|TYPES OF EPC CONTRACT AND EPC MARKET IN THE SOUTHERN EUROPEAN COUNTRIES|
“ENERGY SERVICE PLUS” contract
(the Legislative Decree n. 115/08 defines the requirements and performance- Annex II).
The main requirements are:
(i) guaranteed savings of 10% of primary energy for heating,
(ii) obligation of the company to perform renovations with economic burden on your own
(iii) contract duration from 1 to 10 years
(iv) management of facilities, including the supply of energy, by the ESCO for the duration of the contract,
(v) energy measurement.
|Model “BOOT” (Build-Own-Operate & Transfer)||applied in many cases of realizations of the district heating networks with Public Private Partnerships (PPP) and in the health sector for the construction of Combined Heating and Power (CHP) plants|
|SHARED SAVINGS||especially in the private market,|
|FIRST OUT||especially for plant interventions that have short return times|
|FIRST IN||especially for interventions of construction of renewable plants for which the incentives (conto energia) reduce the return time of the investment|
In Italy EPCs are mostly used for financing cogeneration plants, heating management and efficient lighting.
The most commonly used version of energy performance contracts is that ensuring the client a % reduction in his energy bill, in terms of amounts to pay. Energy performance contracts based on savings in energy units are extremely rare as they imply that the provider be able to determine the level of energy consumption (in KWh) prior to the implementation and subsequently to forecast and guarantee the energy savings (in KWh) achievable after the implementation of the project.
Energy performance contracts are not widely used across the Italian territory. This is especially because there are barriers to third party financing which is essential for projects where available funds (of the EES provider) are not sufficient to cover the whole initial investment. Such barriers are rooted in the banking system that remains very reluctant to finance projects based on energy savings guarantees for collateral. In general therefore, energy performance contracts tend to be used on small energy efficiency projects, especially by ESCOs, whereas utility companies are more likely to use contract types which include the supply of electricity and heating (also on larger projects).
All in all problems related to energy performance contracting mainly come from three uncertainty factors:
1. normative/economic uncertainty linked to the magnitude of future cash flows from an energy efficiency project’s energy savings as legislation is in constant progress and transformation (this is especially related to the applicable energy tariffs and monetary incentives in place);
2. financial uncertainty linked to incentives such as white certificates as these are market-based mechanisms and are therefore subject to market volatility;
3. technological uncertainty linked to new and innovative technologies used.