d) Tips for using EPCs

EPCs are very different from conventional energy efficiency contracting and require additional management measures by municipalities to ensure that the expected results are achieved. Important tips for managing EPCs by municipalities are summarised below: 
  • Monitoring and verification: Since EPCs are designed to ensure that municipalities suffer no financial loss if the projected savings are not achieved municipalities must be able to verify the achieved energy savings. As a result comprehensive monitoring and verification of the energy savings achieved by an EPC is required for a municipality to manage the EPC effectively. Ideally any facilities subject to EPCs should have comprehensive time of use monitoring systems installed to aid monitoring and verification. Since EPCs are sometimes confined to only a few interventions in a building with a vast number of energy users accurate monitoring and verification can be challenging and in many EPCs an independent Monitoring and Verification agency is procured to verify the savings achieved. It is important to require the M&V agency comply with the SANS 50010 to ensure accurate and verifiable savings take place (more here). The cost of Monitoring and Verification should be taken into account when considering an EPC and in the case of shared savings EPC it should be factored into the total cost of the intervention. 

  • Internal technical capacity: Through an EPC, municipalities can acquire access to technical capacity that they don't have available in-house. Despite this it is important to note that there will always be a need for a certain amount of in-house technical capacity within the municipality to ensure that the EPCs are implemented correctly and in-line with the requirements of the municipality. 

  • Ring fencing Energy Savings: In terms of municipal finance management regulations, it is not permissible to "ring-fence" funding from a particular intervention. This can potentially increase risk to the EPC project, as the yearly revenue from the project will not be secure. This can be potentially addressed through a motivation and subsequent council resolution that allocates municipal budget to the project. This motivation however states that the budget is allocated on the understanding the savings on energy costs as a result of the project will result in a matching income to the municipality. 

  • Maintenance: Maintenance of the energy efficiency interventions installed as part of an EPC adds an additional level of complexity to EPCs and requires serious consideration prior to contracting EPCs. Generally the ESCO is required to maintain their energy efficiency interventions for the entire duration of the EPC. The main reason for this is that if an intervention is not performing as expected and the ESCO is not responsible for maintenance it could claim that inadequate maintenance by the municipality is the cause. A municipality contracting an EPC for one of its facilities therefore needs to consider what its existing maintenance arrangements are for that facility and how to integrate maintenance by the ESCO into its existing system. In some cases the ESCO may become responsible for maintenance of the entire facility, but in many cases the ESCO will only have undertaken interventions linked to a portion of energy uses of the building and another agency will be responsible for the remaining maintenance. A clear agreement on who is responsible for what maintenance will be required in these cases. In addition since once the EPC contract is complete the other maintenance agency will be required to maintain the ESCOs interventions a process for hand over and training on how to maintain those interventions are required. 

  • Facility use stability: The use and users of a facility are some of the key determinants of the total energy use of a facility. If the number of users or the energy uses in a facility change this can increase or decrease the total energy use in a facility. As a result a facility that is expected to experience considerable change in its users or energy uses over the course of an EPC is generally not a good candidate for an EPC. Facilities where the uses are expected to remain stable over a number of years are preferable. It should be noted that the longer the contract period of an EPC the higher the risk that an unexpected change of users or energy use could take place in the contract period. It should also be noted that the methodology for accommodating a change of use in the facility is also outlined in detail in the SANS 50010. This further motivates for the contract to be conducted within the requirements of the SANS 50010. 

  • Aligning stores and EPCs: EPCs often involve a changeover from an old technology to a new technology. It is important that the stores system of the municipality is updated on these changes so that it stocks the correct replacement items for the new technology. For instance in some cases new more efficient bulbs are put in place, if stores is not updated it possible that when the new bulbs fail they are replaced with an old less efficient bulb that is still in stock. Alternatively when the change involves new fittings, if stores has not been updated regarding the change over it will not have any bulbs in stock that are appropriate for the new fittings. In these cases facility users may see a long turn around before basic items are fixed. In addition stores could mistakenly acquire inefficient bulbs for the new fittings as it has not been supplied with the new specifications. 
Click on the links below for more information on EPCs.