Application of Energy Performance Contracting in the Greener Government Buildings Program in Victoria: Incentives, Barriers and Strategies

Abstract

The Victorian Government, through its Department of Treasury and Finance’s (DTF) Greener Government Buildings (GGB) Program, has been delivering energy saving and facility improvement projects across the State’s departments and agencies since 2009. The majority of these projects are being delivered through Energy Performance Contracting (EPC), where efficiencies created eventually re-pay the investment in the projects. The EPC market in Australia and the Energy Service Companies (ESCOs) which contract through the model is underdeveloped, in comparison to other markets. While the GGB program has been a driving force for many ESCOs entering the Victorian market, the difference in development and experience, coupled with the altered environment in which the GGB program operates means that there is a degree of uncertainty in many aspects of operating EPCs in Victoria. These uncertainties can lead to inefficiencies in delivering EPCs which may affect the decision to proceed, as well as project success. This paper seeks to understand the GGB program in the context of EPCs globally, the challenges that it faces and how they are being approached through the three main themes: (1) the incentives to stakeholders (clients and ESCOs) to be involved in the program; (2) barriers to the EPC and ESCO industry in Victoria; (3) strategies that have been adopted throughout projects, and the effect this has had on project success and stakeholder collaboration.