This document discusses energy performance contracting (EPC), including the basics, legal framework, and financing options. It provides details on the key aspects of an EPC agreement such as the scope of services, guarantees, and standard contract template. EPC allows an energy service company (ESCO) to implement energy efficiency upgrades and be paid back over time from resulting energy savings. The document proposes establishing a local EPC facilitator called LABEEF to help standardize contracts and financing to scale up EPC projects through mechanisms like forfaiting, which resolves fundamental financing problems for ESCOs.

1. Basics for Energy Performance Contracting
EPC Code:Values and Principles
Financing EPC projects
By Harijs Švarcs, LABEEF council member
2019

2. beneficiary
LEGAL FRAMEWORK
DIRECTIVE 2012/27/EU OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL
2
ENERGYPERFORMANCECONTRACTING
provider of an energy
efficiency
improvement measure
verified and
monitored during the
whole term of the
contract
AGREED ENNERGY PERFORMANCE OVER TIME
PAYMENTS PAYMENTS PAYMENTS PAYMENTS PAYMENTS PAYMENTS
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

3. EPC IN PUBLIC BUILDINGS
3
CLIENT
Public building
CONTRACTOR
ESCO
Owners holding title in
the Building Legal entity with
experience and track
record
Energy
Performance
Contract
The
Agreement

4. SCOPE AND SERVICES
4
ESCO
Arrange:
ü Engineering,
ü Procurement,
ü Supply
ü Installation,
ü Start-up
ü Commissioning
ü Financing
Operation and Maintenance:
ü Periodic maintenance activities
ü Mid-term preventative maintenance activity
ü Long term provisioned maintenance activities
ü Administration, Emergency calls, building insurance
Contractual Fees for:
ü Energy and domestic hot water (metered)
ü Renovation works
ü Operation and maintenance
ü Energy Savings Guarantee
ü Comfort standards
ü Masurement and verification (independent)
Cooperation:
Between owner and
tenants and the ESCO
and subcontractors
CLIENT
CONSTRUCTION PERIOD SERVICE PERIOD
3 TO 12 MONTHS 20 YEARS6 to 8 MONTHS
AGREEMENT
EPC
SIGNATURE
END
WORKS END
CONTRACT
Pre-EPC
SIGNATURE

5. KEY GUARANTEE
5
ENERGY SAVINGS
In the Energy Performance Contract the ESCO
guarantees that after renovation energy consumption is
reduced compared to the baseline and at the same
climate conditions
BASELINE AFTER
GUARANTEE
Guarantee
energy
savings
Guaranteed energy savings indicated in the
Energy Performance Contract
Measurement and Verification @ Settlement
BASELINE AFTER
GUARANTEE
Real
energy
savings
M&V
BASELINE AFTER
GUARANTEE
Real
energy
savings
M&V
Missing
Extra
The ESCO pays back
the missing energy
savings.
The ESCO gets the
extra energy savings.

6. OTHER GUARANTEES (SAMPLE)
6
SERVICE QUALITY
INDOOR AIR QUALITY
INDOOR AND HOT
WATER TEMPERATURE
In the EPC the ESCO guarantees a minimum indoor air
temperature level (for example 22°C) and suitable
domestic hot water supply (for example > 55°C)
In the Energy Performance Contract the ESCO
guarantees suitable number of air exchanges = good
ventilation of the building.
In the Energy Performance Contract the ESCO
guarantees that the installed equipment and the used
materials for the full length of the contract = i..e 20
years

7. EUROPEAN CODE OF CONDUCT FOR EPC
Efficiency
• Energy savings
• Economic efficiency
• Sustainability in time
Professionalism
• Expertise
• High-quality service
• Health and safety
concerns
• Good name in the sector
and project Reliability
• Responsibility
• Respect
• Responsiveness
• Objectivity
Transparency
• Integrity
• Openness
• Long-term approach
• Transparence of all steps
and financing
arrangements
• Clear, regular and honest
communication
7
VALUES

