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Bid engineering for EPC contracts

Bid engineering

Energy Performance Contracts (EPCs), or energy performance contracts, regulate energy services rendered by an Energy Saving Company (ESCo) to a beneficiary. The energy service company (ESCo) undertakes to carry out a series of energy improvements to a building or facility owned by a beneficiary and to remunerate itself in proportion to the economic savings derived from the reduction in energy consumption. The beneficiary will then be able to upgrade its assets without any initial investment by relying on an ESCo that possesses the technical experience, know-how, means, and can assume the risk related to the implementation of the interventions. EPC contracts are identified by Legislative Decree 102/2014 as a tool to pursue the improvement of the energy performance of Public Administration buildings.

Enertech Solution advises on EPC contracts to both ESCos and possible beneficiaries (municipalities, provinces, other public administrations ), identifying the most cost-effective energy efficiency interventions, designing their feasibility and evaluating the achievable savings.

How EPC contracts work

EPC contracts constitute an agreement between a beneficiary and a provider of energy improvement services, i.e., an ESCo: the investments, works, supplies and services are borne by the latter, which is repaid from the savings resulting from the contractually established increase in performance. Because the ESCo generates its profits based on the level of improvement in the energy efficiency of buildings and facilities, proper knowledge of the results to be achieved and the measures to be applied is of paramount importance. Enertech Solution can intervene to accurately identify these aspects, analyzing pre-operational consumption to define a baseline, identifying possible correction factors related to climatic and employment aspects, proposing ad hoc efficiency measures for each context, and estimating achievable savings. The analysis can be accompanied by the calculation of a set of functional indicators to determine the financial viability of the investment. The EPC should, moreover, be preceded by an energy diagnosis, which provides a complete picture of initial consumption and allows an analytical approach to determine the most appropriate intervention strategy.

Interest in EPC contracts from companies, condominiums and PAs.

The ever-increasing interest in EPC contracts by beneficiaries (public administrations, companies or condominiums) stems from the guaranteed achievement of energy savings without the projects having to be supported by public funds or traditional credit but simply by private capital, with the aim of guaranteeing the investor an adequate return, in line with market rules.

Interest in EPC contracts from companies, condominiums and PAs.

The ever-increasing interest in EPC contracts by beneficiaries (public administrations, companies or condominiums) stems from the guaranteed achievement of energy savings without the projects having to be supported by public funds or traditional credit but simply by private capital, with the aim of guaranteeing the investor an adequate return, in line with market rules.

Energy saving

II EPC contracts allow you to reduce the energy costs involved in operating a building or facility. Since the ESCo is repaid by profits from reduced energy consumption and the beneficiary also has overriding interest in improving the performance of its assets, the estimation of contractually guaranteed energy savings assumes paramount importance. Enertech Solution offers its expertise and experience to carefully analyze consumption profiles and identify the works most capable of producing savings in relation to different contexts.

No economic risk

The beneficiary of an EPC contract is excused from assuming any risk, whether financial or operational, by entrusting the design, construction and maintenance of the works to the ESCo with the appropriate technical and financial capabilities. The latter remains the user of the best energy performance of the building or facility and at the end of the contract will be able to fully enjoy the benefits achieved. The risks associated with the implementation of the works can be minimized through the definition of the appropriate intervention strategy, aimed at the implementation of works with the best cost-benefit ratio and certain economic return.

Increase in the monetary value of the building

The EPC contract involves the implementation of interventions that increase the value of a building or facility, making it more attractive to potential buyers and users. Enertech Solution evaluates, among other aspects, the intended use and mode of use of the property in order to propose solutions suited to the context and in line with the best technologies available on the market.

Learn about all bid engineering services

Bid engineering aims to develop project-bids for participation in tenders or proposals to private entities. Enertech Solution provides the experience of its team of engineers in technical/economic planning and drafting of projects with various purposes:

Energy Services

Presidential Decree 412/93 defines "energy service contract" as the contractual act governing the provision of goods and services necessary to maintain comfort conditions in buildings.

Facility Management

As defined by the International Facility Management Association (IFMA), facility management is an activity that spans multiple disciplines

Public-private partnerships (PPPs)

PPP represents a form of cooperation between the public and private sectors, with a wide range of different models, regulated by the Contracts Code (Legislative Decree 50/2016) in Title I of Part IV

Soft Services

In facility management, the activity deputed to the management of services supporting the core business of a company or facility can be distinguished between hard services and soft services

Learn about all bid engineering services

Bid engineering aims to develop project-bids for participation in tenders or proposals to private entities. Enertech Solution provides the experience of its team of engineers in technical/economic planning and drafting of projects with various purposes:

FAQ

EPC Contracts

What is an EPC contract?

An energy performance contract (EPC) is defined as an agreement between an ESCo, a company engaged in the provision of energy services, and a beneficiary who owns or uses a building or facility. The ESCo carries out energy improvement interventions on the beneficiary’s assets, bearing the investment, design and construction costs of the work, paying itself back solely from the energy savings resulting from the interventions. There can be many forms of contracts, but generally the ESCo holds the tenure of the building or facility until the initial investment is recouped and the profit is realized; at the end of the contract, the beneficiary can enjoy exclusively the benefits of the improvements made.

What are the main types of contracts?

The main third-party financing contractual arrangements are “shared saving,” “energy management,” “firts out,” and “garanteed saving.” In the case of “shared saving,” the ESCo receives a percentage share of the monetary value of the energy saved for the period of time it takes to recover the capital and accrue profits . With the “energy management” contract, on the other hand, the company also takes responsibility for the energy bills and receives a predetermined percentage of the pre-operational costs of these from the customer. In the “firts out” agreement, the ESCo receives 100 percent of the monetary value of the energy savings until the investment is recovered and the profit is realized, while with the “garanteed savings” the client pays a periodic fee to repay the interventions with the guarantee that the monetary value of the energy savings will not be less than the fee to be paid.

What is an ESCo?

An ESCo (Energy Service Company) is a company operating in the field of energy efficiency-related services aimed at customers such as businesses and public administrations and certified according to UNI 11352. The ESCo provides all technical, commercial and financial services necessary for the implementation of energy rationalization interventions. Since the service is not limited to the provision of financial resources to the client alone, the client must also possess adequate technical and operational compentencies necessary for the design and implementation of interventions.