PERFORMANCE CONTRACTING AND RETROFIT: AN EXAMPLE OF BERLIN S SUCCESS

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1 Challenging Lock-in through Urban Energy Systems Project Workshop PERFORMANCE CONTRACTING AND RETROFIT: AN EXAMPLE OF BERLIN S SUCCESS Summary Report Dr Ksenia Chmutina and Dr Chris Goodier, Loughborough University 27 th January 2011 Held at the University of Nottingham

2 Challenging Lock-in through Urban Energy Systems Project Workshop Performance Contracting and Retrofit: an example of Berlin s success 27 th January 2012 As a part of the CLUES project, we are conducting a series of innovative international case studies on unique approaches to decentralised energy systems which could be applicable in the UK but have not yet been attempted. In order to present each case study to the UK, we are conducting a short series of interactive workshops. On January 27 th, 2012 we successfully held our third of fourth short workshops Performance Contracting and Retrofit: an example of Berlin s success. The aim of the workshop was to introduce a new way of financing the retrofit of commercial buildings and to share the experience of the Berlin Energy Saving Partnership, as well as to discuss its potential to be implemented in the UK. Attendees at the workshop included representatives of the Berlin Energy Agency (the main stakeholder in Berlin Energy Saving Partnership), local governments (Sheffield and Nottingham City Councils), practitioners, the Energy Saving Trust, academics and other interested parties. 1. Presentations During the first part of the workshop two presentations were given, each followed by questions and answers. The first presentation 1 by Ms Susanne Berger from Berlin Energy Agency introduced the concept of Energy Performance Contracting and outlined the success of the Energy Saving Partnership in Berlin (BESP), and the role of the Berlin Energy Agency in this programme, as well as the experiences of the Energy Saving Partnership in Berlin and abroad. 1 Ms Susanne Berger s presentation can be found at: BESP workshop_presentation_susanneberger.pdf

3 The second presentation was by Dr Mark Gillott from the University of Nottingham, in which he outlined the general situation regarding building retrofit in the UK and emphasised the problems that the refurbishment sector is experiencing over the next few years. The issue of fuel poverty in the UK was also discussed, which led to an interesting and engaging discussion with other workshop participants. 2. Workshop discussion The second session of the workshop was carried out in the form of a roundtable discussion. The aim was to look at the potential of using similar energy saving approaches in the UK, taking into account the similarities and differences in context of the UK and Germany, and to address possible drivers that could encourage the implementation of energy saving partnerships and to find the potential solutions to any barriers for their wider implementation.

4 The following four themes were addressed and debated. 2.1 UK and Germany context: similarities and differences The context of retrofit differs in the UK from Germany. In the UK, the main focus of retrofit (and therefore, policies) is on dwellings. In addition, the prolife of dwelling ownership differs greatly, as in Germany around 80% of houses are rented by tenants rather than owners, and many of the houses are the property of housing associations rather than individuals. Although projects similar to BESP were carried out as a part of the RE:FIT programme in London 2 and some other UK cities, these types of projects are not as widely known as in Germany and are still in a comparatively early stage. The financing of these projects is also different: in the UK the investment is provided by the local authorities (usually on a city-wide scale), whereas in Germany the financial risks are takes by ESCO 3 s. The difference in financing also dictates the difference in payback period. 2.2 Drivers The discussion uncovered a list of drivers that could potentially encourage the wider implementation of energy saving partnerships in the UK. Key drivers discussed for both the UK and Germany were carbon savings and sustainability, and that these could be improved further by introducing more legally binding policies and regulations; it was suggested that legally binding regulations are possibly the only way to encourage and speed up the process of retrofit and investment in energy efficiency measures in buildings. The main driver for using more energy saving partnerships in the UK is financial, including aspects such as reduction in the costs of energy efficient technologies and measures, and increased fuel prices, as well as the realisation of potential savings that local governments can achieve through the implementation of programmes similar to BEST Energy Service Company

5 Social drivers were also discussed: an important role can be played by word-of-mouth and public engagement in understanding that energy efficiency measures in buildings can improve residents comfort and help tackle fuel poverty, as well as create business opportunities and therefore jobs. Energy security and resilience were also mentioned as drivers. In order for this to play an important role in encouraging building retrofit however, a greater understanding of the energy situation by the government was thought to be required. 2.3 Barriers A variety of barriers prevent the progress of increased retrofit in the UK was discussed. Social and educational barriers were deemed to be key, including a lack of understanding of the importance of energy saving measures by the building owners, and the unwillingness to improve one s buildings (as it often involves a high level of intervention). It was discussed that a changing of social norms is a starting point when talking about retrofit. Other barriers mentioned included socio-demographics, the diverse variety of UK building stock, including those in conservation areas, which prevent willing building owners from improving their building energy efficiency. The difficult process of obtaining planning permission is also believed to slow down the retrofitting process. A lack of qualified and competent installers and suppliers of energy efficiency measures was also thought to be a barrier. To overcome these barriers, policies and regulations that would focus on liability and the performance of the implemented measures were thought to be needed to be introduced. Financial barriers were also mentioned in the context of the economy of scale: more volume of energy efficiency measures would allow reducing the costs of these measures. 2.4 The Future Thinking towards 2050, it was decided that the UK needs a more structured delivery of policies similar to the Green Deal, as it would create more jobs as well as provide ESCOs with opportunities beyond energy saving partnerships. The UK was thought likely to go for a more decentralised energy approach, thus improving the coordination between demand and generation. More legislation on energy efficiency measures was also thought to be required that not only set the targets, but also explained and set out how to reach these targets, together with what benefits this would bring to the buildings owners. Overall, the discussion concluded that BESP would be highly replicable in the UK and could be part of the solution for achieving 80% carbon reduction by However, it is important to establish a roadmap and clear long-term vision regarding retrofit in the UK, including support from key stakeholders, including central and local governments.

6 3. About the CLUES Project 4 The CLUES project critically assesses the development of decentralised energy systems in urban areas in the light of national decarbonisation and urban sustainability goals. It examines the range and types of urban energy systems that are (and might be) installed. It further investigates the issues raised by the need for such initiatives to integrate with energy systems at the urban level in the UK, regional and national scales in order to effectively deliver energy and carbon reductions to As a part of this project we are conducting a series of innovative international case studies, representing unique approaches to decentralised energy systems which could be applicable in the UK but have not yet been attempted. Our fourth and final workshop will be on Making energy efficiency and innovation pay: an example of Kungsbrohuset office building, Stockholm, Sweden (2 nd February 2012, UCL, London). The aim of this workshop is to introduce innovative waste heat transfer system used in the Kungrbohuset building and to discuss if this type of heating could work in the UK. Attendees include Mr Klas Johanssen the head of sustainability in Jernhusen ( ), the company in charge of the project; Ms Sarah Cary from British Land; representatives of the UK government; professional associations; academics and other interested parties. If you or your colleagues are interested in either of these workshops, please contact Dr Ksenia Chmutina on k.chmutina@lboro.ac.uk for more details and to book your place. 4