EPC – Energy Performance Contract

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Managers in public housing are increasingly concerned about the fact that increasing energy costs dig huge holes in the government finances. Often due to tight operating budgets, maintenance is neglected and there are large, deferred investment needs in e.g. changes of ventilation systems and renewal to energy saving installations.

One of the solutions could be to make use of an EPC – an Energy Performance Contract. An EPC is a partnership between a public authority, e.g. a public housing company and an energy service company or consultant. The service company/consultant conducts a comprehensive energy audit for the public facility and identifies improvements to save energy. In consultation with the public authority, a reasonable level for energy savings is agreed on and   the company designs and constructs a project that meets these requirements. In Dalarna it is common with saving levels of about 17 – 20 percent.

A contract is established and the company guarantees that the improvements will generate the energy cost savings agreed on. If these are met, and the savings are greater the profits are shared with the company/consultant. What is written in the contract and how the relationship between the parties is governed, is crucial for the project’s results.

There exist different models to finance the investments. In some cases the energy saving company offers to finance the energy saving project , in others like in Sweden it is common that the municipality takes investment costs since Swedish municipalities usually can make use of favorable interest-rates.

In Dalarna four of 15 municipalities have chosen to sign EPC contracts with consulting companies. The municipality of Ludvika has been working in six years with an EPC contract now and is Dalarnas most experienced municipality in this respect. In the preliminary analysis it was shown a potential of savings in heat costs with at least 22%, a level that was agreed on in the contract. The municipality invested 5 million Euros over 4 years in the project and the results were very positive. Read more att http://www.berliner-e-agentur.de/sites/default/files/uploads/pressematerial/eesibrochurefinal.pdf

Another EPC contract has been established recently covering investments of another 5 million Euros. In total the two contracts cover 90% of the municipality`s property portfolio.

Examples of implemented measures:

  • – Conversion to heat pumps (geothermal energy)
  • – Conversion to pellet boilers
  • – Replacing  and upgrading of ventilation
  • – Installation of computerized control and monitoring equipment
  • – Additional insulation
  • – Adjustments of heating systems
  • – Adjustment of operating times
Åke Persson (Dalarna Länsstyrelsen)

Author: Åke Persson (Dalarna Länsstyrelsen)

I’ve been working in the field of sustainable development since more than 20 years. The recent 7 years I was in charge of establishing the Building Dialogue Dalarna.

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