This is an invited post with the UK very involved Energy Expert, Viktar ZAITSAU.
BRE reported that it has been assessed that the market of Energy Performance Contracts (EPC) in The UK is around £180m and that it is not forecasted to grow. It makes me wonder why.
Here is what I think. It is my take on the five biggest barriers to Energy Performance Contracts uptake:
- The No 1 on the list is complexity of the solution. The clients simply do not get, do not see the value of it or, which is even more often, the clients do not get enough trust and credibility in the sales force selling the Energy Performance Contracts. The thing is so new that they can’t compare it with anything they have dealt before.
- The public sector burned itself on Private Finance Initiative (PFI) projects in the past. The Conservative Government made lots of bad publicity around PFI providers ripping off the public sector. It costs The Government £100s of millions in leases and it is not happy about these 25-year contracts they are stuck with. If you ask me, though, it costs cheaper to run non-PFI buildings because they are not run to the same standard.
- Procurement directors screw the Energy Performance Contract model up. The cut it at the root and it does not go through the approval. They have not understood the value of EPC often for the reasons nothing to do with them. The procurement directors start talking about buying nuts and bolts, looking at CAPEX and not at a life cycle cost and performance. They take the model apart, looking at margins, overheads, loosing even even more cash in loose opportunities of not starting the savings soon enougth.
- Money pinching. EPC is the model underlined by guaranteed energy performance. EPC suppliers come up with different energy conservation measures, pricing and ways of delivering it. Yet, some of the stakeholders only used to having a full design prior to selecting the contractors. Then, we know it well, three competitive quotes and the, then, the cheapest one wins, off cause.
- With the shift to commercialisation and privatisation and still a good proportion of PFIs around it is practically impossible to break into those contracts with the Energy Performance Contract. Energy will have to be saved in another way on those estates.
So how to overcome those five barriers? How to spread this great idea of making savings, improving the condition of the estate, reducing carbon, improving environmental condition, reducing maintenance and developing the estates and facilities teams on energy efficiency?
An EPC is a brilliant engine for pulling the economy up, creating new opportunities, new jobs and making a change.
So, how do we overcome these five obstacles? What’s your take on it?
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