Demand for EPCs sees little growth

Companies offering energy performance contracts are experiencing very minimal growth in demand.

A survey of energy service providers in 15 European countries, including the UK, revealed that 31 per cent had seen “little change ”in activity during 2019, and 28 per cent had seen it actually decline.

Lack of trust in the industry, plus the high managerial costs of projects, are perceived as the main factors hampering growth.

Energy performance contracts commit service providers to the delivery of agreed energy savings over a set period of time. The main advantage of these contracts is that they offer guaranteed savings to occupiers of premises being improved, without the need for upfront capital. If agreed energy-saving objectives are not met, the service provider must reimburse the client or carry out additional work.

Throughout this century the European Commission has been seeking to remove market barriers to the expansion of the energy performance market. In 2001 it funded the (now defunct) UK Association for the Conservation of Energy to employ lawyers to establish standard contracts applicable in each European country, so as to minimise continuing legal costs.

More recently, it put together the QualitEE project, aiming to develop a standardised set of quality criteria that can be applied across the energy services industry. The most successful companies are felt to be those that undertake preliminary energy audits for their clients, accompanied by clear measurement and verification of energy savings to achieve the expected outcomes.

One option being considered is to create a quality assurance scheme that will provide reassurance for prospective clients. EC officials are considering including such a scheme in a future revision of the Energy Efficiency Directive by strengthening its Article 16. This specifically deals with qualification, accreditation and certification schemes.

However, the costs associated with creating and policing such a quality assurance scheme are acknowledged to be considerable. Such schemes can be used to create market barriers that deter new entrants to the energy services market.

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