Energy saving contracting

Energy saving contracting (ESC) is also called energy saving contracting ( English Energy Performance Contracting (EPC) or Energy Savings Performance Contract (ESPC); French Contrat der Performance Energétique (CPE)). Energy saving contracting is offered by an energy service company, the contractor or ESCO (Energy Service Company). Customers are owners of buildings and infrastructure in the private sector, industry or in the public sector. It is a market-based business model that aims to achieve energy efficiency and cost savings without the need for public subsidies . An ESCO offers a guaranteed reduction in energy consumption costs. This is made possible by the installation of suitable efficiency, renovation or modernization measures and accompanying services. The investments are amortized or financed through the cost reduction.

Comparisons with the conventional implementation on your own (so-called own solution) show that the energy saving contracting is able to tap the savings potential in the building stock more economically and with a significantly higher security for the building owners.

Business model

In the 1980s, the business model was introduced in the USA in the industrial and building sectors, and in Europe since the 1990s. ESC increases the energy efficiency of buildings and industrial processes without the owner having to provide their own capacities and invest their own funds. ESC is a market-based business model that offers the customer a guarantee of the guaranteed savings in energy, electricity and water. Thanks to ESC, the energy costs for the customer can be better planned and risks are reduced. For the energy service provider ( ESCO , Energy Service Company) there are predictable customer relationships and regular financial flows. The measures are financed through the energy costs saved over a contractually agreed period. Energy saving contracting is also used outside of the building and industrial sector, for example in street lighting.

In addition to the usual planning and installation services, energy savings contracting includes, depending on the contract model, financing, the determination of the energy baseline, maintenance and monitoring of operations, the training of operating personnel on the customer side and the measurement and verification of the savings achieved. ESCO and customer agree on the details of the expected energy savings, the contract duration, the financing and the services of ESCO in a contract. During the term of the contract, the investments will be financed through the saved energy costs. If the savings are above the agreed minimum amount, ESCO and the customer can share the saved costs (bonus). ESCO has an economic self-interest in achieving the highest possible savings. If the minimum amount is not reached, ESCO pays the deficit back to the customer with guaranteed savings. After the contract expires, the customer benefits from all the energy costs saved.

financing

The focus of the ESC is on efficiency measures and corresponding ESCO services . Energy saving contracting is also a financing instrument. There are different financing and contract models. The Guaranteed Savings model is common, for example , in which the customer finances the project himself, but receives a savings guarantee from ESCO . The consideration here is that the ESCO cannot assume the financing risk in addition to the guarantee. On the other hand, the shared savings model is known, in which the ESCO usually finances the project, but does not provide an explicit savings guarantee. Nevertheless, it also takes on risks here that the customer would otherwise bear. The savings are shared between ESCO and the customer according to their share of the financing. Forfaiting is a newer form of financing . Here the ESCO assigns its share of the energy cost savings (also known as the contracting rate ) to a third party, usually a bank or a financial investor. In return, the bank or the investor provides the discounted capital for the implementation of the measures. Because of the high credit rating, which is often lacking in money, energy saving contracting often also makes sense for municipalities or municipalities or municipal bodies. In Switzerland, there is also the fact that many municipalities, but also cantons and the federal administration have to work with a debt brake . In Germany, budget law is regulated in the individual federal states and also determines the approval requirement for energy saving contracting projects as a legal transaction similar to credit. Some federal states have already created exemptions for contracting (refinancing aspect).

Appropriate measures

ESC is particularly suitable for high energy consumption . There are also good examples for smaller projects with low-investment measures (e.g. pump replacement, lighting, system optimization). In Germany , a model contract for small businesses and craft businesses was developed. The development of the participation of citizens' energy cooperatives in efficiency measures is also being pursued. ESC is widespread in the private sector, for example in industrial companies, hotels or large office properties as well as in the public sector (school buildings, administrative properties, barracks, hospitals, etc.). In principle, all measures from the field of building technology , including the building envelope in larger contracts, are conceivable. Most of the time, the control of the systems is exchanged and connected to a central building management system in order to enable monitoring at all. Furthermore, for example, the heating boiler can be replaced or the distribution renewed. There are also combinations with energy delivery contracting models . Both in traditional self-directed implementation and in energy savings contracting projects, a profitability limit to be determined in advance determines the selection of measures. Since 2016, as part of a research project, the implementation of integral building renovations including the building envelope has been demonstrated in a further developed energy saving contracting model and then transferred into practice. This also includes non-energetic savings effects such as B. saved maintenance and repair costs of the replaced old systems are taken into account in the profitability calculation. At the same time, these costs are defined as part of the saved costs.

