Contracting
Energy system Transformation

Energy contracting is a contract-based form of cooperation. There are a number of contracting models that differ primarily in terms of the focus and scope of the services offered. The client transfers selected tasks that relate to the energy management of its properties to the contracting company. The goal of this cooperation is to sustainably improve efficiency and, if necessary, to optimally integrate peripheral systems for compressed air, lighting or industrial gas supply.

By optimizing the energy supply at the contractor's site, energy-saving potential is determined and an efficient cost reduction is achieved. The cooperation form of energy contracting has already managed to establish itself for the long term on the German energy market in recent years. The reasons for this are both environmental and economic.

Utilities or specialized service companies regularly act as contractors. Clients are typically companies in various industrial sectors as well as municipalities and institutions in the housing sector.

Potential tasks that can be transferred from the client to the owner within the framework of energy contracting include consulting, planning, financing and construction of energy conversion plants or individual components, as well as their operation, maintenance, repair, servicing and insurance.

Both individual tasks and the entire range of tasks can be transferred.

The objects whose energy management is transferred can be, for example, industrial plants, complex properties, modern quarters or individual buildings as well as individual plants or entire industrial parks.

The financial remuneration of the contracting provider is determined by the chosen contracting model. In addition to the traditional supply contracting, there is also the possibility of structuring compensation completely or partially depending on the cost savings achieved, the so-called savings contracting.

Contracting as an instrument for enhancing energy efficiency.From an environmental perspective, energy contracting is a vital instrument for improving energy efficiency and for achieving the climate protection targets laid out by Germany and EU member states. Demand for energy is growing continuously, while the supply of natural resources such as fossil fuels is becoming increasingly scarce.

This situation, as well as the effects of climate change, pose major challenges for energy policy. Germany is planning a 55% reduction in CO2 emissions by 2030 compared to the base year, a reduction of at least 80% by 2050, and according to the Green Deal approach currently under discussion at EU level, greenhouse gas emissions will be reduced to zero.

Article 6 (3) of the European Union's Energy End-Use Efficiency and Energy Services Directive, which was incorporated into German law at the end of 2010 through the Energy Services Act, also calls for measures to increase energy efficiency and reduce CO2 emissions.
Contracting agreement: Contractor & clientUtilities or specialized service companies regularly act as contractors. Clients are typically companies in various industrial sectors as well as municipalities and institutions in the housing sector.

Potential tasks that can be transferred from the client to the owner within the framework of energy contracting include consulting, planning, financing and construction of energy conversion plants or individual components, as well as their operation, maintenance, repair, servicing and insurance.

Both individual tasks and the entire range of tasks can be transferred.

The objects whose energy management is transferred can be, for example, industrial plants, complex properties, modern quarters or individual buildings as well as individual plants or entire industrial parks. 

The financial remuneration of the contracting provider is determined by the chosen contracting model. In addition to the traditional supply contracting, there is also the possibility of structuring compensation completely or partially depending on the cost savings achieved, the so-called savings contracting.

If operational management tasks and energy supply are shifted to the contractor, the client gains considerable added value through the outsourcing technical and commercial operational risks and through the assumption of functional, performance and price guarantees. This results in increased reliability and availability of the plant and minimizes the probability of breakdowns and downtimes. Ultimately, ensuring responsive and expert service and emergency response is also a core element of any contractor's quality philosophy.

The value driver of contracting lies in particular in procurement advantages for fuels, because these represent the main cost item for the contractor. This is also why contracting is a such a feature in energy supply as well as the energy industry. There are few other places where an investment triggers such considerable subsequent costs, which is why the integrated approach is so dominant here. Moreover, this insight leads to a certain "law of contracting": If one considers the full lifecycle costs, high investment costs for energy supply solutions can be justified by the use of low-cost fuels.

On the basis of the aspects outlined above, it can be argued that contracting is a growth market that is far from being exhausted. For more than twenty years, the Commission of the European Union has considered contracting t the most promising method for activating energy-saving investments. It has long been calling on the member states to accelerate all contracting activities and to remove all obstacles that hinder the application of this instrument. The implementation of this EU requirement is reflected in the German government's NAPE (National Action Plan on Energy Efficiency), thus initiating wide-ranging growth momentum.