Energy Performance Contracting PDF Download

Energy performance contracting (EPC) allows private firms to enter into arrangements with property owners to reduce the energy consumption of their buildings through customized energy-efficiency upgrades. Energy service companies (ESCo's) provide a range of services including audits, financing, installation and maintenance and are repaid based on the client's energy savings. Operating costs can be reduced and energy efficiency improved with no up-front costs and limited risks to the facility owner. Despite the success of EPC in non-residential markets, virtually no applications in the housing sector have been achieved in Canada. To date, ESCo's have focused almost exclusively on commercial, office and institutional buildings such as hospitals and schools. ESCo's have targeted these types of projects because they are sufficiently large scale, have simplified approval processes, and are easy to replicate. The residential market has been viewed as high risk, diffuse and difficult to manage. The objective of CMHC's study was to determine if the EPC industry could successfully enter the residential market. This study included an industry survey of Canadian ESCo's to determine their level in entering Canada's residential sector. ESCo's identified highrise apartments and highrise and medium-rise social housing as the market segments with greatest potential. These segments offer larger investment returns and greater control of day-to-day energy use in buildings. ESCo's also identified the barriers to EPC entry in the residential sector and possible responses to overcoming these barriers. ESCo initiatives to minimize risk include: targeting priority markets, such as highrise rental apartments and social housing, using energy management measures that are proven and offer reasonably fast pay-backs; and customizing contract structures and services to meet specific residential needs. The study concluded by recommending that further research be conducted. The study also recommended that governments, utilities, ESCo's and the financial and insurance sectors develop a strategy to facilitate EPC entry into the residential sector. The strategy would focus on increasing market access and reducing the risk to a level comparable to other EPC market sectors. It would also target high priority markets (highrise rental apartments and medium-rise and highrise social housing) and build on the success of existing services, financing packages and promotional techniques. If possible, it would include a demonstration project that would showcase innovating approaches, such as financing arrangements, risk management techniques and energy management measures.