Find the Mediterranean ways to Energy Performance Contracts

Interview with Silvio De Nigris, coordinator of STEPPING and STEPPING PLUS modular projects

STEPPING and STEPPING Plus projects were focused on the challenges of the transition to a low-carbon economy through the implementation of Energy Performance Contracts (EPC) in public buildings in the MED Area. The partners engaged local and regional stakeholders, informed them of the overall strategy and content of the project, discussed about the existing regulations, technical and financial barriers of EPCs, and finally proposed possible process to develop Action Plans and launch EPC tenders. Therefore, STEPPING partners are in a good position to tell us what role information and skills play for the effective deployment of energy efficiency in public buildings. We asked Silvio De Nigris, from Piedmont Region (Italy), who coordinated STEPPING and STEPPING Plus.

Mr De Nigris, based on your experience, what is the real need for skills development on energy efficiency technical and financial solutions by municipalities of the MED area?

While working on STEPPING, the gaps in existing policy instruments became clear. As well as the fact that municipalities, especially the small-medium ones usually don’t have the necessary skills internally, so they need the external support of a more expert and structured entities, like energy agencies, regional departments, EPC facilitators or even private subjects to address the multiple aspects - technical, legal and administrative – for the implementation of a complete EPC process. A strong effort in training activities of municipalities’ officers during all the EPC phases – buildings assessment, Investment plan preparation and tender development and realization – was essential in order to increase the knowledge and spread the EPC activation.

How would you classify the knowledge of municipalities of the MED area regarding the adoption of EPC investment schemes in the implementation of energy efficiency measures in municipal buildings?

EPC is a very country specific solution, because its implementation depends on several variables: level of maturity of the market, knowledge of municipalities, incentive schemes available, tendering procedures, climate conditions, etc. In particular, the climate specificity of the MED Area can represent an obstacle to a wide implementation of the EPC. Moreover, MED area countries have different governance structures and procedures, with different levels of competence and financial capacities. To this is added the fact that there is the presence of many small municipalities, which are more probable to lack capacity to support an EPC process. Each project partner at regional level had to find its own way to adapt the EPC concept to its own peculiar framework conditions.
Within the Countries interested by STEPPING and STEPPING Plus projects (Italy, France, Greece, Spain, Malta, Slovenia and Croatia) Italy and France are the ones more experienced, where, despite all bottlenecks the main goals of the project were achieved even more than expected.
Nevertheless, the two STEPPING projects gave the opportunity to share common approaches (i.e., the bundling/pooling) or common working methods (i.e., the step-by-step process outlined in the EPC MED guidelines) and to transfer knowledge from the more experienced partners/regions to the less one.

How is the STEPPING PLUS project contributing to the knowledge increase on energy efficiency technical and financial solutions in the MED area?

An innovative approach based on the bundling and pooling concept was implemented by STEPPING and STEPPING Plus projects in order to increase the project pipeline and offer to the market feasible solutions that could attract the interest of Energy Service Companies (ESCOs).
Thanks to pilots’ results and outputs obtained the Energy Performance Contracts can gain more attention in the energy policy debate in Mediterranean Country: this will help in the definition of new policies that can promote the uptake of EPC and their integration into Regional Energy Plan. The concrete outcomes gained producing Investment Plans and launching EPC tenders will represent replicable examples for the public administrations of the territories of the Interreg MED program.
A particular effort was done to create the conditions for the roll out of further initiatives in the future, thanks to the development of tools (EPC simulation tool) and procedures on EPC application for energy efficiency of MED public buildings (Tender specification or MED EPC Guide) and to their wide dissemination at MED and EU level.
All the involved partners themselves will represent a driving force for the EPC implementation as best practices to be followed.

In your opinion, how can the Efficient Buildings Community further contribute to this knowledge increase in the MED area?

The Efficient Buildings Community gives the opportunity to build up a cohesive group of partners active over all the modular projects of the Community. The Community meetings can allow the establishment of useful networking and exchange activities. This means exploiting synergies among projects, activating mutual learning and disseminating methodologies, best practices and results in a wider area and to a larger number of stakeholders not directly involved in singular project. In this way the impacts and the replication opportunities can be maximized in the Mediterranean area and the transnational character of the projects can be strengthened. Moreover, to be part of the Efficient Buildings Community, means having a sounding board for the dissemination of information, news and events, which is extremely important to increase the visibility of the day-by-day progress and the results obtained by the projects.

What were the main barriers you encountered during the implementation of the STEPPING and STEPPING PLUS projects?

The national and local contexts regarding EPC and public building renovation policies have a large influence on the pilot projects development. Due to different legal frameworks, opportunities for incentives and indebtedness of public administrations it was not possible to define an EPC model valid for all regions. In fact, to convince, on one side, Local Authorities and, on the other side, ESCOs to adopt EPC, several conditions are mandatory: existence of a national legal framework for EPC also with standard documentation; awareness/knowledge concerning EPC and the efficiency of savings guarantee; existing ESCOs and energy supply market. Without these conditions, it is extremely hard to develop pilot project because of the need to set up a favourable context within the project that is time consuming.
Some other conditions instead can facilitate the projects: voluntary or mandatory Energy plans; national policies giving buildings renovation obligations; investment capacity of municipalities or subsidies for building renovation.

Some of the barriers faced during the project implementation were overcome, but there are still some difficulties/problems/solutions to be analysed at a transnational level in order to run successful projects in the coming future.

What is the goal of the EPC Simulation Tool? Do you know if it is still being frequently used by municipalities in the MED area since the conclusion of the STEPPING project and during the implementation of the STEEPING PLUS project? Have you received any feedback from them?

The EPC Simulation tool is designed to perform financial analysis of an EPC investment project bundling several buildings belonging to different municipalities. It defines the conditions under which an ESCO can consider the investment as sustainable from economic and financial point of view. The tool required the input of technical and economic data from the user, so any investment program can be customized. The ideal target user is the EPC facilitator and he/she should have a basic knowledge of technical and financial topics. Based on different assumptions that the user can make, the tool provides different alternative scenarios that can be the basis for the selection of the best option to be tendered. A scenario, to be acceptable, should have the main financial indicator over a fixed threshold. The most important of this index is the Internal Interest Rate. In the STEPPING Plus project the tool has been developed from a simple excel file to a web app available online with a registration procedure. The tool has been used to develop the EPC Investment Plans developed in the project for several millions of euros. The web app is accessible here: https://stepping.interreg-med.eu/epc-simulation-tool/