Achieving energy saving in the public sector through “Energy Performance Contracts”: Is it the right tool?

摘要

In this paper, we examine the use of Energy Performance Contracting(EPC) as a mean to implement energy conservationmeasures in public buildings and to achieve energy efficiency.The use of EPC for energy conservation projects is promotedby the legislator, while public entities may also appeal to otheralternative tools for such projects. Hence, it is essential tounderstand the specificity and the limits of EPC. To this end,we review recent developments in the economic literature onthe theory of contracts, with a particular focus on incentiveproperties of contracts that rely on performance measures. Thisreview of the literature allows us to identify some pitfalls associatedwith EPC, and enable us to understand the conditionsunder which EPC may be an effective means to implement energyconservation in public buildings. We discuss the strengthsand weaknesses of EPC along three important dimensions: theincentive properties of a contract, the potential difficulties inmeasuring and in contracting on performance, and the longterm dimensions of such contracts. Drawing on our literaturereview, we argue that once transaction costs are accountedfor, EPC may be particularly adapted for simple and standardenergy conservation projects. Indeed, successful implementationof energy conservation projects through EPC may involveimportant ex post monitoring and control on an energy servicescompany (ESCO), leading to potentially high overall costswhen projects are complex.