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Energy Performance Contracting Plus

Periodic Reporting for period 2 - EPC_PLUS (Energy Performance Contracting Plus)

Reporting period: 2016-09-01 to 2018-03-31

According to the project proposal, the main reasons why the implementation of Energy Performance Contracting (EPC) can be complicated and lengthy is, among other things, 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 in both the public and private sector.
More specifically, the other main barriers for the implementation of EPC in Small and Medium sized Enterprises (SME’s) are that the transaction costs for procuring energy services are too high in comparison to the budget of the energy efficiency project as are the costs required for the measurement and verification procedures and the guarantees.

The objectives of the EPC+ project were to overcome these barriers by:

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

The other main objective of the EPC+ project was to simplify EPC models by creating and testing sample documents and finding new financing models. These include:

• Development of standardized energy services with special themes (e.g. LED lighting, pumps and electric motors, ventilation systems, cooling, consulting services and user motivation with no or low cost investments etc.) that can be easily handled by SMEs.
• 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.
The main work performed from the beginning of the project includes:

1) The establishment of, at least one SPIN, in each of the participant countries (18 SPINs were established)
2) The preparation of training packages and the implementation of training courses in each of the participant countries/regions.
3) The elaboration of a business case, technical and financial toolboxes, modular model contracts and Standardized Financing Contracts for the established SPINs.
4) The recruitment of clients for the implementation of pilot projects, the adaptation and translation of the modular contracts elaborated, the implementation of the pilot projects and the development of a member’s area for their documentation and monitoring.
5) The development of an EPC+ International Platform.
6) Communication and dissemination activities.

The results from the implementation of the pilot project the impact consisted of the following:

1. Cumulative investments made by European stakeholders: 3,3 million €.
2. Electrical energy savings: 2,4 GWhe
3. Thermal energy savings: 6,7 GWhth
4. Primary energy savings: 13,37 GWh.

Even though underachieving when compared to the targets set in the project proposal for both the cumulative investment and primary energy savings , the project has managed to kick-start a virtually non-existent and stagnant market and it is hoped that the implementation of these pilot projects will serve as a real-life demonstration of the applicability and viability of the implementation of this type of energy service contracting in the SME sector. Therefore, it is very important that the results of the project are exploited correctly in order to ensure its long-term success. In order for this to happen, the project partners and the newly established SPINs should make efforts to maintain the project in the spotlight in order to ensure that the existing interest in it does not fade. Furthermore, future EU projects that complement the EPC+ project should also be informed of its activities and main findings in order to maximize synergies.

Two months after the official termination, we are already witnessing events that seem to confirm that the EPC+ project will have a long-lasting effect in the future development and enlargement of the EPC market. Namely:

• Within the framework of related thematic EU programmes (i.e. HORIZON 2020, ELENA, Interreg-MED etc.) and also national programmes, the project partners of the EPC+ projects are being invited to present its results and achievements and to also participate in relevant discussions.
• All the national SPINs established within the EPC+ project continue to work together in both EPC projects and other business ventures (e.g. mandatory energy audits for large enterprises, training seminars etc.)
• Some of the national SPINs already have new EPC projects in the pipeline (as documented in D5.5) for both 2018 and 2019.
• Some of the national SPINs have started to seek larger partnerships with energy companies who wish to provide energy services with EPC to their clients. This is a very promising, but difficult endeavour, which, if successful, will overcome the liquidity problems of the SPINS. However, in these cases, it is very important that the these enlarged SPINs maintain their initial status and profile and that they are not ultimately absorbed by the larger, energy company.
• All the members of the EPC+ International Platform continue to participate in the network even after the termination of the EPC+ project.
• In some countries (e.g. Greece) other SMEs wishing to establish new SPINs have already contacted the project partner in order to obtain guidance from them.
• Some financial institutions are considering opening new credit lines (e.g. ETVA-VIPE in Greece) for small-scale energy saving projects.
• The new HORIZON 2020 project, QUALITEE ( which intends to institutionalise quality criteria for energy services in the project partners’ countries, is using the qualitative results of some of the EPC+ pilot projects to test the quality criteria that have been drafted.
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.