Energy performance contracting (EPC): a suitable mechanism for achieving energy savings in housing cooperatives? Results from a Norwegian pilot project

Abstract

The barriers to energy savings in institutions and private homes are well known and include people's lack of interest, awareness, knowledge and human and financial capacity. Experiences made in several countries show that EPC-energy performance contracting-may be used for overcoming many of these barriers. A typical EPC project is delivered by an energy service company (ESCO) and the contract is accompanied with a guarantee for energy savings. EPC is increasingly taken in use in the professional market (firms and the public sector), but is less common in the residential sector market. It has been suggested that there are several barriers for using EPC in the domestic sector such as the uncertainty involved in estimating forthcoming reductions in private consumption. In this paper, we present the results from a pilot project on the use of EPC in a housing cooperative in Oslo. The project was initiated and observed by the researchers. The research followed a transdisciplinary methodology in that it was conducted by both researcher and practitioner (co-authors) in close collaboration with members of the housing cooperative and the ESCOs, who also contributed to the interpretation of results. We document the process in terms of why the Board decided to join the EPC pilot, the call for offers from ESCOs who guaranteed that purchased annual energy would be reduced by one third, the responses to and negotiations of the offer from the ESCO who became contracted in the initial phase and up to the moment when the General Assembly finally decided to not invest in the proposed energy saving measures. We find that the residents not only had limited interest in energy savings but also lacked confidence in the EPC process. This contributed to the outcome. We discuss the findings in relation to the barriers to using EPC among housing cooperatives. We highlight the need for more knowledge about the client side for understanding how barriers may be overcome. Three specific recommendations for how EPC may successfully be employed among housing cooperatives are suggested as follows: (i) include refurbishment and not only energy savings in the EPC, (ii) identify the residents' needs in an early phase and (iii) communicate the EPC principle to the residents throughout the process.

Opening up the Black Box of Group Decision-Making on Solar Energy: The Case of Strata Buildings in Amsterdam, the Netherlands

“…According to Reference [29], residents should receive detailed information about the consequences of renewable energy measures on their strata fees, as then they will be more likely to vote for the sustainable energy measures. This is in line with Reference [14], which argued that communication about what a sustainable energy measure means in terms of energy savings and investment is important for a positive decision. Reference [14] also mentioned the potential importance of less quantifiable factors (e.g., convenience), but thus far not much has been written about this in Energy Performance Contracting (EPC) literature, and we considered reasons of convenience to be not that relevant in the case of solar energy.…”

“…This is in line with Reference [14], which argued that communication about what a sustainable energy measure means in terms of energy savings and investment is important for a positive decision. Reference [14] also mentioned the potential importance of less quantifiable factors (e.g., convenience), but thus far not much has been written about this in Energy Performance Contracting (EPC) literature, and we considered reasons of convenience to be not that relevant in the case of solar energy. Another thing important for a positive outcome is that information is easy to understand, e.g., presented in pictures, illustrations, and without jargon [29].…”

“…For instance, Reference [29] mentioned that it is important for residents to agree that there is a need for sustainable energy measures; moreover, residents must understand the importance and need for the project. In line with this, Reference [14] mentioned that it can be helpful for residents to discuss ambitions or goals with regard to sustainable energy performance.…”

“…If information comes too late, people may have negative feelings about the project [29]. Furthermore, in relation to breaking the decision into component parts, Reference [14] argued that residents should be involved in an early phase, e.g., first discussing the goals for sustainable energy measures in a general meeting before voting on the details.…”

“…It is quite common for (home) owners' associations to draw up a maintenance plan for several years that indicates what needs to be done in the near future. Both References [14] and [11] have suggested combining sustainable energy measures with planned maintenance of the building, since this may help achieve a positive outcome.…”