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Energy Efficiency with Performance Guarantees in Private and Public Sector

Periodic Reporting for period 2 - guarantEE (Energy Efficiency with Performance Guarantees in Private and Public Sector)

Reporting period: 2017-10-01 to 2019-03-31

The building stock is the largest energy consumer in Europe (share of 40% (2012) of total final energy consumption). In order to overcome the prevailing modernisation backlog and to achieve the European CO2 reduction and energy efficiency targets, the modernisation rate in the building stock must be significantly increased. As public budgets are strained in many countries, it is crucial to active private capital to implement the necessary energy saving measures.

Energy Performance Contracting (EPC) is an energy service model which has been applied successfully for 20 years for the modernisation of buildings mainly in the public sector. A strong roll-out of EPC beyond the public sector has been prevented so far, mainly because of two unresolved issues:

The split incentives dilemma typically occurs in rented facilities where the main beneficiary of energy saving measures is the user / tenant, while the responsibility for energy efficiency related investments is with the owner.

The limited flexibility of the EPC contract models can restrain market growth, especially among private building owners. The critical issues are project duration (preference for shorter contracts, e.g. five years), termination for convenience, simplified measurement and verification, using synergies with energy management requirements (for SMEs).

Within the guarantEE project, 14 experienced partners developed innovative business and financing models for performance-based Energy Service Company (ESCO) projects. For rented facilities, solutions were developed and tested that targeted adequately sharing of costs and benefits between users, building owners and ESCOs (triple-win approach). With a special focus on building owners in the private sector, EPC contract variants were developed that provide enhanced flexibility.

The planned 33 pilot projects were to achieve 78 GWh primary energy savings and 18.000 t CO2 savings per year and were to trigger investments of 11 million euros.

As a conclusion it can be stated, that the project has exceeded the targets and brought forward the role of facilitators in EPC as well as EPC for residential buildings with the triple-win-approach. The 36 pilot projects that were implemented, achieved 724 GWh primary energy savings and 48.000 t CO2 savings per year and triggered investments of 190 million euros. About 43,000 stakeholders have been informed about EPC during the project.
At the beginning of the guarantEE project the current state of the European EPC market and the needs for performance-based ESCO projects has been assessed. Based on those results and the experience of EPC project facilitators, innovative business and financing models for performance-based ESCO projects have been developed. With a special focus on building owners in the private sector, EPC contract variants providing enhanced flexibility have been set up.

The energy service models were to be tested in pilot projects, in which the building owners received support from experienced EPC facilitators. The role of the EPC facilitator is to act as a mediator between the client and the ESCO and to manage the project from the early stages of its development right through to the project conclusion. EPC facilitators give substantiated and reliable information to building owners, helping them to understand the possibilities, benefits and risks of EPC and thus paving the way for energy-efficiency projects to be undertaken.

36 pilot projects have been tendered, evaluated with questionnaires and summarized in a report which is available on the project website. The best practice database on the guarantEE website now contains 115 examples.

An EPC pre-check tool was developed and launched which is available in 13 languages. With the tool it is possible to find out if a project or building is suitable for EPC contracting, not in a business case way, but by checking if the organization is ready to outsource energy and maintenance services to a third party. The tool has been used 3,644 times in Europe during the project period and is also used by the Ministry of Slovakia, EnergieAgentur.NRW and the Swedish County Administrative Board for the Interreg project Effect4Buildings.

Quality criteria and training activities for facilitator pools have been set up. An EPC facilitation report has been published that examines the role EPC facilitators have had on the development of the EPC market in the partner countries. Also a policy recommendations report has been compiled and shared with European stakeholders.

The dissemination activities of the guarantEE project included the development of a corporate design, a website in English with 14 national subsites, the use of social media, newsletters, press releases, presentations and EPC stakeholder events. The first EESA ceremony within the guarantEE project took place in Berlin on 31 May 2017 and the second EESA ceremony took place on 20 February 2019 in the framework of the Covenant of Mayors Investment Forum – Energy Efficiency Finance Market Place.

Overview of the results
• Publication of
o an EPC market report
o a brochure with business models
o EPC contract variants and model processes
o an online EPC pre-check tool
o quality criteria for facilitator pools
o training modules on new EPC related topics
• Training activities for project facilitators have been provided with
o an European facilitator workshop
o EPC information days with overall 856 participants
o facilitator trainings with 586 participants
o webinars with overall at least 286 participants (not all could be monitored)
• 49 EPC facilitators are registered for the network guarantEEforum
• Published tenders of 36 and evaluation reports of 46 pilot projects
• 86 new projects in best practice database
• Publication of a pilot project, an EPC facilitation, and a policy recommendations report
• Project website with 14 national subsites
• Twitter social media presence with 826 tweets reaching more than 70,000 followers
• 79 online newsletters
• 67 press releases reaching more than 5,500 journalists leading to 259 media coverings
• Presentations of the guarantEE project at 97 conferences or seminars, reaching more than 5,000 participants
• 20 EPC stakeholder events reaching about 6,000 participants
• 2 EESA ceremonies
The guarantEE project paved the way for EPC in residential buildings and for private investors. The results of the pilot projects show that the potential of cost and CO2-savings with EPC went beyond the expected. The guarantEE project has demonstrated the significant amount of flexibility available when undertaking EPC projects. Aggregation allows for buildings which would otherwise be considered too small to be pooled together and to be included in an EPC project. EPC is no longer viewed simply as a financing mechanism.

The knowledge of EPC facilitators could be enhanced by trainings and the development of the European network of EPC facilitators. The market for qualified EPC facilitators could be strengthened by establishing national support structures for EPC with further developing national pools of qualified EPC facilitators.

Triple-win strategies have been developed in order to help share the benefits of EPC between building owners and tenants and secure buy-in from both parties.

With a bundle of dissemination activities the publicity of EPC could be further spread.
guarantEE logo
Policy recommendations
Administrative building after EPC
Expert collecting baseline data
Expert collecting baseline data
Expert examining the current state of insulation