Innovative Procurement Frameworks for Energy Performance Contracting in the UK Public Sector

34 Pages Posted: 8 Mar 2016

See all articles by Colin Nolden

Colin Nolden

University of Sussex - Science and Technology Policy Research Unit (SPRU)

Steven Robert Sorrell

University of Sussex - Science and Technology Policy Research Unit (SPRU)

Friedemann Polzin

Sustainable Business Institute (SBI); Utrecht University - School of Economics

Date Written: September 11, 2015

Abstract

Procurement Frameworks for Energy Performance Contracting (PFEPCs) simplify the process of negotiating, developing and implementing Energy Performance Contracts (EPCs) with Energy Service Companies (ESCOs). This paper analyses their role in promoting the implementation of cost-effective energy efficiency measures in the UK public sector. Compared to conventional approaches to procuring goods and services involving detailed specifications, PFEPCs translate the challenge of upgrading, retrofitting and replacing energy related equipment and infrastructures into required outputs through functional specifications. The innovativeness of specific PFEPCs often lies less in the diffusion of ‘developmental’ innovative energy efficient solutions, although partner bidding approaches create favourable conditions for innovation. However increasing standardisation and bundling prove successful at lowering transaction cost, which enables ESCOs to address projects which would not be considered in the absence of PFEPCs due to high transaction costs. This particular organisational innovation opens the market up to new approaches to implementing cost- effective energy efficiency measures.

Keywords: Energy efficiency, energy performance contracting (EPC), energy service companies (ESCOs), public procurement of innovation, public sector

JEL Classification: O33, O38, Q41, Q48

Suggested Citation

Nolden, Colin and Sorrell, Steven Robert and Polzin, Friedemann and Polzin, Friedemann, Innovative Procurement Frameworks for Energy Performance Contracting in the UK Public Sector (September 11, 2015). SWPS 2015-31, Available at SSRN: https://ssrn.com/abstract=2744646 or http://dx.doi.org/10.2139/ssrn.2744646

Colin Nolden (Contact Author)

University of Sussex - Science and Technology Policy Research Unit (SPRU) ( email )

Mantell Building
Falmer
Brighton BN1 9RH UK, Sussex
United Kingdom

Steven Robert Sorrell

University of Sussex - Science and Technology Policy Research Unit (SPRU) ( email )

Mantell Building
Falmer
Brighton BN1 9RH UK, Sussex
United Kingdom

Friedemann Polzin

Utrecht University - School of Economics ( email )

Kriekenpitplein 21-22
Adam Smith Building
Utrecht, +31 30 253 7373 3584 EC
Netherlands

Sustainable Business Institute (SBI) ( email )

Burgstr. 4
Oestrich-Winkel, 65375
Germany

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