Advantages of energy saving contracting

Benefits for customers

• Energy saving: The most important benefit from energy saving contracting is the saving of energy, electricity and water.
• Reduction of CO ₂ : Depending on the measures implemented, energy saving contracting is usually associated with a significant reduction in CO ₂ . In some countries there are funding programs in which the savings achieved are certified and remunerated. The achievement of binding climate protection targets is also supported by contracting projects, in particular through guaranteed energy savings.
• Cost savings: Depending on the design of the contract, after the implementation of the measures, there will already be cost savings on the customer side. At the same time, no own capital is tied up for the implementation of energy efficiency measures and can be used for investments in the core business,
• Complete service package: The customer receives access to the know-how of the selected ESCO , which often does not exist in the same depth with the customer.
• Quality gain: Obsolete systems (parts) are replaced, inefficient settings optimized and modern technology used. The ESCO has an economic self-interest at the highest possible savings.

Benefits for actors in the ESCO market

• The market for energy services is constantly developing and is supported by European legislation.
• ESC is a business model that can be marketed together with other energy services .
• Digitization continues to develop and supports the approach of many energy service providers, e.g. in the context of remote monitoring of system technology.
• Energy saving contracting ensures long-term customer relationships and predictable cash flows .
• Building owner / energy consultants develop new services for their customers. You can position yourself with a new business model and gain a competitive advantage.
• There are investment opportunities for investors in the energy efficiency business area .

Procedure for the implementation

1. Step 1: The customer (e.g. building owner) conducts a situation analysis together with an energy consultant or directly with an ESCO in order to estimate the energy saving potential. The so-called baseline data are collected here.
2. Step 2: In the public sector (but not necessarily in the private sector), an invitation to tender must be carried out on the basis of this data, any measures that have already been defined and standardized procedural and contractual documents . Based on the award criteria (amount of energy savings, economic efficiency, experience of the provider, etc.), the energy saving contract is then concluded with an ESCO .
3. Step 3: This is followed by the detailed structural planning of the measures and their implementation before the contract term begins.
4. Step 4: During the contract period, the energy saved is measured and verified. For example, the period of one year is specified for this. This energy consumption is compared with the original energy consumption before the implementation of the measures (reference period, baseline). Widespread procedures such as the International Performance Measurement and Verification Protocol (IPMVP) have existed for years to measure and verify these savings .
5. Step 5: After the end of the contract, all savings go to the benefit of the customer. The term of an energy saving contract is usually up to 15 years, in exceptional cases longer.

Obstacles and solution approaches for the development of the energy saving contracting market

A possible disadvantage of energy saving contracting can be that, if the customer wants the terms to be too short, only the most economical measures can be selected with this method, but other measures that make sense in the long term are not implemented or made more difficult. This “ cherry picking ” can make subsequent general renovations or long-term solutions more difficult. In reality, an exact survey of the actual situation, the wording of the contract with regard to the scope of the contract and the consideration of later planned (own) measures are important. Sufficient templates are also available for documenting the initial status. There is a large number of studies on the barriers to the development of the energy saving contracting market in various European countries. The main obstacles identified were a lack of information and trust at the decision-making level, a lack of know-how and capacities on the part of planners, energy consultants and employees in municipal building management. Practical guidelines also provide good help here, which both help to overcome initial skepticism and can be used as a guide for public tenders.

