France/New rules for energy performance contracts for local authorities

Published on 27/09/2021 | La rédaction

France

The energy performance contract (EPC) is a particularly effective tool for controlling energy expenditure and optimising consumption. Although it is quite developed in the private tertiary sector, it is still struggling to find its audience in the tertiary sector managed by local authorities. Since its appearance in the 2000s, the EPC has evolved enormously, effectively reinforcing the energy performance objectives and the structural exchanges between the public contracting authority and the contract holder. It is in this spirit that the Fédération nationale des collectivités concédantes et régies (FNCCR) has led a working group bringing together local authorities and professionals in the sector to produce a standard clause that can be used by all. A look back at this work...

The national federation of local authorities (FNCCR) is responsible for the Action des collectivités territoriales pour l'efficacité énergétique (CEE ACTEE) programme.(CEE ACTEE), which aims to facilitate the renovation of approximately 50,000 public service buildings. This initiative is based on a long-term approach and aims to encourage the pooling of local authorities of all sizes in order to connect territories by stimulating local energy efficiency and low-carbon dynamics.

As part of the national recovery plan, the FNCCR has launched the ACTEE 2 programme, which was made official with the publication of the decree of 4 May 2020. With a budget of 100 million euros, it will enable the partial or total renovation of around 50,000 buildings. This programme provides financial support to local authorities for the implementation of shared energy efficiency initiatives, as well as the development of a tool library, a resource centre and a telephone support unit. ACTEE 2 extends and strengthens the first ACTEE 1 programme, increasing the objectives by a factor of 8, with a target of 20 TWh cumac by December 2023. ACTEE is now the largest CEE program dedicated to improving the public assets of local authorities.

The FNCCR has also been asked by the Directorate General for Energy and Climate of the Ministry of Ecological Transition and Solidarity to update the FNCCR CPE clausier relating to the energy performance contract published in 2012 and to prepare a report on the program.The federation is being assisted by the French Ministry of the Environment, which is responsible for updating the FNCCR energy performance contract clauses published in 2012 and making them compatible with the new rules and tools of public procurement so that they fit in with the new financial plans and territorial organisations. The federation is supported by LexCity Avocats.

The new Clausier, the result of a collaborative effort

Coordinated by the FNCCR, a working group made up of local authorities, EPC operators and business representatives has initiated and discussed the production of new market parts adapted to this new framework.The group was coordinated by the FNCCR and included local authorities, EPC operators and business representatives.(GIMELEC), the French Building Federation (FFB), the French Federation of Energy and Environmental Services (FEDENE), including the National Union of Climate Control and Maintenance (SNCF), and the French Association of Energy and Environmental Services (AFES).(SNEC) and the national union of district heating and urban air conditioning (SNCU) has contributed considerably to enriching the documents produced.

Thus, very recently, a set of general administrative clauses (CCAG), a set of specific administrative clauses (CCAP), models of the contracting process and a list of the most common contracts were delivered.(CCAP), model public tender notices and consultation regulations, as well as a user's guide.

It is important to note that the FNCCR CPE clause book is based solely on the global performance contract defined in articles L. 2171- 3 and R. 2171- 2 of the Public Order Code, financed exclusively with public funds. Partnership contracts do not fall within the framework of this clause, which remain exceptional contracts that are less suitable in the context of the mass production of EPCs.

EPCs: a recent origin but ongoing adaptations

Today, EPCs are more than ever essential to the energy transition and play a central role in achieving the objectives of reducing energy consumption.

The objectives set by the eco-energy plan for 2030, 2040 and 2050 are ambitious, which is why local authorities and EPCIs must have effective and operational tools to carry out their missions. EPCs therefore play a key role in the success of energy renovation projects carried out by local authorities.

They were first introduced by European directives and then transposed into French law under the POPE Act of 2005, the Grenelle Act of 2009 and 2010, and the Energy Transition Act for Green Growth (LTEG).for Green Growth (LTECV) of 2015 and the Elan Act of 2018, EPCs are now a tool that is suitable for local authorities wishing to undertake the energy renovation of their building stock.