8. PRINCIPLES
THE EPC PROVIDER FOCUSES
ON HIGH QUALITY AND CARE
IN ALL PHASES OF PROJECT
IMPLEMENTATION
The EPC provider delivers economically efficient savings
The EPC provider takes over the performance risks
Savings are guaranteed by the EPC provider and determined by
M&V
The EPC provider supports long-term use of energy
management
All steps in the process of the EPC project are conducted lawfully
and with integrity
The EPC provider supports the Client in financing of EPC project
The EPC provider ensures qualified staff for EPC project implementation
EUROPEAN CODE OF CONDUCT FOR EPC
8

9. ENERGY PERFORMANCE CONTRACT (SAMPLE TEMPLATE)
9
A2. BUDGET AND SCOPE
OF RENOVATION WORKS
A5. OPERATION AND
MAINTENANCE MANUAL
2. SERVICE PROVIDED 3. TERMS1. SCOPE
SPECIFIC CONDITIONS
A1. INFORMATION ABOUT
THE BUILDING
A4. BASELINE & ENERGY
SAVINGS GUARANTEE
A6. ENERGY RELATED
FEES AND M&V
A9. AUTHORISED
REPRESENTATIVES
1. DEFINITIONS
3. SAFETY QUALITY AND COMFORT
5. RIGHT AND OBLIGATION OF THE ESCO
7. SETTLEMENT PROCEDURES
6. RIGHT AND OBLIGATION OF THE CLIENT
10. M&V AND DATA MANAGEMENT
8. TERM OF THE AGREEMENT
9. LATENT CONDITIONS
16. SOFTWARE AND IP RIGHTS
11. DISPUTE RESOLUTION PROCEDURES
12. MAINTENANCE OF THE MEASURES
13. INSURANCE
14. ASSIGNMEENT OF CLAIMS
15. TITLE OF THE MEASURES
17. CHANGE IN USE OF THE BUILDING
18. DISPOSAL OF DISMANTLED EQUIPMENT
19. LIABILITY
20. TERMINATION OF THE AGREEMENT
21. FORCE MAJEURE
22. CONFIDENTIALITY
23. CONSLUSION AND AMENDAMENTS
GENERAL TERMS AND CONDITIONS
4. COMPENSETION
A3. COMFORT
STANDARDS
A7. RENOVATION FEE
A8. OPERATIONAL AND
MAINTENANCE FEE
A10. GENERAL
ASSEMBLY PROTOCOL
2. ACCEPTANCE OF AGREEMENT TERMS
4. GUARANTEES
24. REPRESENTATION OF THE PARTIES
25. NOTICES
26. SIGNATURE

10. ESCO FINANCING
ESCO
Payments
LABEEF
BUILDING
Standartized EPC Financing
agreement
Renovation and
guaranteed savings
Payments
Financing
BANK
FORFAITING
LABEEF
ESCO
Banks
LABEEF ESCO
Standartized EPC
Forfaiting agreement
ESCO designs,
implements and
finances the
project
LABEEF buys
energy savings
and associated
cash flows
forward
LABEEF forfaits
the contracts
and provides
long term
financing
1
2
3
RESOLVES
FUNDAMENTAL
ESCO PROBLEM !
11
10

11. HOW TO SCALE?
ESCO A
LABEEF
STANDARTIZED EPC
INSTITUTIONAL
INVESTORS
FINANCING
SHAREHOLDER EQUITY
ALTUM INSTRUMENTS
BANK FINANCING
EBRD
OTHER INSTITUTIONS
PRIVATE EQUITY
DEBT FINANCING
ESCO B
SHORTTERMFINANCINGLONGTERMFINANCING
ESCO C ESCO D ESCO E
11

12. DE-RISKING
ESCO motivated to select suitable
buildings:
• Higher energy saving potential
• Low default risk of building owners
ESCO motivated to implement at
highest standards:
• Technical design
• Quality material
• Execution of works
Multi layer de-
risking
approach
Investment guidelines:
• Required technical standards
• Analyse historic credit risk
• Contract templates
LABEEF and independent
verification consultants:
• Due diligence
• Review prior to disbursement approval
ESCOs paid for on-going
performance and
maintenance services.
ESCO motivated to ensure
performance:
• Maintenance
• Operations
EXECUTION PAYMENT
EPC project cycle:
Steps for de-risking
over time
12

13. THANK YOU
CONTACTS
Harijs Švarcs
harijs@fcubed.eu
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