Risk management

Berliner Energieagentur GmbH

Risks of EPC

Equipment transfered into the property of building owner at the moment of installation and/or hand-over

Ownership

by contractor for the total investment into ESC schemes

economic risk

by contractor;

guarantee of performance, technical condition & availability

technical risk

by building owner;

rising prices => protection of contractor

decreasing prices => benefit for building owner

energy price risk

by building owner; change of use => modification of guaranteed savings

risk of use

Berliner Energieagentur GmbH

Risk Management Instruments

• Careful analysis of the savings potential

• Good, complete data basis

• Complete and meaningful tender documents with clear and detailled specifications of services required

• Careful selection of the service provider

• Integration of additional external know-how where needed

• Use of standard documents, e.g. model contract and checklists

• Well balanced contract

Berliner Energieagentur GmbH

by building owner; change of use => modification of guaranteed savings

risk of use

Risk of use

is a risk that cannot be influenced by the contractor. This risk is born by the building owner/client only. Good contracts foresee procedures for cases like this.

It can be done via a baseline adaptation in case of changes in use; the calculation basis for such cases should be available.

Berliner Energieagentur GmbH

by building owner; energy price risk

Risk of changing energy prices

are to be born by the client/ building owner in any case, with or without a contracting project.

• Rising prices => protection of contractor

• Decreasing prices => benefit for building owner

For the sake of calculating the proper savings, the baseline is calculated with fixed reference prices of the base year.

Berliner Energieagentur GmbH

Technical Risks

exist with regard to the adequacy and design, construction, operability and availability during operation, as well as maintenance periods of the technical equipment. The contractor fully bears this risk

The Economic Risk

is related to the need that the invested capital depreciates in the course of a project. In the case of EPC the contractor bears this risk that the capital depreciates through the achieved savings.

by contractor for the total investment into ESC schemes

economic risk

by contractor;

guarantee of performance, technical condition & availability

technical risk

Berliner Energieagentur GmbH

• Under German law, the ownership of equipment installed passes to the building owner when the equipment is installed and accepted. There are parts that can also pass into the ownership at the end of a contract

• Ownership with Building Owner: Security in case of problems on side of ESCO (worst case: bankruptcy)

• Ownership with ESCO: Asset Security for credits

Tax or credit issues can have both negative and positive factors for both sides

Equipment transfered into the property of building owner at the moment of installation and/or hand-over

Ownership