Improving the Efficiency of Energy Consumption in Buildings: Simulation of Alternative EnPC Models

Jorge Natividade, Carlos Oliveira Cruz and Cristina Matos Silva
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Jorge Natividade: Instituto Superior Técnico, Universidade de Lisboa, Avenida Rovisco Pais, 1049-001 Lisbon, Portugal
Carlos Oliveira Cruz: CERIS, Instituto Superior Técnico, Universidade de Lisboa, Avenida Rovisco Pais, 1049-001 Lisbon, Portugal
Cristina Matos Silva: CERIS, Instituto Superior Técnico, Universidade de Lisboa, Avenida Rovisco Pais, 1049-001 Lisbon, Portugal

Sustainability, 2022, vol. 14, issue 7, 1-17

Abstract: The construction sector and the operation and maintenance of buildings largely contribute to energy consumption and emission of greenhouse gases (GHGs) in the European Union (EU). Therefore, it is of utmost importance to improve the energy performance of buildings. Yet, this frequently involves high short-term investments, which may not be compatible with owners’ budgetary constraints. In this research we analyze the importance of Energy Performance Contracting (EnPC) for the improvement of energy efficiency in buildings. These models allow bypassing budgetary restrictions of owners (public and private ones) and bring private capital to finance energy efficiency measures. The paper analyses different models of contracting Energy Service Companies (ESCOs), from traditional models to alternative models, and exposes the versatility of the new contracting models and the associated risks. Several applications of energy performance contracts implemented in European countries are presented to identify the main characteristics that lead to successful contracts. The paper also includes the discussion of energy performance contracts applied to a public building (a school) that seeks to reduce its annual energy consumption, by testing the use of three types of energy performance contracts. The results show that there is potential in the use of EnPC but it is critical to select the most adequate model, especially when defining the contract duration, to balance both owners’ and companies’ interests.

Keywords: energy performance contract; energy service company; First-Out Contract; guaranteed savings; shared savings; PPP (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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