Integration with EED Goals and Key Elements

Energy services are integral to the overarching goals of the Energy Efficiency Directive (EED) and support several key elements:

• Energy Efficiency First Principle: Energy services embody the Energy Efficiency First principle by prioritizing and facilitating the implementation of energy-saving measures before considering additional energy supply options.
• Energy Efficiency Targets: The delivery of energy services directly contributes to achieving energy efficiency targets by identifying and implementing measures that reduce overall energy consumption.
• Alignment with Higher Climate Neutrality Goals: Energy services support the EU’s climate neutrality goals by reducing greenhouse gas emissions through enhanced energy efficiency and the adoption of sustainable practices.
• Multiple Benefits of Energy Efficiency: Energy services highlight the multiple benefits of energy efficiency, including cost savings, improved operational performance, and environmental benefits, encouraging broader acceptance and implementation.
• Heating and Cooling Planning: Energy services provide the expertise needed for effective heating and cooling planning, ensuring that systems are designed and implemented to maximize energy efficiency.
• Heat and Cooling Supply: Energy services support the optimization of heat and cooling supply systems, reducing energy consumption and improving system efficiency.
• Transformation, Transmission, and Distribution: By offering solutions to improve the efficiency of energy transformation, transmission, and distribution processes, energy services contribute to overall energy system optimization.
• Exemplary Role of the Public Sector: The public sector can leverage energy services to lead by example, implementing best practices in energy efficiency and demonstrating their benefits to other sectors.
• Exemplary Role of Public Buildings: Public buildings can benefit from energy services to implement state-of-the-art energy efficiency measures, serving as models for best practices.
• Energy-Efficient Public Procurement: Energy services guide public procurement processes to ensure that products and services meet high energy efficiency standards, driving market demand for efficient solutions.
• Energy Saving Obligations and Obligation Schemes: Energy services help design and implement measures to meet energy saving obligations, ensuring compliance with regulatory requirements and achieving mandated energy savings.
• Energy Audits and Energy Management: Providing high-quality energy audits and implementing effective energy management practices are core responsibilities of energy services, driving continuous improvement in energy performance.
• Efficiency in Data Centers: Energy services offer solutions to enhance the efficiency of data centers, optimizing their operations and reducing energy consumption.
• Billing Information: Accurate and detailed billing information provided through energy services helps consumers understand their energy use and identify opportunities for savings.
• Awareness Raising: Energy services play a key role in awareness-raising efforts, educating stakeholders about the benefits of energy efficiency and promoting best practices.
• Empowering and Protecting Vulnerable Consumers: Energy services ensure that energy efficiency measures are inclusive, benefiting vulnerable consumers and helping to reduce energy poverty.
• Energy Professionals: Energy services rely on skilled energy professionals to deliver high-quality and effective solutions, ensuring that energy efficiency projects are implemented successfully.
• Energy Services: This element itself highlights the importance of developing a robust energy services market to drive energy efficiency initiatives and achieve the goals of the EED.
• National Energy Efficiency Fund and Financing: Energy services facilitate access to national energy efficiency funds and financing options, making energy efficiency projects more feasible and cost-effective.
• National Technical Support: Providing technical support at the national level helps ensure that energy services are aligned with best practices and regulatory requirements, enhancing their effectiveness.

By integrating energy services across these key elements, the EED ensures a comprehensive approach to improving energy efficiency, driving cost-effective energy savings, and supporting the EU’s broader climate and energy goals.

Types of EPC contracts

Energy Performance Contracting (EPC) offers a flexible and effective framework for implementing energy efficiency projects, particularly in markets that are still developing, like Uzbekistan. Different EPC models cater to varying client needs and levels of market maturity, allowing for tailored approaches to energy savings. In the context of Uzbekistan’s emerging ESCO market, understanding these models is crucial for both public and private sector stakeholders.

