects or the follow-up model for expiring classical EPC projects. Because the
EPC Light “soft” measures implemented are not “visible”, it is necessary to inform on
and promote the use of the EPC Light in targeted environment.
• EPC Plus should be preferentially used as the model for a deep renovation in the
public sector. It reduces both the delivered and the final energy consumption of a
building by a significant percentage compared with the pre-renovation levels.
• Further EPC market evolution should be underpinned by introduction of the EPC
Codes of Conduct as a tool to acquire customer trustfulness and to increase the
transparency of the EPC market setting quality principles and requirements.
• Member States should analyze level of technical competence, objectivity and
reliability in the EPC market in terms of recommendations on quality certification of
EPC Services.
64
7 Further Information
European Websites
• European Energy Service Initiative: http://www.european-energy-service-
initiative.net
• Intelligent Energy Europe: The Webpage of the EU Intelligent Energy Europe program.
(http://ec.europa.eu/energy/intelligent/)
• Intelligent Energy eLibrary: The e-library holds a range of tools and guidebooks on
energy efficiency, renewable energy applications and sustainable mobility.
(http://www.iee-library.eu/)
• Energy Service Directive: The framework for energy end-use efficiency and energy
services in the EU. (http://ec.europa.eu/energy/efficiency/end-use_en.htm)
• BUILD UP: The European portal for energy efficiency in buildings.
(http://www.buildup.eu/)
• JRC Institute for Energy: The Joint Research Center of the European Commission,
Institute for Energy (http://re.jrc.ec.europa.eu/energyefficiency/)
• Energy Efficiency Watch: The platform of the Energy Efficiency Watch Initiative.
(http://www.energy-efficiency-watch.org/)
EU Projects
• FRESH: Financing energy refurbishment for social housing. (http://www.fresh-
project.eu/)
• Minus 3%: Shining Examples for the Implementation of the Energy End-use Efficiency
& Energy Services Directive. (http://www.minus3.org/Home.php)
• PERMANENT: Performance Risk Management for Energy efficiency projects through
Training. (http://www.permanent-project.eu/)
• Change Best: Assistance for energy companies and ESCOs in entering the markets for
energy services. (http://www.changebest.eu/)
Further Links
• IEA Demand Side Management Program: offers solutions to problems such as load
management, energy efficiency, strategic conservation and related activities.
(http://www.ieadsm.org/)
• Elios: alternative risk transfer solutions for the implementation of innovation and eco-
technologies in construction. (http://www.elios-ec.eu/)
• EU ESCO Association: The European ESCO Association. (http://www.eu-esco.org/)
65
8 Abbreviations
• EBRD European Bank for Reconstruction and Development
• EESA European Energy Service Award
• EESI European Energy Service Initiative
• EIB European Investment Bank
• EnEff Energy Efficiency
• EPC Energy Performance Contracting
• ESC Energy Supply Contracting
• ESCO Energy Service Company
• EU European Union
• HVAC Heating, Ventilation, and Air Conditioning
• ICLEI International Council for Local Environmental Initiatives
• LFI Local Financing Institutions
• M&V Measurement and Verification Methodology
• MoIT Ministry of industry and Trade
• NEEAP National Energy Efficiency Action Plan
• PPP Public Private Partnership
• RE Renewable Energy
• VAT Value Added Tax