Refurbishment of municipal schools via Energy Performance Contracting

In its 2007 Climate Plan, the city of Paris commits to reduce energy consumption and GHG emissions in public buildings by 30% by 2020. Accounting for 20% of the municipal building stock and providing one of the best cost-benefit ratios in terms of energy savings, schools were chosen to benefit from a vast retrofitting programme.

In the framework of this programme, organised in the form of Energy Performance Contracts, 600 kindergartens and elementary schools are to be refurbished in successive lots that allow for learning and iteration. Beyond its climate action goals, the project aims at achieving financial savings, notably thanks to contractual guarantees related to final energy savings. The project benefits from the European ELENA-EIB technical assistance.

Business model: How the programme is implemented

School retrofitting programme:

• Objectives: 30% of energy savings and a 30% CO2-emission reduction in public buildings by 2020, compared to 20041 .
• Schools are the most important category of the municipal building stock with 660 out of 2,500 buildings, representing over 20% of the municipal building stock. They yield one of the best cost-benefit ratios in terms of energy savings. Only some 600 schools are however included in the retrofitting scheme, the others being either in need of deeper renovations or already show good energy performance.
• The 600 schools are divided in lots and are thus retrofitted in several phases. This allows learning and iteration throughout the process. The overall expected investment to be raised in the context of the technical assistance provided by the EIB (which covers 300 schools) for this project amounts to EUR 180 million, which corresponds to a leverage ratio of 131 for the ELENA grant awarded to the city of Paris –much higher than the minimal ratio of 20 required by the EIB.
• The retrofitting programme has been implemented through Energy Performance Contracting2 (EPC). This type of contract provides a guarantee on the final energy savings achieved and includes actions that vary from one school to another (from installing thermostats to heavy insulation).

The first Energy Performance Contract, designated as CPPE, was signed in 2011, and takes the form of a Public-Private Partnership. It regards the first lot of 100 schools. The second one (CREM), which should be signed early 2016, takes the form of a global procurement contract, a tool that was not available in the frame of the French legislation back in 2011, when the CPPE was signed.

If for the CPPE the private contractor brought the initial capital, in the case of CREM, it is the city that pays the investment upfront. However, the contracts include the guarantees on delivered energy savings. The reasons behind the switch from one contractual form to another are that the private pre-financing of the actions cannot be presented as an asset in terms of accounting4 . Besides, financial engineering is more complex for contracts such as CPPE.

For the CPPE contract, which is the only one tested so far, the process goes as follows:

• Conception phase: energy audits in schools, identification of the needed measures, etc.
• Realisation phase: the first lot finalised in 2012 regarded a representative sample of 45 schools and aimed at increasing their energy efficiency by at least 30%.Their energy consumption was reduced by about 33% for an investment of EUR 14.5 million. There are not definitive results for all the 100 schools yet.
• Exploitation and Maintenance phase: the private entity leading the works has a contractual obligation to organise awareness-raising campaigns for employees in every retrofitted school on the issue of energy savings (a measure designed to avoid rebound effect). During this phase, the contractor is entitled to maintain the installed equipment so that energy savings are actually delivered.

Organisation & partnerships

The implementation of the programme is organised around a project management team within Paris municipality (Mairie de Paris), composed of three full-time municipal civil servants. This team is in charge of liaising with the city’s external partners which include:

• The ESCO that implements the retrofitting programme – NOV’ECOLES Paris was specifically created to serve the purpose of the project and its shareholders are the Caisse des Dépots et Consignations, EDF Optimal Solution and Atlante Gestion. The conception, implementation and exploitation phases of the retrofitting of the schools is made by EDF Optimal Solution and the local business it is associated with (small and medium local enterprises develop 34% of the actions implemented within this project);
• The European Investment Bank that provides the ELENA technical assistance;
• Schools, to collect their feedback (notably teachers and parents’ associations).

Internally, the team also deals with different partners and municipal services such as:

• “Mairies d’Arrondissement” (City Boroughs Councils),
• Financial department,
• Education department, usually in charge of school-related matters.

This programme contributed to the development of a cross-sectorial vision of energy efficiency actions within the municipality. The experience acquired during the first phase of the programme allowed for overcoming the strict division of tasks and the silo mentality that prevailed in the internal organisation of the city.

Improved knowledge on energy efficiency issues determines the actions to be initiated under the following Energy Performance Contracts, especially better consideration of the input from the schools (e.g. accounting winter and summer comfort will lead to improving insulation).

As regards replicability, the city now has the technical knowledge to independently develop its own energy efficiency projects and assist other cities in doing so.

Beneficiaries

Players	Impact of the programme
Municipality	Financial savings in the form of reduced operational costs related to lower energy bills for municipal school buildings.
Schools	Schools benefit from improved infrastructure and better heating systems but not financial savings, as they do not have their own budget.
School employees	Experience disruptions during the construction phase. They may also have to change their behaviour once the actions are implemented (for instance monitoring thermostats). In a few schools, the users complained about some measures (notably when reducing inefficiencies such as excessive heating of the premises during winter time).
Pupils	They may experience improved school infrastructure. The works are carried out during the holiday period, which limits the negative consequences for the pupils (and employees).

Results

• The initial phase of energy retrofitting actions involving 45 schools in 2012 resulted in average in 33% of energy savings.
• There is not definitive result yet as regards the savings obtained for the 100 schools under the CPPE contract but they are expected to be of about 10,000 MWh and 2,300 tCO2.
• Very few complaints were expressed by the first 45 schools, which can be seen as a sign of success.
• Within the CPPE, the city expects to save EUR 750,000/year (after the payment of the contractor) which means an expected profit of EUR 15 million over 20 years.