Good practice:

Energy saving performance contract - EPC for Landstinget i Östergötland (LIO)

Landstinget i Östergötland (LIO) is the county council of Östergötland province in Sweden. It is responsible for three big teaching hospitals, one small hospital and all together has forty two health clinics and forty dental care clinics. The LIO found out that they had quite a lot of increase in energy cost and needed to find a means of cutting down this cost while maintaining consistency in the standard of healthcare provision. Totally they had to apply energy saving solutions to 189 public buildings that consumed approximately 100 GWH per year.

Siemens Building technologies was the winning contractor of the public bid for the Energy Saving Performance Contract (EPC) with aim to upgrade the running and management of 189 buildings. Siemens successfully completed the first and second phase within the stipulated period. During phase one (6 motnhs), the exact repayment period is determined. Phase 2 is the implementation stage and lasts for a period of 18 months, where measurement tools are specified and reporting procedures are defined. Phase 3 is the payback period, during which the bidder is paid back by the savings in O&M costs. All phases of the contract lasted 9 years (2007-2016). The public body will start benefiting after the payback period. The bidder provided both the financing (8 Mio EUR private funds and 2 Mio EUR public funds) and the technical solution and guaranteed min. 20% of energy savings.

The investments reached 10 million EUR (18,5 EUR/m2), exploiting governmental support 2,4 million EUR (25%). The savings during phase 3 (payback) reached 1 million EUR/YEAR (1,9 EUR/m2) and created many jobs (appr. 130 FTE).

The results and benefits include the reduction of CO2 emissions by 2.307 tonnes/year, the reduction of emissions of NOx by 2.922 kg/year and SOx by 1.463 kg/year, guaranteed savings of 16.038 MWh/year or 30 kWh/m2 year, guaranteed savings of 29.000 m3/year of water, guaranteed savings of €800.000 annually and additional savings on maintenance of €7.35m in 15 years, achieving the goals originally set. Therefore it is considered as a successful project.

The in-house team at LIO faced some challenges in informing the staff on the essence of the project and also on further education of the entire working body on behavioral changes that will lead to significant changes in energy and water consumption and hence reduce incurred cost of these resources.

According to the LIO team, the pursuit of long-term cost efficiency in green management control systesm describes a strategic direction on the basis of management control systems and of the environmental management area. How an organization can achieve the double objectives of long-term cost efficiency on the one hand and sustainability on the other hand is a dilemma for most managers and Green Management Control Systems (GMCS). in their opinion, GMCS is the most feasible way to solve this dilemma. It is achievable, if implemented effectively, i.e. making the investment into green technology and simultaneously controlling employee behavior. Thus it will turn out to be a high yielding venture in the long run in terms of cost control and sustaining the business and added equity or value. The EPC project is so far one of the most viable tools they have identified that makes a significant difference in cost management and sustainability.