2. How do I Implement an EPC?

The following 10 steps provide a guideline on how to implement an Energy Performance Contract (EPC):

An internal energy management policy allows a municipality to clearly define the broad framework for energy management within it's own infrastructure. The policy usually covers items such as policy measures (institutional responsibilities, monitoring, financing and performance indicators), procedures and policy review processes. They key advantage of a municipal energy policy is that it gives a department a policy mandate to implement a range of sustainable energy interventions, including EPCs. More information on internal municipal energy consumption and tools are available here: www.cityenergy.org.za. A template for developing a Energy Management Policy can be downloaded here

An Energy Management System (EMS) is developed and implemented in order to clearly understand the energy consumption and baselines within different facilities. There are different approaches that can be used to set up an Energy Management System, which are covered in more detail here. It should be noted that it is not strictly necessary to implement an EMS in order to conduct a Energy Performance Contract. It is possible to request the Measurement and Verification (M&V) service provider to develop a baseline and measure savings from the EPC. More information on EMS baseline establishment and M&V systems can be viewed from the links below.

  1. See how to conduct M&V
  2. See how to establish a baseline
  3. See how to develop an Energy Management System

Once the Energy Management System is in place, a high level scoping study of all the available buildings and facilities should be conducted. The purpose of this scoping study is to list all the available buildings and facilities that are under the control of the municipality. The scoping study should include information about the building use, size and an indication of the energy consumption within these buildings and facilities. This scoping study will be used to develop an initial short-list of the building that will be included in program. This short-listing can be done by using criteria such:

  1. High electricity consumption of facility or area
  2. Old age of technology to be retrofitted
  3. Willingness and buy-in from facility manager
  4. A template for this scoping study can be downloaded here.

Once a shortlist of buildings is in place, it is necessary to conduct a walk-though audit in these buildings. The purpose of the walk-though audit is to get a better understanding of the technology and its usage within a particular building. The walk-though audit therefore aims to more accurately quantify the number of technologies that can be retrofitted through a EPC, in each building or facility. Depending on the number and complexity of buildings it may be necessary to contract a service provider to assist with this task. However, walk-through audits are usually conducted by municipal staff as it only requires a count of technologies and fittings. A detailed walkthrough audit can also form part of the requirements of the EPC contractor. However it is recommended that this audit be conducted prior to the EPC being developed to ensure a clearer understanding of the scope of work is established. A template for conducting a Walk-though audit can be downloaded here.

Once the walk-though audits have been completed in all applicable buildings, an EPC business plan can be developed. The purpose of the business plan is to outline the scope of the EPC intervention in terms of: targeted facilities; what the expected time frames are for the project; and what financing options are available. The business plan is important because it sets our the overall scope and objectives of the project, and helps to decided on which steps are critical in the EPC process. A tool has been developed to assist municipalities in assessing their overall energy efficiency potential as part of this business plan here. Points to consider when developing an EPC business plan can be viewed here and a structure for developing a EPC Business Plan can be downloaded here. Additionally, you can use these guidelines to assist with developing a business case.

Once an EPC business plan has been developed, it is necessary to begin securing approval to embark on the EPC process. EPCs usually take longer than three years and therefore require a particular process to be followed. More information on this process is available here. The type of approval required depends on the type of EPC being implemented. If a shared savings model is being proposed, it may not be necessary to motivate for financing directly, however, motivation will be necessary in order to enter into a long-term contract. It may also be necessary to motivate for using the savings generated from the EPC to pay for the intervention. A template for motivating for a long-term EPC can be downloaded here.


Once the necessary approvals to embark on the EPC are in place, it is necessary to begin initiating the Measurement and Verification (M&V) process for the EPC. There are various options available to implement the M&V process. More details on initiating the M&V process are available here.

The Energy Performance Contract should define the project scope and outline roles and responsibilities of the Energy Service Company (ESCO) and the facility owner. The contract also needs to clearly state the conditions for the guaranteed savings, and the system for measurement and verification. A draft Shared Savings Contract from the eThekwini Municipality can be downloaded here. The US Department of Energy's standard EPC can be downloaded here and the appendix here.

Once the contract has been vetted by the municipal legal department, a Tender for the EPC can be issued to implement the contract. The type of tender and procurement process that will be conducted will depend on the type or EPC being implemented. In general there are 3 steps for the procurement, the independent M& V team, the full scale facility audit and the actual performance contract. For a guaranteed savings model the initial audit and implementation can be conducted through the same tender process (see the Cape Town procurement experience here). For a shared savings contact, it may be necessary to conduct a full scale audit prior to conducting the EPC tender. A number of existing tender documents can be used as templates for this process and can be downloaded here.

Once the EPC contract is in place it is will be necessary to implement the project and manage the ESCO/s. The contract entered into between the ESCO and the municipality (see step 8 above) is a key tool in the implementation to ensure that the aims of the EPC are achieved. The following steps (adapted from the Energy Performance Contracting: Guide for Federal Buildings) should be considered during the implementation of the EPC

  1. Clearly defined roles and responsibilities during the EPC
  2. EPC Concept and design approval
  3. Clarification on the use of subcontractors
  4. Construction and implementation schedule
  5. Reporting, measurement and verification, and maintenance during the contract period
  6. Ongoing training
  7. User awareness campaign