This subchapter explores three primary EPC models: the Shared Savings Model (SSM), the Guaranteed Savings Model (GSM), and the Chauffage or Utility Purchase Agreement. Each model presents unique benefits and risks, making them suitable for different stages of market development. For an underdeveloped ESCO market such as Uzbekistan’s, starting with the GSM is recommended. This model reduces client risk by guaranteeing savings, making it an ideal entry point for building trust in EPCs. As the market matures, the SSM, where the ESCO and client share the savings, can be introduced, shifting more responsibility for financing and risk onto the ESCO. Finally, the Chauffage model, which involves the ESCO owning and operating the energy systems, offers another avenue for more advanced market engagements.

Shared savings model (SSM): In this model, the ESCO and the client share the cost savings achieved through energy efficiency measures. This approach is suitable for clients who prefer to reduce their upfront financial commitment, as the ESCO typically shoulders the initial project costs and recovers its investment through a share of the savings. In shared savings EPCs, cost savings (energy and O&M) from the project are shared between the ESCO Client and the ESCO.

• Arrangements vary, but payments to the ESCO may be a) a fixed percentage of savings, b) a minimum fee plus a share of the savings, or c) a scaled fee that decreases over time as the ESCO recoups its investment
• The ESCO typically provides the capital investment and assumes most of the risks
• Both the ESCO and the ESCO Client may see an additional monetary benefit if savings estimates are exceeded

Guaranteed savings model (GSM): In this structure, the ESCO guarantees a certain level of energy savings, and the client pays the ESCO based on the achieved savings. This model is more attractive to clients who want to mitigate financial risks, as the ESCO assumes the risk of not meeting the projected savings. Guaranteed savings contracts are the most common form of EPCs and are used by governments. These contracts are characterized by:

• A fixed term with a fixed payment schedule in which the ESCO ensures the savings (energy and O&M) will meet or exceed a minimum savings level (guaranteeing a minimum performance after implementation)
• Financing which is typically provided by the ESCO may also include capital investment from the ESCO Client

Chauffage or utility purchase agreements: Chauffage is a French word meaning ‘heating’ and is used to describe an arrangement popular with ESCOs in Europe and the USA. In this arrangement, the ESCO owns, operates, and maintains the energy-using equipment. The ESCO Client buys the end-use (e.g. heating, air-conditioning, lighting) for an agreed-upon rate and time. The ESCO may also negotiate with fuel and power suppliers to arrange purchase agreements and maintain those relationships and payments.

For an insufficiently developed ESCO market like Uzbekistan, it is recommended to first start using EPCs under the Guaranteed savings model until the private ESCOs turn to strong, trustful, and experienced companies, with good financial creditworthiness, ready and able to carry the project risks and to provide the performance guarantee for energy savings. Until then, they will not have access to financing in favorable conditions. Once the private ESCO market develops, the EPCs should be implemented under the Shared savings model, whereby the ESCO is responsible for the financing of the EE project.

Project cycle of EPC

Table 1: The basic phases of an EPC arrangement.

Core services in EPC

The following activities can be included in an Energy Performance Contracting (EPC) arrangement, either individually or as a comprehensive package:

Core Energy Services:

• Energy audits and analysis: Conducting detailed assessments to identify energy-saving opportunities.
• Planning of energy efficiency interventions and savings: Developing strategies to achieve energy reductions.
• Design services: Creating detailed designs for energy-efficient systems and technologies.
• Purchase or installation of equipment: Procuring and installing energy-saving technologies.
• Project initiation, preparation, and/or implementation: Overseeing all aspects of project management, including documentation and execution.
• Commissioning: Ensuring that installed systems are operating as intended.
• Measurement and Verification (M&V) of achieved energy savings: Systematically tracking and verifying the energy savings generated by the project.
• Monitoring and assessment of energy savings: Ongoing evaluation to ensure sustained energy performance.
• Training of facility owner’s operating staff: Educating staff on the operation and maintenance of new systems.
• Consultancy and training: Providing expert advice and specialized training to support energy efficiency initiatives.

