Market study confirms high potential for cost savings through energy services
- 60 percent of building experts have no experience with Energy Performance Contracting or similar energy services models
- Report conducted within the European project guarantEE and coordinated by the Berliner Energieagentur delivers valuable insights
- Best practices and specialized information material for building owners and managers required
Many public and private buildings still bear high potentials for energy cost savings. Specialized energy service companies can help reducing energy costs, e.g. by installing or operating efficient building technology on their own financial risk. Nevertheless, more than 60 percent of the building experts in the European Union have no personal experience with energy services like Energy Performance Contracting (EPC) and are rather cautious and partly skeptical about such energy service models. This are the results of a market study conducted within the European project guarantEE that is coordinated by the Berliner Energieagentur (BEA).
Energy Performance Contracting (EPC) is an energy service where specialized energy service companies (ESCOs) implement energy efficiency investments in the premises of their clients. The investments are refinanced through the saved energy costs during the contract duration of usually 7-12 years. The ESCO guarantees the achievement of the savings and takes over the financial and technical risks in case investments are more expensive than planned or if plants are to be renewed or repaired.
“Energy Performance Contracting is already well-established in public buildings” explains Michael Geißler, CEO of the Berliner Energieagentur (BEA). “It is now the time to bring into the market adapted service models tailored to the needs of private building owners. Energy services have unbeatable advantages because financing and professional implementation are all coming from a single source. There are strong arguments for EPC – now is the time to motivate building owners and managers for putting EPC into practice by means of best practice examples and practical guidance.”
The report on the market analysis is based on a survey with 256 participants. On the one hand it shows that there is still a huge potential for cost savings through EPC projects in Europe. On the other hand, half of the respondents indicated they prefer investing in energy efficiency measures on their own capital funds and their own technical risk instead of outsourcing them to an external energy service company. Many of the surveyed emphasize the clear benefits of energy services like EPC, e.g. the guaranteed energy cost savings as well as the technical know-how of service providers. However, there are obstacles as inexperience in the design of EPC contracts as well as fiscal uncertainties to energy services in general.
The report identifies barriers to the further development of the EPC markets in Europe. The low energy prices since 2013 make energy efficiency investments less economical. Furthermore, there is also the so-called split-incentives-dilemma – which means a lack of building owners’ investments due to the fact that in rented facilities cost and benefits of energy efficiency measures are split between owners and tenants. Therefore, the market requires adapted contract models to apply EPC similar services in rented service and multifamily buildings.
Within the EU-funded project guarantEE coordinated by BEA, 14 experienced partners will develop innovative business and financing models for performance-based ESCO projects in public and private facilities. For rented facilities, the aim is to develop and test solutions adequately sharing costs and benefits between users, building owners and ESCOs (triple-win approach). The regulatory framework is already given by the EU Energy Efficiency Directive, which requires member states to establish building renovation targets and compulsory energy audits. Furthermore, several EU member states implemented public funding schemes for energy efficiency, which could be accessed for EPC projects. Germany, Upper Austria and Slovenia even provide EPC-specific subsidy schemes. Norway has even introduced a national standard for EPC in 2015.
The full “Report on the European EPC Market” including all survey
results can be downloaded here:
The country specific report for Germany can be downloaded here: https://guarantee-project.eu/de/service/downloads