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

• Paid for by reference to a contractually agreed level of energy efficiency improvement or other agreed criteria such as financial savings.

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

The ESP 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 are used to fund the cost of improvements and services and are guaranteed by the ESP under contract. Once the costs have been repaid, the trust should be able to keep the full savings generated from the improvements.

ESPs will also offer a mix of funding options including capital and Salix funding and the option for the contract to incorporate financing and ongoing maintenance.

A fundamental principle of our EPC framework is the transfer of risk to the ESP with a savings guarantee, meaning the ESP has to achieve the savings or they are liable to pay if there is any savings underperformance.

Savings will be measured and verified in accordance with The International Performance Measurement and Verification Protocol (IPMVP) and once the costs have been repaid the customer should be able to keep the full savings generated from the improvements.

The EPC does not need to impact on existing facilities management contracts or energy procurement, although it may be beneficial to include maintenance of equipment if required.

The duration of the savings guarantee will typically last until the project costs have been covered by the savings. There may be variations to this resulting from aspects such as the financing approach or the services provided (including maintenance and any other ongoing services).

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

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.

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 C02 emissions.

The basis of the EPC contract is an agreement between the buying organisation (the school, trust, or associate members of the trust) and the ESP. It is created to provide a structure for undertaking a contract that sees an ESP design and install equipment to deliver energy savings and/or energy generation.

The purpose of the EPC framework is to:

• Provide a mechanism whereby the parties may enter into further competitions leading to call-off contracts.

• Provide the framework to administer each call-off contract.

• Set out the rights and obligations of the ESP and the buying authority under a call-off contract.

To fully understand a project so as to determine the potential savings, and detail exactly how these will be best achieved, typically requires significant monitoring and analysis of the current use and energy demand. Such a detailed level of analysis is unlikely to be feasible at the partner selection stage (from a disruption or bidder cost perspective) and the expectation is that the initial analysis and design undertaken at the tender stage is further detailed once the preferred bidder has been selected. Performance aspects from the tender, such as minimum savings and maximum payback periods, should be taken forward as part of the minimum contractual requirements.

To ensure that the buying organisation isn’t tied into the proposals before they, and their impact, are fully detailed, the proposed framework uses a two stage process:

Call-off Phase 1

This is expected to be signed on selection following tender. This covers the production of the Investment Grade Proposal.

Call-off Phase 2

This is expected to be signed once the buying authority is happy with the approach, measures, plan and other details contained in the Investment Grade Proposal.