A Guide to the Statistical Treatment of Energy Performance Contracts

In September last year, Eurostat published a guidance note2 on the revised treatment of Energy Performance Contracts (EPCs) in government accounts. This guidance explains how the rules of the European System of National and Regional Accounts (ESA 2010) apply to EPCs. The revised treatment offers public authorities an opportunity to expand energy efficiency investments using private sector technology, know-how and finance and we are now pleased to introduce an accompanying practitioners’ guide to help the market make the most of the possibilities now available. This clearer approach to EPCs is designed to contribute to mobilise investment in energy efficiency in public sector buildings. The public sector’s annual energy bill of €47 billion represents a large, untapped savings potential in energy efficiency. Improving the energy
efficiency of this sector provides an opportunity to save public money, boost growth and job creation, improve the health of EU citizens, combat energy poverty and reduce our energy dependence. Despite these benefits, the public sector is not taking advantage of the huge potential savings in costs and energy use. One reason for this is the debt and deficit limitations.
An increase in investment using energy performance contracting should help public authorities lead by example and contribute to EU climate and energy targets for 2020 and beyond. EPCs offer a number of advantages for public entities:
– energy efficiency improvement investments are financed directly from cost
savings
– the private sector takes on the performance risks of the works and technology
used
– energy and cost savings are guaranteed by the private sector
– the private sector contractor brings its expertise to help the long-term use of
improved energy management solutions
– the private sector contractor supports the public sector building owner in finding the most suitable technical and financing solution.

The value of EPCs in unlocking energy savings is highlighted in the Energy Efficiency Directive (2012/27/EU). According to the EED, EU countries are required to renovate at
least 3% of the total floor area of buildings owned and occupied by the central government. More recently, the role of EPCs in helping to renovate public buildings was outlined in the
“Clean Energy for All Europeans” package, which was adopted in November 2016. The EPC market in the European Union has a long way to go before reaching its full potential, but the public sector can play a key role in accelerating energy efficiency 2 See http://ec.europa.eu/eurostat/documents/1015035/7959867/Eurostat-Guidance-Note-RecordingEnergy-Perform-Contracts-Gov-Accounts.pdf/
FOREWORD 2018 A GUIDE TO THE STATISTICAL TREATMENT OF EPCS 3
investments in buildings. The Eurostat guidance, and this practitioners’ guide, combined with technical assistance and financing solutions, contribute to the Investment Plan for Europe (IPE), launched by the European Commission and the European Investment Bank to support economic growth by stimulating additional investment. On behalf of the European Commission and the EIB, we are therefore pleased to introduce this guide as a key contribution to the IPE’s goals. The guide will help Member States and other stakeholders better understand the impact of EPCs on government balance sheets, assist public authorities in making good decisions when using EPC arrangements to improve the energy efficiency of their buildings and ultimately accelerate energy
efficiency investments. Perhaps most importantly, this Guide will allow public authorities to plan with greater confidence, so that there will be more investment derived from the private sector using the opportunities offered by sound EPCs. It will be instrumental in developing a sound EPC market in Europe and in unlocking the potential for energy efficiency investments in the public sector. This guide has been jointly prepared by Eurostat and the EIB. By clarifying the statistical treatment, it deals with one of the many practical issues that public authorities should consider if they are implementing and financing energy efficiency improvements using energy performance contracting. Along with the technical assistance and advisory support that the Commission and EIB will continue to offer through programmes such as Horizon 2020, ELENA, JASPERS and the European Investment Advisory Hub, we strongly believe that this new guide will help to create a sound basis for a growing market in energy efficiency investment. Marianne Thyssen Andrew McDowell Miguel Arias Cañete Commissionner for Employment, Social Affairs, Skills and Labour Mobility, European Commission Vice President, European Investment Bank Commissioner for Climate Action and Energy, European Commission Eurostat / European Investment Bank A Guide to the Statistical Treatment of EPCs May 2018 page 4/147 The EPC market in the European Union has a long way to go before reaching its full potential, but the public sector can play a key role in accelerating energy efficiency investments in buildings. The Eurostat guidance, and this practitioners’ guide, combined with technical assistance and financing solutions, contribute to the Investment Plan for Europe (IPE), launched by the European Commission and the European Investment Bank to support economic growth by stimulating additional investment. On behalf of the European Commission and the EIB, we are therefore pleased to introduce this guide as a key contribution to the IPE’s goals. The guide will help Member States and other stakeholders better understand the impact of EPCs on government balance sheets, assist public authorities in making good decisions when using EPC arrangements to improve the energy efficiency of their buildings and ultimately accelerate energy efficiency investments. Perhaps most importantly, this Guide will allow public authorities to plan with greater confidence, so that there will be more investment derived from the private sector using the opportunities offered by sound EPCs. It will be instrumental in developing a sound EPC market in Europe and in unlocking the potential for energy efficiency investments in the public sector.
This guide has been jointly prepared by Eurostat and the EIB. By clarifying the
statistical treatment, it deals with one of the many practical issues that public
authorities should consider if they are implementing and financing energy efficiency improvements using energy performance contracting. Along with the technical assistance and advisory support that the Commission and EIB will continue to offer through programmes such as Horizon 2020, ELENA, JASPERS and the European Investment Advisory Hub, we strongly believe that this new guide will help to create a sound basis for a growing ma