Multiple benefits of renovation in buildings - PU Europe

Multiple benefits of investing in energy
efficient renovation of buildings
Box 3 ESCO partnerships in Europe
The most common ESCO in Europe is an independent company specialising in providing
services such as energy analysis and audits, project design and implementation
and monitoring and evaluation of savings to name just a few. While 62 per cent of European
ESCOs define themselves in this category, 17 per cent are Energy utility or
supply companies, and about 16 per cent are public sector agencies or public-private
joint ventures. Almost all companies provide financing services, 89 per cent offer
guarantee of performance meaning that they are prepared to accept part of the technical
and financial risk, and about 58 per cent offer insurance coverage.
The vast majority of ESCO projects take place in either industry (50 per cent) or in the
public sector (38 per cent). The choice of applied technology is more diverse and
ranges from improved heating systems, heating ventilation and air conditioning to improved
lighting and industrial processes and combustion improvement. The length of
an ESCO partnership contract is typically 5-15 years.
Germany was one of the first movers, and is currently one of the most mature ESCO
markets in the EU. The focus has primarily been on public buildings in the commercial
sector with building “pools” of up to 100 separate buildings in order to minimize transaction
costs. In 1995 Berlin launched an energy saving strategy, and by an ESCO
partnership managed to reduce the annual energy cost bill by almost €3 billion and to
reduce CO 2 emissions by 25 per cent.
In Nyköping in Sweden, an ESCO offered a contract covering 123 of the municipality’s
buildings totalling an area of 257,000 m 2 . The improvements included the installation
of a Building Management System in all buildings to monitor energy consumption, new
heat pumps and solar panels, including sensor controlled lighting and heating/cooling.
The project resulted in a reduction of 21 per cent in the municipality’s energy bill.
The Royal Gwent Hospital in UK engaged an ESCO to renovate old infrastructure and
ensure energy savings. The project introduced more effective energy and heating systems,
a lighting retrofit and water conservation measures. The project has resulted in
annual savings of at least €620,000.
Source: DG JRC (2005) and www.EU-esco.org
Energy costs are a small share of overall costs
While the total value of energy savings at macro level might be substantial, energy costs
account typically for a small part of overall costs for business and to a less extent households.
46 One study has found that the energy costs in commercial building in high cost city
centres like London account for just 1-2 per cent of total costs. 47 Partly for the same reason,
energy cost management is typically not centralised within a single unit that holds
responsibility for the overall energy bill. Instead, energy cost management may be shared
across different departments within firms and institutions. This gives little incentive to
invest resources into reducing the energy bill, especially as these projects involve transaction
costs of gathering information, inconvenience of installing new equipment etc.
46 For some households, especially low-income households, energy costs may be a substantial share of total costs.
47 European Commission (2012), citing Guertler, Pett and Kaplan (2005)
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