COGAP - Contracting the Gap: Energy Efficiency Investments and Transaction Costs

Energy Performance Contracting (EPC) consists in outsourcing the design, the structure and sometimes the financing of energy-conservation project to a contractor called Energy Service Company (ESCo). In such long term contracts, the contractor provides its client with a reduction in energy costs in exchange for a fixed fee or part of the savings achieved. EPC can be considered as an important market driver for efficiency investments by reducing a substantial part of the entailed transaction costs, yet the market is only emerging in Switzerland. Using data from existing markets and two surveys from the supply and demand sides in Switzerland, this study analyzes the development and potential roles of the Energy Performance Contracting market. The focus is on the impacts on the energy efficiency gap and related transaction costs. The results are used to identify relevant policy measures for promoting the market and possible interactions with other instruments used for energy efficiency.