Market shares and national characteristics

The European Commission has increasingly focused on energy saving contracting in the latest versions of the European Building Performance Directive (EBPD); nevertheless there is no obligation of the member states to develop a coherent strategy for the development of energy efficiency potential with ESC. In the last ten years in particular, several multinational projects have dealt with the harmonization of the legal and energy market framework conditions for energy-saving contracting. The development of the ESC markets has been very different: the mature markets with sufficient to good framework conditions include Spain , Great Britain , the Czech Republic , France , Belgium and Germany . However, the market shares in the energy efficiency market in these countries are in the low single-digit range; In Germany, the turnover for energy saving contracting is estimated at approx. 50 million € / a. There is no reliable information on potential in Switzerland. However, this is also rated as very high in certain sectors. In the USA, the market volume for ESC is around 6.4 billion USD, which corresponds to almost 5–10% of the total market potential. In the public buildings of the US government, a presidential decree triggered a significant demand impulse for ESC in the public sector. A major reason for the comparatively slow development of the market in Europe is the lack of similar binding targets for the public sector in the European market.

Energy saving contracting in Germany

In Germany, energy savings contracting has been a topic of discussion by various actors for a long time. The German Energy Agency DENA published the “Energy Saving Contracting Guide” back in 2008 and has since continuously developed it and adapted it to current regulations in Germany (e.g. procurement law). This contains practical information on how to proceed, especially when tendering projects in the public sector. Also has DENA templates developed as contracts or audit sheets. In addition to DENA , it is primarily the energy agencies of individual federal states that are active and, for example, support municipalities in the development of projects. Baden-Württemberg, Hesse, Berlin, Bavaria and Saxony should be mentioned. The Association for Heat Delivery (VfW) also represents the interests of the ESCOs . In its National Action Plan on Energy Efficiency (NAPE), the federal government has stipulated to improve the framework conditions for energy services - including for contracting . As part of this, for example, funding programs for contractors have been opened and redeveloped and a federal-state dialogue contracting has been implemented.

Energy saving contracting in Switzerland

In Switzerland, the swissesco association aims to promote the energy savings contracting business model . This business model starts with energy efficiency and thus supports the efforts of the federal government's Energy Strategy 2050. swissesco was founded in September 2015 and has members from the energy sector, energy consulting, the financial sector as well as cantons, cities and municipalities. The association is supported by the Swiss Federal Office of Energy (SFOE) and various cantons. swissesco pursues the following goals:

• Creation of framework conditions for the development of the Swiss ESCO market and Swiss project developers
• Contribution to the standardization of methods and processes
• Information about energy saving contracting and its promotion
• Coordination of activities with other associations / institutions
• Creation and management of a knowledge base in the ESCO market

swissesco has worked with the Swiss Federal Office of Energy (SFOE) to develop official guidelines for the implementation of energy saving contracts in Switzerland. Such a document has so far been missing. Similar principles already exist in other countries, but they are not compatible with the legal framework and the legal framework for public procurement in Switzerland. The Swiss guideline, which is comparable to that of the German Energy Agency DENA , that of the state of Hesse or that of the European Energy Service Initiative EESI, was published in German and French in November 2016. The freely available guidelines explain in detail how energy saving contracting works and what to look out for when planning a corresponding project. The procedure for public tenders is explained step by step with text and illustrations. Sample documents such as analysis grids for building analyzes or a sample contract are also made available.

