About EPC

According to the Directive on energy efficiency (Directive 2012/27/EU), Energy Performance Contracting (EPC) means a contractual arrangement between the beneficiary and the provider of an energy efficiency improvement measure, verified and monitored during the whole term of the contract, where investments (work, supply or service) in that measure are paid for in relation to a contractually agreed level of energy efficiency improvement or other agreed energy performance criterion, such asfinancial savings.

EPC has been used in the European Union (EU) since the 1980s. However, the market remains underdeveloped, notably in comparison with North America (the United States and Canada). The Energy Performance Contracting model is highly replicable in the EU and internationally recognised as a guaranteed, cost effective and scalable procurement method for reducing the operating costs and environmental impacts of buildings. EPC represents a proven tool used in Austria, Germany,Czech Republic and Scandinavia, to some extend initiated in the United Kingdom and France but lessor not used at all in other EU countries.

Our objective is to promote EPC at the EU level and address key barriers such as lack of awareness and/or lack of knowledge, lack of policies and support mechanisms, lack of common definitions and harmonised processes, etc.


In practice, under a performance contract, an Energy Services Company (ESCO) provides a comprehensive building retrofit, which can include the replacement of boilers, insulation, cooling systems, lighting and temperature automation controls, as well as the integration of energy data management software and on‐site renewable energy systems.

The ESCO takes complete “turn‐key” responsibility for the project, meaning it covers all aspects of the project from start to finish: preliminary energy audits, detailed design and engineering, business case, analysis, installation, commissioning, and performance measurement and verification.

The ESCO acts as an overall project manager and will divide the retrofit works into specialised areas, which will be contracted to local specialised partners, the ESCO keeping the overall responsibility for the work and the guaranteed energy savings. For that reason, EPC projects are using local Small and Medium Enterprises (SMEs) and in turn this contributes to the development of the local job market.

Moreover, the most important for this model is that the ESCO assumes performance risk for the project in the form of a long‐term financial guarantee to ensure that the projected energy and operational cost savings materialise and are preserved over time. If promised energy savings are not realised, the ESCO must pay the difference to the building owner.

What EPC can achieve

The EPC process

EPC is a four stage process:

  • Preliminary study
  • Detailed analysis
  • Implementation
  • Guarantee phase

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