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Energy Performance Contracts in industryEnergy Performance Contracts in industry

Energy Performance Contracts in industry

Energy Performance Contracts – EPCs – were created by the European Union in 2006 for tertiary buildings, then transposed into French law in 2009[1] following the Grenelle de l’environnement multi-party round table on the environment and sustainable development issues. After a rocky start, EPCs have gained significant traction since 2012 and there are now over 250 contracts in place[2]. Their application to industry is proving to be more complex, though, since the recipe for optimising energy performance varies from one factory to another, depending on its plant, processes and utilities. As a result, the deployment of EPCs in industry is still a work in progress, with no statistics available to date.

 

1- Definition

An industrial Energy Performance Contracts is basically a contract between a manufacturer and one or more energy-efficiency stakeholders:

  • Energy services or equipment provider
  • Facility manager
  • Third-party investor
  • Energy consultancy

An EPC guarantees an energy consumption level for the operations, equipment and/or utilities concerned (engines, compressed air, steam, etc.) and sets energy optimisation targets. There are bonuses for achieving the targets and penalties for exceeding the stipulated consumption levels. A factory can sign a number of different EPCs, each generally spanning three to five years.

 

2- Metering: the essence of the contract

When it comes to EPCs, there is no such thing as a model contract! Each EPC must set down, very clearly and precisely, the technical information used to gauge performances. It is important to identify and assign a weighting to the factors that influence variations in consumption and have an impact on the stipulated energy performance levels. These might include the volume and organisation of production, weather conditions, including outdoor temperature and/or humidity, changing requirements or a change of equipment for processes or utilities.

Metering and measurement therefore play a key role in industrial EPCs by establishing indisputable ground rules for all of the parties:

  • A pre-EPC energy baseline;
  • Targets (ratios, EPIs);
  • Details of the measurements and metering (types of sensors, locations, etc.);
  • Details of the calculation methods.

 

3- Appointing an independent, technical, trusted third party is highly recommended

How can energy managers “objectively objectify”? By bringing an independent partner into the contract to act as a trusted third party in all energy-performance calculations.

This partner will:

Calculate the actual performances as described in the contract (and therefore any bonuses or penalties).

 

4- Industrial EPC key success factors

It takes thorough preparation and close attention to the data to successfully fulfil an EPC. According to 3E-Performance, Blu.e’s partner energy consultancy, a successful EPC demands:

  • A suitable data history for the stated objectives (right time increment and season);
  • Appropriate, objective metering and/or measurement;
  • The inclusion of net gains only;
  • The presence of an independent, trusted third party;
  • The transparent provision of data and its analysis, for example through the e pilot® platform;

Thorough information for the field teams, whose actions can have a significant impact on the EPC.

 

[1] Article 5 of the French Multi-Year Budget Act No. 2009-967 of 3 August 2009 on implementation of the Grenelle de l’environnement agreement

[2] 2017 ADEME survey, France.