In May 2024, the Prospect+ Community of Practice (CoP) held a meeting for its members. This time, the talks focused on Energy Performance Contracting (EPC). We shared experiences and explored EPC applications. The meeting emphasized again the importance of community and collaboration in advancing energy efficiency through EPC. 

The meeting was led by Megan Gignac from the Energy Agency of Upper Austria, one of Prospect+ most experienced mentors.  

Megan provided insights into the agency's extensive experience with EPC, which dates back to the 1990s. She highlighted the agency's role in facilitating over 300 EPC projects, driving more than €100 million in investments. 

The EPC Mechanism

Megan explained that EPC involves a contractual arrangement between a client (such as a municipality or company) and an Energy Service Company (ESCO). The ESCO implements energy-saving measures, guarantees a certain level of energy savings, and uses these savings to refinance the project. The ESCO is also responsible for the operation and maintenance of the installed systems, ensuring energy efficiency throughout the contract period. This dual role helps achieve higher technical and quality standards for the projects 

Types of EPC

Megan explained two type of EPC applications: 

• Energy Performance Contracting: This type focuses on implementing energy-saving measures like upgrading lighting systems to LED technology. 

• Energy Supply Contracting: Here, the ESCO installs and finances energy systems (e.g., heating systems) and supplies energy to the client at a fixed price, taking responsibility for the efficiency and constant energy supply 

EPC Benefits and Challenges

EPC enables municipalities and companies to undertake energy efficiency measures without needing upfront capital. It provides a financial mechanism to make significant upgrades and achieve cost savings over time. 

Challenges include ensuring comprehensive contract coverage, such as the correct indexation of energy prices, provisions for dealing with energy cost fluctuations, and handling system extensions or new installation. 

Success Factors

• Proper internal preparation and clear project specifications are crucial for the success of EPC projects. Understanding the exact needs and expectations helps achieve higher satisfaction rates. 

• Independent third-party advice from entities like energy agencies can be invaluable, especially for clients new to EPC. 

• Building trust and maintaining transparency between the client and the ESCO are essential for a successful long-term partnership 

Examples of EPC Projects

Megan shared examples of various EPC projects in Upper Austria, including street lighting refurbishments and deep renovations of public buildings. These projects demonstrated significant energy and maintenance cost savings, highlighting the effectiveness of EPC in different contexts. They also showcased the involvement of various ESCOs, from local small companies to large international firms like Siemens. 

Participants' questions

CoP members had several questions, focusing on practical aspects of EPC implementation. These included the smooth transfer of operations post-contract, handling energy price fluctuations, and criteria for selecting buildings suitable for EPC projects. Participants also expressed interest in learning how to negotiate the best EPC contracts and ensure the right provisions, such as energy price indexation, are included.  

If you would like to watch the recording but you are not a member of the Prospect+ Community of Practice, register today to get access: click here