The energy contracting model allows for investments in energy efficiency and in renewable energy without high upfront investment costs from the building owner. A specialised company plans, builds and finances the energy efficiency measures while guaranteeing the project’s success.
Higher investment costs, compared to conventional solutions, are often a major challenge when investing in sustainable energy solutions. In many cases, these higher upfront costs are more than offset by the reduction in energy and maintenance costs during the service life. Nevertheless, there is an increased need for capital at the time of purchase that cannot always be compensated for by funding programmes. Furthermore, the planning of future-proofed solutions is often more complex and requires key knowledge and skills.
A particularly smart solution for overcoming both these issues is the so-called energy contracting model. Energy contracting is a contractual arrangement between a client (e.g municipality or company) and a service provider, a so-called „Energy Service Company“ (ESCO). Typically, the ESCO finances and implements the energy efficiency investment. The savings are then used to cover the investment and capital costs (or part of them) over the course of a contract period. The ESCO guarantees a certain level of energy savings and is contractually liable for achieving it. This way, the building owners benefits from the higher quality and convenience of modern systems and – after the end of the contract – from the savings achieved, without having to invest time or staff resources.
The Regional Energy Agency of Upper Austria (OÖ Energiesparverband) advises and supports municipalities and companies in the development of energy contracting projects. Upper Austria was one of the first regions in Europe to introduce a funding programme for energy contracting (the region’s energy contracting programme (ECP)). So far, over 300 contracting projects have been funded in Upper Austria, triggering energy investments of over 90 million Euro.