Contracting refers to a contractually agreed provision of energy services. The building owner (principal) commissions a service provider (contractor) to complete measures that will increase the energy efficiency in its properties. The contractor plans, finances and completes all steps needed to save energy or to optimise the energy supply based on a customised concept. In addition, the contractor – depending on the agreement – also manages the operation, maintenance and repair of the newly installed system. The energy service provider recoups the investment by taking a percentage of the saved energy costs or by receiving remuneration for the delivery of useful energy, again depending on the contracting model.
The Federal Government has also recognised the significant potential of energy efficiency services like contracting: It intends to improve the framework conditions, as enshrined in the National Energy Efficiency Action Plan (NAPE).
Contracting models: energy savings contracting and energy supply contracting
At the moment there are two main contractual models in use: energy supply contracting and energy savings contracting.
In energy supply contracting the contractor provides a reliable supply of useful energy in combination with other services: the contractor remains responsible for the system and its maintenance for the duration of the contract. The saving measures relate to energy production.
The focus in energy savings contracting is on a promise by the contractor that the principal will achieve guaranteed savings. Here, the energy service provider must deliver these promised energy savings within the agreed contractual period, and its remuneration will depend on this fact. The targets are reached by efficiency measures on demand and the supply side. There are also mixed forms that combine both contractual models.
Owners benefit from energy services
Contracting is a good alternative to attempting the implementation of efficiency measures without outside support. Building owners can enjoy many different benefits: the reduced energy consumption in energy savings contracting leads to lower energy costs. Moreover, the building owner remains financially flexible, because the service provider looks after any major capital investments. Principals also ease the strain on their own staff and resources, shed the commercial and technical risk involved in the process, and can count on the expertise of the energy service provider. Finally, they also increase the value of their property and contribute actively to climate protection. CO22emissions are reduced.
Suitable candidates for contracting
Many savings opportunities remain unused, especially at municipal and state level. Contracting measures can help to alleviate this situation. This is because the energy services are particularly suited to public buildings, hospitals, commercial properties and rental housing. But hotels and detached or semi-detached homes can also benefit from contracting.
Practice has shown how efficient this service can be: dena has supported managers of government-owned properties in the introduction of energy contracting. Over 30 successful projects demonstrate that around 39 percent in energy costs and 37 percent in CO2 emissions can be saved on average. You will find additional successful examples of contracting models in dena’s Database of Case Histories.
Centre of Expertise for Contracting for Buildings
Deutsche Energie-Agentur (dena) – the German Energy Agency – founded the Centre of Expertise for Building Contracting in 2010 in cooperation with the Federal Ministry of Transport, Building and Urban Development (BMVBS) in order to exploit contracting potential nationwide. The purpose of this initiative is to improve the conditions for a more widespread use of contracting and to publicise the benefits of energy services to potential stakeholders and target groups.
Besides basic knowledge for novices and details on project implementation, the Centre of Expertise for Contracting also provides numerous examples of successful contracting projects. It also supports those using contracting models by offering extensive practical assistance in the preparation and execution of their projects, including guidelines, contractual templates and calculation tools. Find out more at www.kompetenzzentrum-contracting.de.