Energy Performance Contracts (EPC)

Short answer: An energy performance contract (EPC) is a model where energy efficiency investments are financed through the savings achieved. The business pays for the efficiency improvement from the savings obtained, rather than as an upfront cost.

Many businesses postpone taking advantage of savings opportunities due to the upfront cost of energy efficiency investment. An energy performance contract removes this obstacle, financing the investment through savings.

A poorly designed efficiency project may not deliver the expected savings. The EPC model manages the risk by making savings measurable and guaranteed.

What is involved in the EPC process?

Energy audit and identification of savings potential.
Defining improvement measures and investment.
Establishing a savings measurement and verification (M&V) method.
Establishing the contract structure and repayment model.
Post-implementation performance monitoring

How are savings measured and guaranteed?

The foundation of an energy performance contract is the objective measurability of the savings achieved. To this end, a baseline consumption is determined before the project; after the improvement, consumption is compared to this baseline to calculate the actual savings. This process is called Measurement & Verification (M&V) and is based on international protocols. When savings can be reliably measured, the investment can be financed and even guaranteed against these savings. Thus, the business gains energy efficiency without making a large upfront expenditure; risk is managed through measurable performance.

Legal Framework and Assessment

Energy performance contracts and efficiency studies are conducted within the framework of energy management legislation and international M&V protocols.

Frequently Asked Questions

Who finances the investment in EPC?

The model is based on financing the investment with the savings achieved; the upfront cost burden is reduced.

How is savings guaranteed?

Through measurement and verification (M&V), actual savings are objectively calculated and tracked.

Which businesses is it suitable for?

Suitable for facilities with significant energy consumption and efficiency potential.