Produced in Association with SERIES 21 / Module 09 Energy as a Service


of EPCs are for less than five years). Also, they use a guaranteed savings model and are paid for using the client’s internal funds or debt arrangements4.


Energy Supply Contract An Energy Supply Contract (ESC) could be considered to be a subset of an EPC and usually takes the form of a long term contract to supply useful energy to a site in the form of steam, hot water, coolant or electricity. Depending on the nature of energy supplies, this may be referred to as heat supply, energy services or a power purchase agreement. A rate is agreed that provides savings to the client in return for commitment to a minimum level of consumption, while the provider guarantees minimum energy supply service levels and availability. Figure 2 illustrates how an EPC may


typically be implemented in five common steps. Approaches used will depend on the scope and programme chosen. The QualitEE project is focused on


quality assurance for energy efficiency services across Europe. Their research has identified key elements for quality in EPC projects. Top rated UK aspects include: a robust preliminary technical- economic analysis and energy audit, good communication between provider and client, measurement and verification (M&V), transparency and completeness of contracts, implementation of technical measures, and achieving expected savings levels. This research is the basis for the current European guidelines for quality evaluation of EPCs5. It is important that there is a clear


understanding of the brief and roles and responsibilities at the start. Top management needs to be on board by setting out key requirements, appointing an internal project manager and ensuring appropriate targets are stipulated. Different people are likely to be involved in the process; for example financial managers interested in cost and property managers interested in technical specifications and service levels. Clients need to have the procurement (and contract management) capabilities to ensure appropriate risks are truly transferred to the provider. Commonly, the provider takes on


project, technical and performance outcome risks. Some risks will need to be shared or taken on by the client; these may include energy unit price changes, weather impacts or


impact of major changes in customer building/process use (both the latter can be accounted for in the M&V process). Upfront assumptions need to be transparent and clearly documented. An investment grade audit, used


to identify and set specifications for energy conservation measures, can be quite expensive, especially where assumptions need to be made up front for a long-term commitment.


Defi ned and measured Service level requirements need to be defined and measured, depending on the services in scope: for example, building user comfort requirements may be specified using objective measures (temperature, air quality, lighting levels, etc.), supported and evidenced by collective user customer feedback. Energy consumption should be


understood in terms of its driving factors. For instance, units produced is often important in manufacturing sites, covers in restaurants, and external temperature for supermarkets with high refrigeration load. This can help understanding of energy service productivity, drive continual improvement and form the basis for M&V. For better insight into effective energy savings measures, it is


important to involve local maintenance and operations teams who are closest to and so best understand the (changing) needs of their customers. Beware, without a collaborative ethos, an EPC model can cause conflict with incumbent service providers. The secret is often to blend the technical and people based approaches, with good energy management ISO 50001 system controls alongside. The M&V plan, to verify energy


savings delivered, needs to be developed early so sufficient baseline information can be collected. A gap analysis identifies existing metering and where upgrade provisions are necessary. The International Performance Measurement and Verification Protocol (IPMVP)6 defines good practice in M&V. Raising affordable finance can be


seen as a barrier for UK projects, even though there is a wide range of finance options available; debt finance is often used, for example from Salix Finance for public sector projects; leasing options exist for removable assets such as lighting systems; or project finance can be put together through special purpose vehicles. Where necessary, clients use


independent EPC facilitators for project development, provider selection, M&V, behaviour change or other ways to add value.


Figure 2: Energy performance contracting in 5 steps


Major benefi ts The energy as a service approach has the potential to offer significant benefits for end user organisations for a wide range of applications. Recognising energy as a service


means that energy use can be viewed holistically, with the end point of the value chain being the end service rather than the energy meter. This means avoidable energy can more easily be targeted, generating the Negawatts that Amory Lovins referred to as one of the biggest opportunities in our economy today. At its best, optimum energy service


productivity can be considered to be the point that the organisation is confident its systems and practices are only using what they need. You will know what works best


for your organisation, whether it’s contracting services out or working with specialists on particular areas and engaging, empowering and incentivising the teams involved. This can be structured under the wider remit of an EPC7 or set up through in-house initiatives such as energy crediting (bottom-up tracking of savings linked to people and teams). The overall package needs to be


right so that it delivers enhanced value for the customer, reduced energy consumption and cost and benefits for the parties and people involved (the ‘Win Win Win’). If service pricing is competitive, more organisations will get buy-in. A culture of continuous learning, creativity, innovation and leadership is what typically drives enhanced levels of quality and service for customers and colleagues. To succeed, the overall approach


needs to be desirable, focused, (relatively) easy and continual, but most importantly it needs to be owned by the people involved. ▄


References


[1] The Negawatt Revolution, Amory Lovins, the Conference Board Magazine Vol. XXVII No. 9, September 1990


[2] Reach for the stars, Energy efficiency, design for performance, CIBSE Journal, December 2018


[3] Energy Services Contracting Group (ESCg) Booklet, Accelerating the energy transition, ESTA, 2019


[4] QualitEE, UK Country report on the energy efficiency service market and quality, https:// qualitee.eu/gb/, 2018


[5] QualitEE, Guidelines of European Technical Quality Criteria for Energy Efficiency Services, https:// qualitee.eu, 2020


[6] International Performance Measurement & Verification Protocol, https://evo-world.org, 2022


[7] BS EN 17669:2022, Energy Performance Contracts. Minimum requirements, standard, 2023


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EIBI | APRIL 2024


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