Additional Services:

• Financing: Offering financial solutions to support energy efficiency projects, often including third-party financing options.
• Operations and maintenance of installed systems and equipment: Managing the ongoing upkeep of energy systems to ensure long-term efficiency.
• Supply of energy services (lighting, indoor heating/cooling, etc.): Delivering essential energy services, often within the framework of Chauffage or Utility Purchase Agreements.
• Energy supply: Providing energy to facilities under long-term contracts.
• Energy management services: Comprehensive management of energy consumption to optimize efficiency and reduce costs.

These services ensure a holistic approach to energy efficiency, covering everything from initial audits and planning to long-term operation and maintenance. By bundling these services, EPCs provide a comprehensive solution that maximizes energy savings and financial returns.

Gender Glasses (Finland)

In 2009 the Equality Unity at Finland’s Social Affairs and Health Ministry launched the “Gender Glasses project” (“Sukupuolisilmälasit”)  to raise awareness about gender mainstreaming across all Ministries and build their capacity to effectively implement gender considerations in their respective policy making scope of work.

The project was launched despite Finland’s international high ranking on gender equality performance, to address gaps in the understanding and integration of gender considerations in the policy space. Previous research conducted by the Ministry had identified the limited understanding of the objectives and methods related to gender mainstreaming among Ministry representatives as a barrier preventing the application of gender mainstreaming theories into policies and policy-making. Acknowledging this constraint while upholding gender mainstreaming as a priority for the Finnish Government, a dedicated training project was launched to provide the national administration staff with a basic understanding of gender mainstreaming principles, how to mainstream gender and evaluate the gender impact of policymaking.

The project was addressed to all Ministries and was designed and developed in three phases (the first two with funding from the European Commission), with increasing ambitions of gender integration and further tailoring to the specificities of each Ministry.

The first phase’s training provided general awareness raising to all ministries, and a first set of seminars were held with the ministry leadership. Dedicated educational and awareness-raising materials were developed, including a website. In the following phase, thematic training sessions were held for the equality working groups of each Ministry. One seminar was also delivered to Ministry staff in charge of budgeting.

Further to consultations and need assessments with each Ministry, in phase three dedicated support was provided to three Ministries: the Ministry of Education and Culture, the Ministry of Social Affairs and Health and the Ministry of Interior.

The four-year project has been instrumental to improve the general awareness among staff and directors of the principles, terms and methods related to gender mainstreaming as well as about the links between gender equality actors across Ministries. It also contributed to increasing the availability of tools and materials to support training efforts in this field. The gender equality working groups were boosted by this initiative and further sharpened their work. While gender mainstreaming gained in visibility, new tools were created to support the work of gender equality coordinators and working groups in the ministries. Gender monitoring, in particular, was strengthened by new and improved legislation, while the mandatory relevance of gender mainstreaming was reiterated at all ministerial levels.

Thanks to the project, the Ministry of Social Affairs and Health produced a practical “Handbook Handbook to support the gender equality work of ministries” which is constantly updated and still in use. The Handbook provides guidance on how to embed gender perspectives in decision-making processes, and provides practical instructions for assessing gender effects, implementing projects, preparing legislation, and planning the operations and finances of ministries.

Women Energize Women (Germany)

Women Energise Women is a communication measure of Germany’s Federal Ministry for Economic Affairs and Climate Protection (BMWK), to inform, mobilise, inspire and connect women around the world who work for the energy transition.

Women Energise Women holds conferences and monthly events (discussion panels, interviews, networking events) with inspiring women related to the energy transition, promotes female role models in the international energy context, disseminates information on the challenges and solutions related to women in the energy sector. WEW cooperates with established and emerging women’s networks, organisations and institutions, fostering networking of allies.

The initiative is implemented by the Deutsche Gesellschaft für internationale Zusammenarbeit (GIZ) and the German Renewable Energy Federation (BEE) as part of the bilateral energy partnerships.