In this respect, and in light of changes in public procurement rules, new existing financial schemes and changes in territorial organization, updating the constituent parts of EPCs is now essential to their proper implementation.This is what led to the creation of this working group, making it possible to maintain the driving role of EPCs in optimising and reducing energy consumption.

In the field of public procurement, an EPC can be defined as "any contract concluded between a public purchaser and an energy efficiency service company aimed at guaranteeing, in relation to a contractual reference situation, the improvement of the energy efficiency of the building.performance of a building or a group of buildings, verified and measured over time, through an investment in works, supplies or services"(1).

Any company, regardless of its main sector of activity, acting as a co-contractor for the energy efficiency of a building or a group of buildings, can be considered to be acting as an "energy efficiency service company" (EESC).Any company, regardless of its main sector of activity, acting as a co-contractor of a public purchaser and implementing works, supplies or services aimed at reducing energy consumption within the framework of an EPC"(2).

Different types of EPCs to meet the needs of local authorities

Behind this common definition, there are different families of EPCs. This variety provides public purchasers with a range of solutions that they can choose from depending on the condition of the building or stock concerned, their technical project, their financial resources and the payback time they expect, etc.

There are usually four main categories of EPCs, depending on the nature and type of investments made at the beginning of the contract, i.e. the renovation actions undertaken. All combinations between the elements of these families are also possible and left to the free choice of the buyer.

These four families, classified by increasing degree of energy ambition and cost, are as follows

- EPCs for Supplies and Services, which cover two categories, depending on the type of equipment supplied:

-- EPCs based on the evolution, replacement, supplementation, improvement of the building's energy management, regulation and control equipment and systems. This type of EPC is usually considered to reduce the building's energy consumption by 5 to 10%, for a relatively low initial investment; the payback period for these investments is estimated to be between 1 and 5 years;

EPCs based on changing, replacing, supplementing, or improving energy-using equipment and systems in the building. This type of EPC is usually considered to reduce the building's energy consumption by 10 to 20% with an estimated payback period of 10 to 12 years;

- EPCs for works and services involving work on the building envelope itself. This family includes contracts that mainly involve work on the building, such as waterproofing a building. This type of EPC is usually considered to reduce the building's energy consumption by at least 20%, with a payback period of more than 15 years.

Given the cost of the work, these contracts cannot usually be financed solely by the energy savings achieved;

- Global EPCs combining all the above solutions. This family calls for cross-cutting skills and all the energy renovation solutions of the different EPCs mentioned above. Generally, companies must be organized in groups to carry out this type of EPC.

Achieving performance and guaranteeing it, the cornerstones of an EPC

The main purpose of the contract is to guarantee the improvement of the actual energy performance of the buildings compared to the reference situation. To achieve this, five key points must be respected.

The initial situation of the buildings must be defined on the basis of all quantitative and qualitative data and information recorded over a representative period of time, possibly adjusted for any external factors.The baseline is the situation of the buildings, based on all the quantitative and qualitative data and information collected over a representative period of time, possibly corrected for any external factors that have a significant impact on consumption, showing the characteristics of the buildings in terms of their energy and environmental performance. This is the reference situation.

The package of works required to achieve the energy performance desired by the community must be established. This phase includes various steps ranging from the analysis of the project owner's assets with regard to energy and organizational issues, to The selection of the building(s) with the best energy cost-efficiency ratio for the implementation of the EPC or the selection of the building(s) that need to be integrated in order to comply with the EPC.the objectives of the tertiary eco-energy scheme, including detailed and exhaustive energy diagnostics.This involves carrying out detailed energy diagnostics that are as exhaustive as possible, and defining the work to be carried out to validate the level of performance to be achieved.

