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Turn the lights off when you leave the room! Leave the car at home when you can! Don't leave your electronic devices on stand-by! Everyone knows about saving energy, and everyone can dish out advice on the matter. But what is energy-efficiency contracting? All it really means is that two parties sign a contract on saving energy. Both sides will benefit from this contract.

Once an SME or a local authority has made sure everyone follows the advice on how to conserve energy at work, the only way to cut their energy use even further is to invest in modernisation work, which can be quite costly. Say you want to have an entire school fitted with new windows, or a new ventilation system installed in a production hall, or a gymnasium insulated, or a highly-efficient heating installed that relies on PV and heat pumps. All this can be very expensive. It is true that the Federal Ministry for Economic Affairs and Energy has launched a whole host of programmes under which funding is available for such investments (cf. lead article), but the cost may still be too high for an SME or municipality to shoulder.

Energy efficiency paid for in instalments. Thanks to lower electricity bills.

This is where energy-efficiency contracting offers a solution. It comes in the form of companies that specialise in energy services and act as contractors. They know all about planning and implementing the technical and organisational steps required to, say, replace an old boiler or have highly-efficient LEDs fitted for lighting. What is even more important, they can also provide their customers with financing.

This is how it works: the company or municipality and the contractor sign a contract. They specify the exact work that is to be financed and implemented by the contractor. The customer sees his monthly bills fall. At the end, he is able to pay the contractor for the services rendered - both sides benefit from this arrangement.

The climate also benefits

Let's take the example of a gymnasium owned by a municipality. There is no doubt that having its building envelope insulated will help cut the heating bills. But that's not all. The building will increase in value and the indoor climate improve. The municipality will be able to reduce its carbon footprint and help mitigate climate change. And all this is possible without local government having to increase its spending burden. Instead, the energy-efficiency gains are being paid in instalments. That's the idea underpinning contractors' business models.

Seek the right advice – the Federal Ministry for Economic Affairs and Energy will support you

As part of its National Action Plan on Energy Efficiency (NAPE) launched in late 2014, the Federal Government decided to promote the benefits of energy-efficiency contracting and to support companies and municipalities that wish to make use of it. Energy-efficiency contracting is good for the climate, but let's not forget that it also offers a good return on investment. The Federal Ministry for Economic Affairs and Energy supports companies and municipalities that turn to renowned project developers for advice on energy-efficiency contracting. The purpose of these consultations is to find out more about energy-efficiency contracting and how it works from a competent and independent source. This is crucial for any such complex projects to be able to succeed. There are some very attractive grants available for those seeking this type of advice: up to €2,000 for initial consultations offering general guidance on energy-efficiency contracting, and up to €7,500 (for SMEs) or €12,500 (for municipalities/municipal and charitable institutions) for consultations conducted in preparation of an actual project.

Furthermore, the Federal Ministry for Economic Affairs and Energy and guarantee banks have made it easier for small and medium-sized companies to become energy-efficiency contractors themselves, thus helping energy-efficiency contracting to really take off. Since January 2016, SMEs acting as energy-efficiency contractors have been able to apply for guarantees for any investments associated with the energy-efficiency work they conduct. This allows them to finance these investments.