Field: Energy efficiency in buildings
Global Technical function: Setting up synergies
Technical Function Unit: Performance contract, Private equity funding for development, demonstration, and commercial exploitation, Setting up a public-private partnership
Geographic Area: Austria, Germany

Contracting private Energy Service Companies (ESCOs) to undertake feasibility analyses and implement the necessary technologies to provide guaranteed energy savings for clients.

As an Energy Saving Partner of the Berlin Senate’s Administration for Urban Development and Environment (Senatsverwaltung für Stadtentwicklung und Umwelt), Energieagentur Berlin is responsible for providing guaranteed energy savings for a pool of buildings that the Senate governs (e.g., hospitals, day-care centres etc.). The Energieagentur Berlin receives a share of the saved energy, which it can use to refinance investments in energy saving technologies and measures it undertakes as part of the project.

The challenge

The owners of public properties are often hesitant to invest in energy efficiency in buildings due to insecurities they may have as regards returns of investment.

The measure

An energyperformance contract is a third party financing program, whereby after a competitive tendering process, a contracted company is responsible for the project feasibility, design, equipment purchase, installation, maintenance, operation and most importantly: a guaranteed amount of savings. Such a contract has been initiated in a public-private partnership between the Energieagentur Berlin and the Berlin Senate’s Administration for Urban Development and Environment following a tendering process for a pool of public buildings including town halls, schools, day-care centres and other public buildings.

According to this partnership model, the contractor (Energieagentur Berlin) bears the risk of investment as a private energy service provider and implements feasible measures to provide guaranteed annual cost and energy savings to the contract providing authority. Setting up a public private partnership as in the case of Berlin Energy Performance Contracting, leads to setting up synergies among the interests of public and private partners. The public authority has guaranteed energy savings delivered by the private company. In turn the private company is promised a percentage of these savings which it can use to refinance its investment.

A range of measures were undertaken by the Energieagentur within the framework of the Berlin Energy Saving Program including:

  • Offering caretakers’ training on energy related topics
  • Installation of process control technology, up-grade of consumption measurement systems and installation of digital controls
  • Replacement of boiler plants to reduce the consumption of gas and CO2 emissions
  • Replacement of energy-intensive lights with more energy-efficient lights
  • Installation of process control technology to ensure equipment is operating according to demand and not being used in excess of demand

The energy and cost savings from the Berlin Energy Saving Program are shared with the Eneregieagentur Berlin who can use these savings to refinance the invested cost for various energy saving technologies. This innovative partnership runs on private equity funding for demonstration and commercial exploitation and is a model example for how such partnerships can work.

Lessons learnt

On average public clients can reduce 30% of their energy consumption by energy performance contracting. This public private partnership for energy saving creates win-win situations for the public agencies and the private energy service providers. Pooling of small buildings can further strengthen the incentive and profitability of the project. However, a competitive market for tenders as well as a greater number of participants taking part in the tendering processes, is needed in order to ensure the maximum benefits are achieved by the project.

Further deployment

The model has already proven to be a success beyond Berlin in places such as Leipzig (Germany) and Vienna (Austria), therefore its maturity is assumed to be 9 on GML scale.

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