Once all the work has been carried out, it is necessary to monitor and analyse the consumption of the buildings in order to ensure that the energy performance objectives are met and to monitor the planned performance throughout the EPC. The Energy Performance Measurement and Verification Plan (MPV) is the arbiter of the EPC. It defines the methodology used to verify the achievement of the guaranteed performance.

The main obligation of the contractor is to guarantee the reduction of energy consumption. The energy performance guarantee consists of the contractor compensating the project owner for all the damage suffered for any overconsumption in relation to the contractual objective. The energy performance guarantee will at least take the form of cash compensation. In addition or as an alternative, the documents may provide for compensation in kind, i.e. the takeover of the performance improvement package and/or additional actions financed by the contractor.In the event of overperformance, a bonus is paid to the contractor for the remaining duration of the contract and beyond for the life of the buildings. In the event of over-performance, a bonus or incentive is payable to the operator. The distribution key for the contractor's profit-sharing in the event of over-performance is usually set at 50% for the contractor and 50% for the project owner. A different split can be set up to take into account the particularities of each project.

Finally, raising the awareness of the occupants and training technical staff, in order to give full scope to the missions, makes it possible to improve the energy performance of buildings. It is recommended that the contractor be entrusted with the task of raising the awareness of occupants and training technical staff to accompany the renovation and operation-maintenance of technical installations.

To include or not the energy supply in the EPC?

The project owner can freely decide whether or not to include the supply of energy in his EPC (P 1). The FNCCR EPC clause does not provide for the inclusion of P1 of the GCC as a basic solution.

However, the local authority may decide to depart from this solution in view of the specific nature of its project. The SCC will specify, if necessary, the extent to which the supply of energy may be included in the EPC by expressly providing for a clause derogating from the GCC in the special conditions. This choice corresponds to a broader treatment of the energy issue. It remains the responsibility of the project owner to assess the advantages and disadvantages of such a solution which, in law, is neither prohibited nor prescribed.

Valuation of energy saving certificates

The energy performance contract makes it possible to guarantee the achievement of energy savings in targeted buildings. These energy savings enable the project owner to obtain energy saving certificates (EEC), which can then be recovered by the project owner or through an intermediary.

It was decided in the EPC GCC to allow the project owner to use the EECs it holds, as well as all other types of financing or subsidies (TFPB rebate, Ademe heat fund, etc.) for operations carried out under the EPC.

This choice implies at least that the holder produces on behalf of the project owner all the written documents (certificates, technical notices, invoicing) necessary for the valuation of the EEC.

In addition, the EPC GCC requires the contractor to guarantee a volume of EEC. The contracting authority will thus be able to demand the payment of an indemnity in the event that the project does not enable all or part of the guaranteed volume of EEC to be obtained. This compensation will be equal to the value of the CEE not obtained, calculated on the basis of the contractor's commitment expressed in Mwh cumac and the average price of recovery for the contracting authority set by the specific documents of the contract (in €/Mwh cumac).

EPC and tertiary eco-energy scheme

The eco-energy system expresses the obligation to reduce final energy consumption in tertiary buildings and sets out the conditions and procedures for implementing this obligation (modulation, financial sustainability, etc.). The EPC is one of the most effective tools for the operational implementation of the obligation applicable to a given building.

The rules and parameters of the eco-energy scheme and the EPC are therefore not intended to be strictly identical, even if they share a common objective. The eco-energy scheme applies only to owners and lessees, whereas the EPC organises the relationship between the owner and/or lessee on the one hand and the EPC holder on the other. The EPC, which is part of the eco-energy scheme, may cover a shorter period and not ensure, in one go, the entire legal reduction in energy consumption for the period concerned.

The EPC sets up a very detailed contractual apparatus that the legal and regulatory obligation does not describe, which is normal. Similarly, it can be applied to buildings that are exempt from the obligation to reduce final energy consumption.

In the end, whether it is in the context of the tertiary eco-energy scheme or a more global performance approach by the project owner, the EPC is a key tool for the good management of its property stock.