Individual evidence

1. ↑ DIN 8930 B 5, Beuth Verlag, Berlin, DE
2. ↑ Springer Gabler Verlag, Gabler Wirtschaftslexikon, 2014, Berlin ( online )
3. ↑ In the municipalities in Baden-Württemberg, according to the municipal code, a profitability comparison between energy-saving contracting and your own solution is required as a prerequisite for the approval of energy-saving contracting projects. The statement refers to a total of 25 comparative calculations that the Climate Protection and Energy Agency Baden-Württemberg (KEA) carried out between 2004 and 2016 and submitted to the approval authorities.
4. ↑ swissesco (2016): Guide to Energy Saving Contracting (Switzerland). https://pubdb.bfe.admin.ch/de/publication/download/8084
5. ↑ German Energy Agency dena (2016): dena guidelines on energy saving contracting. https://www.dena.de/newsroom/publikationsdetailansicht/pub/leitfaden-energiespar-contracting
6. ^ Department of Energy & Climate Change, UK (2015): Guide to Energy Performance Contracting Best Practices. https://www.gov.uk/government
7. ^ Fédération des services énergie environnement (FEDENE) (2013): Contrat de Performance Énergétique. www.fedene.fr
8. ↑ Hessian Ministry for the Environment, Energy, Agriculture and Consumer Protection (2012): Guide to energy saving contracting in public properties. https://www.energieland.hessen.de/pdf/Contracting-Leitfaden_2012.pdf
9. ↑ Grazer Energieagentur GmbH (2009) http://www.grazer-ea.at/eesi/upload/download/diskussionspapiere/091018_gea_energy_contracting_definitions-discussion_paper.pdf
10. ^ Polzin, Friedemann / von Flotow, Paschen / Nolden, Colin (2016): Modes of governance for municipal energy efficiency services e The case of LED street lighting in Germany. doi : 10.1016 / j.jclepro.2016.07.100
11. ↑ Deutsche-Energie-Agentur dena (2016): Brochure: Energy-efficient street lighting, https://www.dena.de/newsroom/publikationsdetailansicht/pub/broschuere-energielösungene-strassenverbindungen
12. ↑ Grazer Energieagentur (2009): Comprehensive building renovation through energy savings contracting. A guide for building owners and contractors. http://www.grazer-ea.at/eesi/upload/download/standard%20documents/gea_bleyl_schinnerl_umfassende_gebaeudesanierung_mit_esc_deu_090813.pdf
13. ↑ swissesco (2016): Guide to Energy Saving Contracting (Switzerland). https://pubdb.bfe.admin.ch/de/publication/download/8084
14. ↑ German Energy Agency dena (2016): dena guidelines on energy saving contracting. https://www.dena.de/newsroom/publikationsdetailansicht/pub/leitfaden-energiespar-contracting
15. ^ Department of Energy & Climate Change, UK (2015): Guide to Energy Performance Contracting Best Practices. https://www.gov.uk/government
16. ^ Fédération des services énergie environnement (FEDENE) (2013): Contrat de Performance Énergétique. www.fedene.fr
17. ↑ Hessian Ministry for the Environment, Energy, Agriculture and Consumer Protection (2012): Guide to energy saving contracting in public properties. https://www.energieland.hessen.de/pdf/Contracting-Leitfaden_2012.pdf
18. ↑ swissesco (2016): Guide to Energy Saving Contracting (Switzerland). https://pubdb.bfe.admin.ch/de/publication/download/8084
19. ↑ https://www.efd.admin.ch/efd/de/home/themen/finanzpolitik/die-schuldenbremse.html
20. ^ Association of German Guarantee Banks (2016): VDB sample contract for savings contracting: http://www.vdb-info.de/aktuelles/contracting-buergschaften
21. ↑ Deutsche-Energie-Agentur dena (2015): Practical help: Citizen financing for energy efficiency in non-residential buildings, archived copy ( memento of the original from June 6, 2017 in the Internet Archive ) Info: The archive link was inserted automatically and has not yet been checked. Please check the original and archive link according to the instructions and then remove this notice. 
22. ↑ https://www.grazer-ea.at/cms/arbeitsfelder/contracting-thermoprofit/integrierter-energiecontracting/content.html
23. ↑ Lohse et al. 2015. Enhancing the technical scope of energy performance contracting. ASHRAE Winter Conference 2015, Chicago, IL, USA Technical Paper, ASHRAE 2015, Atlanta, GA, USA.
24. ↑ EDLIG energy services for integral building renovation / IEA Annex 61 Technical and Business Concepts for Deep Energy Retrofit (iea-ebc.annex61.org)
25. ↑ Lohse, Riel Implementation of Deep Energy Retrofit in a Dormitory in Mannheim Germany, ASHRAE Winter Conference 2017, Las Vegas, Technical Paper, ASHRAE, Atlanta, GA, USA
