Energy performance contracts
Energy Performance Contracts (EPC’s) are contracts for the implementation of energy saving and renewable energy measures by a contractor sometimes referred to as an Energy Service Company (ESCO) or EPC provider. They first emerged in the US in the 1970’s and 1980’s. They can be appropriate for domestic and commercial properties, but are most often associated with public-sector clients.
Most commonly, Energy Performance Contracts include a guarantee from the provider that the specified energy savings will be achieved, and so there is no risk to the client. Less commonly, contracts may adopt a shared savings approach, in which savings are shared on a percentage basis for a pre-agreed period. In this case, the client and the provider are to a certain extent sharing the risk.
Schemes can include financing, often by a third party, but sometimes by the EPC provider, in which the savings generated by the measures implemented should be sufficient to make the repayments required. At the end of the contract, all subsequent savings are kept by the client.
Typically, the EPC provider will carry out an energy audit of the premises, design the measures it considers will best achieve the required savings, implement the measures and arrange the financing. As a result, EPC providers tend to be large organisations with experience in the sector and with the capability of standing by guarantees for long periods of time (up to 15 years). This might include; energy suppliers, energy consultancies, facilities management companies and large equipment suppliers.
EPC’s can be useful in enabling energy efficiency measures to be implemented quickly, with no capital expenditure by the client, and with little risk. However, they have been criticised for being difficult to negotiate, for a lack of transparency in the costs of the measures implemented and because of the lack of low-cost financing. In addition, there are complexities for properties that are leased and when properties are sold, and because EPC’s are such long-term contracts, there are inevitable uncertainties in relation to the future of the energy market, future technologies, changes of use and so on.
It may be appropriate to seek independent advice when negotiating Energy Performance Contracts.
 Related articles on Designing Buildings Wiki
- Green Deal.
- Emission rates.
- Energy certificates.
- Feed in tariff.
- Renewable energy.
- Renewable heat incentive.
- Zero carbon homes.
- Zero carbon non domestic buildings.
 External references
- Eu.bac, Energy Performance Contracting in the European Union.
Featured articles and news
UK-GBC green paper proposes more powers for cities on new-build housing.
The Pompidou Centre – not a monument but an event.
The Chartered Institute of Building restructures and launches 29 new local hubs.
Designing Buildings Wiki talks to the founder of the world's first indoor biophilic gym, now open in London.
£1.3bn Swansea Bay project to be backed as a 'pathfinder' for other tidal lagoon projects.
Designs released for a proposed Las Vegas stadium to entice the Oakland Raiders.
Have a look at these award-winning concept designs for a thermal bath in Latvia.
Flagship project no longer "a going concern" according to the Garden Bridge Trust as funding slows.
How the work of 20th century urbanist Jane Jacobs continues to resonate in light of the government's garden village plans.
New landmark for the Ecuadorean capital of Quito utilises a sinuous facade mold system.
Have a look at this glass piano and violin building in China.