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The market for EPC projects is growing due to its minimal burden on public budgets, and environmental subsidies

Efforts to reduce CO2 emissions, significant support from EU funds, but also the clear imperative for energy savings, are behind the increased public interest in Energy Performance Contracting (EPC) projects. This is a comprehensive service, including the design of energy saving measures, their preparation and implementation, as well as subsequent energy management. One of the pioneers and leaders of the industry is MVV Energie CZ a.s.

"Demand has not been weakened by the risk of budget cuts at the level of regions, municipalities and cities and their contributory organizations, as a result of Covid-19. On the contrary, one of the main advantages of EPC projects has emerged: all investments are covered by the savings achieved, which are guaranteed by the energy services supplier," says Martin Hvozda, manager of the MVV energy services division.

In recent months, it has signed contracts amounting to almost 90 million crowns, bringing customers savings of approximately 160 million in the coming years. The largest contracts include EPC for the Ústí nad Labem Region and the revitalization of energy management in the buildings of the Jan Evangelista Purkyně University. Recently, the implementation of the EPC project for the buildings of the Pardubice Region has also been completed.

Other tenders are currently underway, such as for hospitals in the Central Bohemian Region and dozens of buildings in the South Bohemian Region. The public sector is not far behind either. EPC tenders have been announced for two court buildings, and even the premises of five prisons. Completion of this public procurement is expected in the second half of the year.

According to representatives of MVV Energie CZ, the interest of municipalities and the general public in EPC is increasing every year. Its representatives are interested in the possibility of energy savings, and the EPC method is the optimal way to achieve them.

"Awareness of this method is growing. Education from the Association of Energy Service Providers (APES) helps a lot," says Martin Hvozda, who is also the vice-chairman of APES. He adds: "We believe that pilot tenders for EPC projects in public sector buildings will be completed. Here there is a very significant potential for energy savings, and thus savings in the budgetary costs which these organizations have for energy."

A great advantage for the public sphere is the possibility of financing projects from future contractually-guaranteed savings. EPC works on the instalment principle and therefore does not require any input costs. Therefore, if the customer (city, municipality, contributory organization...) has financial resources at its disposal, it can use them for other investment purposes.

Announced budget cuts in the public sector caused by the post-covid situation are not an obstacle for EPC projects either. MVV, on the contrary , anticipates a higher interest in this service, precisely because cities, municipalities or organizations require almost no initial investment.

"EPC funding is and will be even more important than in the past. These projects are a way to achieve greater savings in future operating costs. In addition, despite a possible decline in budget revenues, the entire energy system is renovated and optimized - from start to finish - exclusively in the customer's ownership," adds Martin Hvozda.

Investments in these projects have a return on investment of 6 to 10 years and it is possible to achieve a reduction in energy costs by an average of 40 percent. If the guaranteed savings are not achieved, the provider pays the client the difference between the actual and the guaranteed savings.

In addition, if the EPC is combined with the subsidy title of Operational Environment Program (OPŽP), even higher savings can be achieved. This combination is furthermore supported by the fund, among other things, with a 5% higher subsidy.

EPC's environmental measures are in line with the Green Deal package approved by the European Commission in 2019. However, ecological solutions are increasingly appreciated by the public, so the inhabitants of the towns and municipalities in which the projects are implemented will also approve the EPC method. It not only saves costs, but also improves the environment.

About EPC - in the Czech Republic, in the 25 years of EPC's existence, more than 250 projects with a total investment of 3.6 billion crowns have been implemented across the market. This year, another approximately 15 projects worth a total of CZK 1 billion are being implemented or are in the tender phase. You can find an interactive map of all EPC projects.

The MVV Energie CZ energy group comprises fifteen companies operating in fifteen cities in the Czech Republic. The parent company is MVV Energie CZ a.s., which was established in October 1993. Since 1999 the company has been a subsidiary of MVV Energie AG, a German energy group, based in Mannheim. The three main pillars of the MVV strategy are the production and distribution of thermal energy, the combined high-efficiency power production and the waste-to-energy generation.

Jitka Tůmová