26. ↑ https://energy.gov/eere/femp/energy-service-companies-0
27. ↑ swissesco (2016): Guide to Energy Saving Contracting (Switzerland). https://pubdb.bfe.admin.ch/de/publication/download/8084
28. ↑ http://guarantee-project.eu
29. ↑ Archived copy ( memento of the original from September 28, 2017 in the Internet Archive ) Info: The archive link was inserted automatically and has not yet been checked. Please check the original and archive link according to the instructions and then remove this notice. 
30. ↑ swissesco (2016): Guide to Energy Saving Contracting (Switzerland). https://pubdb.bfe.admin.ch/de/publication/download/8084
31. ↑ German Energy Agency dena (2016): dena guidelines on energy saving contracting. https://www.dena.de/newsroom/publikationsdetailansicht/pub/leitfaden-energiespar-contracting
32. ↑ http://evo-world.org/en/products-services-mainmenu-en/protocols/ipmvp
33. ↑ Hessian Ministry for the Environment, Energy, Agriculture and Consumer Protection (2012): Guide to energy saving contracting in public properties. https://www.energieland.hessen.de/pdf/Contracting-Leitfaden_2012.pdf
34. ↑ DENA practical help contracting. https://www.dena-expertenservice.de/arbeitshilfen/praxishilfen-contracting/
35. ↑ https://www.swissesco.ch/de/markt/download.html
36. ↑ Including Contracting Offensive Baden-Württemberg, 2013, Ministry of Environment BW, Stuttgart https://um.baden-wuerttemberg.de/de/energie/energiedienstleistungen/contracting
37. ↑ Grazer Energieagentur (2009): Comprehensive building renovation through energy savings contracting. A guide for building owners and contractors. http://www.grazer-ea.at/eesi/upload/download/standard%20documents/gea_bleyl_schinnerl_umfassende_gebaeudesanierung_mit_esc_deu_090813.pdf
38. ↑ swissesco (2016): Guide to Energy Saving Contracting (Switzerland). https://pubdb.bfe.admin.ch/de/publication/download/8084
39. ↑ German Energy Agency dena (2016): dena guidelines on energy saving contracting. https://www.dena.de/newsroom/publikationsdetailansicht/pub/leitfaden-energiespar-contracting
40. ↑ Hessian Ministry for the Environment, Energy, Agriculture and Consumer Protection (2012): Guide to energy saving contracting in public properties. https://www.energieland.hessen.de/pdf/Contracting-Leitfaden_2012.pdf
41. ^ Fédération des services énergie environnement (FEDENE) (2013): Contrat de Performance Énergétique. www.fedene.fr
42. ^ Department of Energy & Climate Change, UK (2015): Guide to Energy Performance Contracting Best Practices. https://www.gov.uk/government
43. ↑ https://ec.europa.eu/energy/en/news/commission-proposes-new-rules-consumer-centred-clean-energy-transition
44. ↑ TRANSPARENSE 2015 ( http://www.transparense.eu/eu/news/horizon )
45. ↑ Klinke, Sandra / Reiter, Ulrich (et al.) (2017): Contracting the Gap: Energy Efficiency Investments and Transaction Costs. Bern: Federal Office of Energy.
46. ↑ Presidential Memorandum “Implementation of Energy Savings” Projects and Performance-Based Contracting for Energy Savings (November 2011)
47. ↑ German Energy Agency dena (2016): dena guidelines on energy saving contracting. https://www.dena.de/newsroom/publikationsdetailansicht/pub/leitfaden-energiespar-contracting
48. ↑ http://www.kea-bw.de
49. ↑ Hessian Ministry for the Environment, Energy, Agriculture and Consumer Protection (2012): Guide to energy saving contracting in public properties. https://www.energieland.hessen.de/pdf/Contracting-Leitfaden_2012.pdf
50. ↑ http://www.berliner-e-agentur.de/themen/energiespar-contracting
51. ↑ Archived copy ( memento of the original dated November 26, 2016 in the Internet Archive ) Info: The archive link was inserted automatically and has not yet been checked. Please check the original and archive link according to the instructions and then remove this notice. 
52. ↑ http://www.saena.de/projekte/energiespar-contracting.html
53. ↑ http://www.bmwi.de/Redaktion/DE/Downloads/MO/nationaler-aktionsplan-energiedienstleistungen-nape.pdf?__blob=publicationFile&v=4
54. ↑ http://www.swissesco.ch
55. ↑ swissesco (2016): Guide to Energy Saving Contracting (Switzerland). http://www.bfe.admin.ch/php/modules/publikationen/stream.php?extlang=de&name=de_932608848.pdf  ( page no longer available , search in web archives )  Info: The link was automatically marked as defective. Please check the link according to the instructions and then remove this notice.