New EU decision lifts key barrier to investing in energy efficiency projects


On the 19th of September, the EU statistical service Eurostat published a new guidance note on how to classify Energy Performance Contracts (EPC) in government accounts. This new guidance note, effective immediately, clarifies and makes it easier for public authorities to finance energy efficiency projects of their buildings and infrastructure. The new rules allow for accounting energy efficiency investments off the balance sheets, thereby not contributing to government deficit and debt.

When cities now want to invest in energy efficiency projects using EPCs, they can spread the investment costs over the duration of the contract. The cities’ financial department only has to record the EPC fee (cash payment with the EPC contractor, e.g. an ESCO) on the city’s balance sheet.

Before the new decision announced this week by the European Commission, the Eurostat rules forced most cities to account the entire investment made by private third parties in EPCs as debt in their balance sheets. This made it very difficult for many local authorities and Member States to develop comprehensive energy efficiency investment programmes. Now, especially in countries where public funds are limited (e.g. due to high deficit, imposed austerity measures, etc.), the new EU accounting rules will enable to unlock more local investment into energy efficiency projects.

Multitude of options to use EPCs at local level

Whether it is a metropolis like Paris using EPCs to refurbish its schools and kindergardens, the Portuguese capital Lisbon making its traffic lighting more efficient with EPCs, or the small Czech municipality of Litomerice renovating its public buildings thanks to EPCs, its applications are manifold.

Thanks to the new guidance note, such projects will be easier to implement for European cities of all sizes, even with limited financial resources. It is a step in the right direction in fostering more public investment in energy efficiency, which is a key tool in driving the energy transition of local and regional authorities across Europe.

Find out more EPC best practice examples in our dedicated database!

© Cover photo: Daria Garnik, Shutterstock.com

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Author

David Donnerer

Publication date

September 21, 2017