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Energy performance contracting in the EU: creating common "model" definitions, processes and contracts

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This paper offers a comparison of definitions, model procurement processes and contract document templates used in energy performance contracting (EPC). It is intended for policy makers and building efficiency stakeholders at local, regional, national and European Union levels who are interested in EPC as a means to reduce the operating costs and environmental impacts of buildings.

A central theme of this document is that EPC is understood and used differently from one jurisdiction to the next and from one organization to the next. Most policy makers and market practitioners agree that this kind of diversity can create confusion and produce wide variations in the quality of services delivered under energy performance contracts, complicating efforts to track and compare the effectiveness of cost and greenhouse gas reductions across various markets.

Creating standard European definitions, processes and contract models for EPC may help to address these issues while catalyzing the European EPC market, which is far from reaching its full potential and which remains underdeveloped in comparison with the United States and, increasingly, advanced developing countries.

In that spirit, this paper examines how EPC is defined by a variety of organizations and suggests common elements for building a standard European definition. It also compares four types of procurement model processes used in Europe and the United States and analyzes the benefits of each model for building owners versus energy service companies (ESCOs). The last part of this paper compares and analyzes three energy performance contract document templates.

It is hoped that the information and analysis contained in these pages can be of use for policy makers and other stakeholders who hope to maximize the contribution of the buildings sector to the 20% by 2020 greenhouse gas reduction target.