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H2020

EPC_PLUS Report Summary

Project ID: 649666
Funded under: H2020-EU.3.3.7.

Periodic Reporting for period 1 - EPC_PLUS (Energy Performance Contracting Plus)

Reporting period: 2015-03-01 to 2016-08-31

Summary of the context and overall objectives of the project

Energy Performance Contracting (EPC) is generally looked upon favourably, but the implementation can be complicated and lengthy. The main reason lie in the procurement law provisions (EU-wide tendering) and long-term and complex contracts, which impede a real breakthrough in the spread of the EPC methodology. The other main barriers for the implementation of EPC in Small and Medium sized Enterprises (SME’s) are:

• The transaction costs for procuring energy services are high
• Investments and project sizes are small
• It is difficult to obtain financing for such small projects.
• High costs for guarantees, measurement and verification procedures.

The objectives of the project are:

• The development and establishment of SPINs (SME Partnerships for Innovative Energy Services) and an international EPC+ platform.

o A SPIN is a nationally organized cluster of independent energy efficiency service providers, mainly SMEs, that jointly supply energy efficiency services and that have a structured long-term collaboration with some commonly agreed objectives.
o The international EPC+-platform is an international 'market place', where - according to commonly agreed rules – its members can safely exchange valuable know-how and develop EPC-models and SPIN-concepts.

• Simplifying EPC models. Based on the existing energy performance contracting models it is planned to simplify the models, creating and testing sample documents and finding new financing models. These include:

o Manageable project sizes that can be directly awarded or awarded with simple tendering procedures or pre-awarded services with specialized themes that can be easily handled by SMEs.
o Development of highly standardized and simple contracts: simplified models and contracts with e.g. unique determination of savings and quality guarantees beyond conventional warranty etc.
o Financing: Open financing possibilities for SMEs, forfeiting the contracts; fixed bank conditions (pre-negotiated) on bases of the model contracts; new ways of funding with risk capital; flexible financing solutions etc.

Work performed from the beginning of the project to the end of the period covered by the report and main results achieved so far

In general, the EPC+ project is progressing satisfactorily, although there are delays in some of the Work Packages. However, it must be noted that these delays will not affect the future tasks of the project and, more importantly, the implementation of the pilot projects and the monitoring and verification of their energy performance. The following text describes the general progress of the report.

WP1 is a horizontal Work Package that foresees the organization and implementation of regular technical meetings and Project Steering Committee meetings for the coordination and management of all the project activities in order to ensure the timely submission of all the expected outputs and deliverables. The results so far are:

• The kick-off meeting (1st technical meeting) was held in the opening month of the project as scheduled.
• The 2nd, 3rd and 4th technical meetings (Vienna, Caher and Athens) were held with a slight 1-month delay. The main reason for this was to to be able to discuss WP deliverables that had also been submitted with delays.
• Project Steering Committee meetings were regularly held each month according to schedule.

The main output of WP2 is the establishment of, at least one SPIN, in each of the participant countries by the end of Month 10 (i.e. January 1st 2016) and the timely submission of all the related deliverables. The results so far are:

• The establishment of the SPINs was delayed by approximately 4 months. The majority of the SPINs were finalized by the 1st May 2016 and a few of them soon afterwards (within the month of May).

The main output of WP3 is the implementation of SPIN training courses in each of the participant countries/regions by the 1st of September 2016. The results so far are:

• Five (5) of the participant countries had implemented their training course by the 1st September (i.e. Ireland, Italy, Spain, Portugal and the Czech Republic).
• Three (3) of the participant countries had implemented their training course by the 1st October (Germany, Austria/Vienna, Bulgaria).
• Two (2) of the participant countries had implemented their training course by the 1st November (Greece, Slovenia).
• Two (2) of the participant countries will be holding their training course in late November – December (Austria/Graz, Belgium).

The main output of WP4 is the elaboration of the technical toolboxes by the 1st of March 2016 and the elaboration of the modular model contract and the Financing Contract modules by the 1st September 2016. The results so far are:

• The technical toolboxes were finalized with a 2-month delay (May 1st 2016).
• The national, adapted versions of the technical toolboxes will be finalized with a 3-month delay (December 1st 2016)
• The modular model contract was finalized with a 1-month delay (October 1st 2016).
• The financing contract modules to be finalized by mid-November 2016 (i.e. with a 2 ½ month delay).

The main output of WP5 is the recruitment of the clients for the implementation of the pilot projects. The results so far are:

• Recruitment activities are ongoing and clients for 29 pilot projects have already been secured. By March 1st 2017 we expect to reach the quota of 33 pilot projects.

WP6 is a horizontal Work Package that foresees the development of the EPC+ International Platform. It is proceeding according to schedule with no perceived delays and the platform is online and already has 15 members representing 16 member states.

WP7 is horizontal Work Package that foresees all communication and dissemination activities of the project. It is proceeding according to schedule with no perceived delays. There have already been numerous presentations at national workshops and International Conferences, national press releases and distribution of developed leaflets.

Progress beyond the state of the art and expected potential impact (including the socio-economic impact and the wider societal implications of the project so far)

The main innovation of the EPC+ project is that it is an Energy Performance Contract project that specifically addresses SMEs both on the service provider and client side. Until today, the EPC market has seen very little growth in the European Union. It has only been partially successful in the public sector and the large buildings of the tertiary sector where projects with large budgets are involved. In these cases, the energy service providers that are dominant in the market are large ESCOs and multinational that have better access to funding, either from their own finances or through loans from financial institutions.

Energy efficiency measures for SME clients are usually not attractive to these large multinationals and ESCOs, as they have large transaction costs, their budgets are comparably low and profit margins are limited. SME energy service providers on the other hand lack access to funding and many times do not have the range of knowledge and/or expertise required to address them.

By clustering SMEs and convincing them to form partnerships and by standardizing energy efficiency measures, energy performance contracts and monitoring and verification procedures, the project aims to overcome the aforementioned diasadvantages of EPC projects for SMEs and thereby to significantly stimulate the energy services market and to increase the number of energy services provided by SMEs for SMEs.

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