The EPC, a powerful financing means of Energy Efficiency

The EPC (Energy Performance Contract) is a funding mechanism based on the principle of reimbursement of energy efficiency expenses by savings.

Thanks to the EPC, an investment for the benefit of energy savings is financially neutral for the consumer: the energy bill is replaced by an equivalent amount made of a lower bill and an additional charge representing amortization of the investment.

According to that principle, an energy service provider may provide to large consumers a package including necessary works and monitoring of savings and be paid by capturing savings: this is the principle of ESCOs (Energy Service Companies).

This model, that is simple and attractive at first, is more complex than it appears to set up. To deploy it on an economically viable way, implies a strict learning process, the gathering of various conditions of success and perseverance. Too superficial approach of that model frequently brings service providers or investors to abandon or denigrate.

However, experience shows that the EPC can be a remarkably attractive tool for large consumers as well as for ESCos.

The EPC appears not only as a financing tool pushing back the limits of energy efficiency to be, at least partially, funded by the public authority but also as a means to delegate the risk to professionals, consumers and investors avoiding to support important hazards.

The challenge today is the decline and adapt to market segments for which the basic form is quite unsuitable: industry, large commercial buildings, social housing.

In many countries, a regulatory boost would accelerate such developments and enable greater use of private funds to finance energy efficiency: for that, understanding the EPC beyond the simple founding principle would be necessary.

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