How to implement Energy Performance Contracts in multi tenant building pools using the smartEPC model
Implementing Energy Performance Contracts in building pools with multiple tenants or occupants raises particular challenges. Using the smartEPC model, allows project developers to use innovative mechanisms of cost and benefit sharing to create a powerful win-win situation.
Energy Performance Contracts have gained momentum over the last couple of years as they offer risk free implementation models based on energy performance guarantees. They also use financing mechanisms in which future (guaranteed) energy savings reimburse the initial investments, often in a budget neutral manner. These contract models are particularly scalable and thus suited for pooling multiple buildings into one single project and contract.
Most projects involve a single tenant or occupant, who is often (although not always) also the building owner. Things become more complicated in case of multiple tenants or occupants, even more so when they occupy only parts of any given building.
The Fedimmo project, implemented by Energinvest as project facilitator, has allowed us to use the smartEPC methodology to tackle some of the challenges associated with this additional complexity. The first issue is the fact that maintenance costs often vary a lot across different buildings in the pool. This is particularly the case when maintenance costs are related to the “building value”. Older buildings represent in this case very often a higher cost of maintenance in comparison to newer buildings. The size of the building also plays a great role in the overall maintenance costs. On the other hand, the savings potential also changes a lot from one building to the other, such that some tenants or occupants benefit more from implementing an EPC contract. In some case a single occupant may have to deal with high costs and low benefits, making it hardly interesting to participate in the project.
Within the Fedimmo project, Energinvest designed a solidarity mechanism between multiple occupants, based on the calculation of a “distribution key”, that allows for costs and benefits to be more evenly distributed over various occupants. This distribution key is firstly calculated on the basis of the total cost of maintenance and energy in the so-called Business-As-Usual (BAU) scenario. Maintenance costs for each site (and thus occupant) are then recalculated in a way that they represent a fixed % (called maintenance%) of the total replacement value of each building, while keeping the total actualized cost of maintenance in the offer equal to the new recalculated value. Thus each occupant contributes to maintenance costs in an evenly manner.
Likewise surplus energy savings that are being generated through a bonus mechanism are being distributed between building occupants using the distribution key. Same holds for bonuses paid on comfort performance.