Investing in energy efficiency through Energy Performance Contracting (EPC) hinges on one key factor: ROI. In an EPC, the ESCO (Energy Service Company) gets paid based on the actual savings achieved. To secure their remuneration, ESCOs must prove the savings throughout the project.

This article explores how ESCOs can demonstrate savings and why using IPMVP® (International Performance Measurement and Verification Protocol) compliant software is vital.

Article Overview:

• What are Energy Performance Contracts?

• Benefits for companies that choose an EPC.

• How ESCOs can demonstrate real savings (IPMVP models used for measurement & verification).

• Automated reporting and real-time dashboards.

Energy Performance Contracts (or EPC or Energy Performance Contracting) have been introduced with the aim of encouraging energy retrofitting through the implementation of an energy efficiency or renewable energy project.

What are Energy Performance Contracts?

Energy Performance Contracts (EPCs) drive energy retrofitting through energy efficiency or renewable energy projects. According to Article 2 of the European Directive 2012/27/EU:

“Energy performance contracting means a contractual arrangement between the beneficiary and the provider of an energy efficiency improvement measure, verified and monitored during the entire contract term, 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 as financial savings.”

We highlight two important points here:

1. The supplier improves energy efficiency, not supplies energy.
2. The improvement must be verified and monitored.

The advantages for companies in entering into an Energy Performance Contract

EPCs offer significant benefits. Accurate pre-assessment lets suppliers predict energy savings during the contract term. This accuracy ties the service fee directly to the supplier’s forecast. If savings fall short, the supplier’s payment decreases accordingly.

Another major advantage: energy efficiency measures fund themselves through the savings they generate over time.

HOW an expert in energy management or ESCO can prove the real savings achieved

Both suppliers and customers need precise savings measurements to optimize contract outcomes. For suppliers, accurate savings calculations ensure proper compensation. For customers, precision ensures they pay the correct amount, aligning with the ROI.

Suppliers must provide software to monitor energy consumption and production. However, not all software accurately calculates pre- and post-project consumption. Therefore, choosing software that complies with IPMVP® is crucial.

The IPMVP® protocol

The IPMVP® protocol sets the standard for professionals verifying energy efficiency project results. Using IPMVP®-certified software ensures accurate energy savings calculations.

Our Energis.Cloud platform is IPMVP®-compliant, delivering precise savings calculations for energy professionals. The platform’s modeling module supports simple linear regression to complex statistical models, all implemented easily with minimal mathematical knowledge.

The screenshot above from our Energis.Cloud software highlights key project metrics:

• Expected project cost.
• Expected annual savings.
• ROI.
• IRR (Internal Rate of Return) of the project.

Users can instantly see the years needed to recoup the investment and the estimated break-even point (BEP).

Automated reporting and real-time dashboards

Clients often demand updates throughout the contract, not just at the end. Manually generating these reports can be costly, especially using tools like Excel.

Monitoring consumption and costs during the project is essential for adjusting interventions. Automated reporting systems and real-time dashboards save time and enhance customer satisfaction. Alerts notify users immediately if any parameter deviates from the norm.

Sources:

• European Commission, Energy Performance Contracting.
• Eur-Lex, DIRECTIVE 2012/27/EU OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL.
• FIRE.