What are EPC projects and how do they work?
EPC, or Energy Performance Contracting, is a way to upgrade public buildings without the need for immediate investment from your own budget. It is a form of energy services in which the supplier designs, implements and finances cost-saving measures. The investment is then repaid directly from the energy savings achieved.
The terms and definition of EPC are regulated by the Energy Management Act. The latter refers to EPC as a service with a guaranteed result. In other words, the supplier guarantees that the object will really save. If the savings do not reach the agreed value, the difference is paid by him, not the customer.
Typical measures include replacing outdated lighting, upgrading the heating system, installing photovoltaics or introducing intelligent power management. In order for a project to be implemented in the form of an EPC, the savings must be measurable and high enough to gradually cover the investment. Most often, the payback varies between four to ten years.
How do EPC projects work step by step?
The implementation of an EPC project in a public building is not a one-time technical event. It is a process that has a clear structure and relies on legislation, methodologies and rigorous preparation. At PKV, we have gone through dozens of projects and we know that a well-managed start is the key to a successful end.
Overview of the basic steps of the EPC project:
What does the EPC project process look like in detail?
1. Identification of buildings for inspection
The whole process begins with the selection of objects. Typically, these are schools, medical facilities, offices or technical buildings that have high consumption and outdated technologies. It can be a single building, but also a whole set of objects.
2. Expert assessment of technical condition and consumption
On the basis of the first selection, energy audit or technical-economic analysis. The latter will show where it makes sense to upgrade, and where the savings would be too low. At this stage, it is decided what is appropriate for the EPC and what is not.
3. Austerity proposal
Specific measures will be prepared for the selected objects. This can be the replacement of lighting, upgrading the heating system, installing photovoltaics, modifying the ventilation system, introducing metering and regulation, or deploying energy software. Importantly, the set of measures must generate Measurable savings.
4. Financing and securing the subsidy
Because the entire project is repaid from the savings achieved, there is no need to cover the costs in advance. Financing can be provided by an EPC vendor or a third party (e.g. a bank). If appropriate, it is also addressed. Possibilities of receiving subsidies, for example, from the ELENA program or OPŽP.
5. Vendor selection
The contracting authority shall prepare the tender documentation and write out tendering. Importantly, the EPC contract must contain Guarantee the amount of savings — if these are not achieved, the provider shall pay the difference from his own.
6. Implementation of measures
After the signing of the contract, the actual modernization of the buildings will take place. Replacement of equipment, construction modifications, installation of technologies. At the same time, a good contractor coordinates the work in such a way that they interfere as little as possible in the normal operation.
7th. Monitoring and savings guarantee
After completion, the key stage begins — long-term measurement, evaluation and reporting of savings. The client does not pay for promises, but for real saved energy. If the guaranteed savings are not fulfilled, supplier pays the difference.
As Ivan Macho, Sales Director of PKV explains:
Advantages and disadvantages of EPC projects
Advantages:
- No need for initial investment — the project can be implemented without immediate own funds.
- Guaranteed savings — the supplier bears the risk of not achieving savings.
- Increasing the comfort and modernization of the building — schools, hospitals and offices are getting to 21st century levels.
- Long-term service and monitoring — technologies are not only installed, but also continuously monitored.
Disadvantages:
- Complex preparation — requires time and experience (e.g. in public procurement).
- Long-Term Commitment — repayment takes several years, it is necessary to plan with a view.
Example of EPC project: Central Bohemian Region
One of the largest projects of its kind in the Czech Republic, which we helped to implement in PKV, is the EPC project for Central Bohemian Region. In the last three years alone, we have analyzed and planned works on 27 properties, including schools, hospitals or homes for the elderly.
The county chose to lead by example:
- He selected suitable objects.
- He commissioned analyses using support from ELENA (90% of the cost covered).
- He competed contractor after package to reduce the risk of complications.
And the result?
Expected annual savings 6 GWh of energy and reduction of CO₂ emissions.
The first three pilot projects resulted Saving 15 million CZK per year, about 60 other organizations can bring to the county 50-60 million CZK savings per year.
Measuring savings of EPC projects
A key element of EPC is transparent measurement of savings. Unlike conventional renovations, every kilowatt-hour saved plays a role here. At PKV, we use the tool for our clients Enmonwhich enables online energy monitoring and automatic generation of reports. Thanks to this, all parties (client, supplier and eventual investor) have access to the data in real time.
Conclusion
EPC is a proven way to upgrade buildings and save money — even without your own funds. The Central Bohemian Region is proof that when the project is prepared rigorously and professionally, the results will come. The first three pilot projects alone saved the regional budget 15 million crowns per year.
We are one of only six entities in the Czech Republic that have the mandate of the National Development Bank for the implementation of EPC projects. If you want to help with your project, get in touch.
FAQ - EPC FAQ
Chcete pomoct s přípravou EPC projektu? Nechte nám na sebe kontakt.
Chcete pomoct s přípravou EPC projektu? Nechte nám na sebe kontakt.
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