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What is an Energy Performance Contract (EPC)

and what are the benefits for schools and academy trusts?

In this blog, we cover what an EPC is and how schools and academy trusts can benefit from entering into one.

So let’s first examine what an EPC is – The Energy Efficiency (Encouragement, Assessment and Information) Regulations 2014 gives the meaning of “energy performance contract” as a contract under which energy efficiency measures are:

  • Provided;
  • Verified and monitored during the whole term of the contract; and
  • Paid for by reference to a contractually agreed level of energy efficiency improvement or other agreed criterion such as financial savings.

Are EPCs new? – No, EPCs have been around for many years and are widely used across the Public Sector and Higher Education, regarded as one of the best methods to retrofit existing buildings with energy saving and energy generation measures.

How is an EPC Paid for? – The Service Provider designs and implements Energy Conservation Measures (ECMs) and guarantees the level of energy savings, thus offering a secured financial saving over the period of the agreement. These measures improve the energy performance of their buildings, thereby reducing carbon emissions and achieving substantial annual cost savings.

The savings stream is used as the basis to fund the cost of improvements and services from the Service Provider and these savings are guaranteed by the Service Provider under Contract. Once the costs have been repaid the Trust should be able to keep the full savings generated from the improvements.

Each Energy Services Provider will also offer a mix of funding options including Capital and Salix funding for example and the option for the contract to incorporate financing and ongoing maintenance.

What are the benefits of an EPC to a School or Academy Trust?

It is anticipated that the framework will offer schools and multi-academy trusts, in particular, a range of attractive benefits including:

Wider benefits:

  • Improved building environment
  • Improving the comfort for staff and students through better heating controls and air quality.
  • Creating a safer and better working environment through improved lighting and reduced equipment failures.
  • Investment in buildings and green technologies to help generate local jobs and improve local skills.
  • Reduction in CO 2 emissions, helping to achieve CO 2 reduction targets.

Financial benefits:

  • Guaranteed energy savings.
  • Reduction in backlog maintenance levels, maintenance costs and other running costs.
  • Reduction in CRC Scheme costs.
  • Creating the opportunity for renewable energy generation and income from the Feed-In-Tariff and Renewable Heat incentive schemes.
  • Reducing the impact of future energy price rises through significantly reducing energy use.

What is the contractual basis of the EPC Agreement? – The basis of the EPC contract is an agreement between the buying organisations (the School, Trust or Associate members of the Trust) and the Energy Services Providers. It is created to provide a structure for undertaking a contract that sees a Service Provider design and install equipment to deliver energy savings and/or energy generation.

For further information about starting your Carbon Zero journey, please visit the EPC Framework Vol 2