C40 Good Practice Guides: London - ESPC co-ordination by a dedicated RE:FIT Programme Delivery Unit

Summary

London’s public building retrofit programme (RE:FIT)^xxxv, aims to introduce energy efficiency retrofits in 40% of London’s public buildings by 2025. All retrofits are coordinated by a RE:FIT Programme Delivery Unit (PDU) and initiated under guaranteed-savings contracts (ESPCs) by ESCOs. The ESCO guarantees a set level of energy and water savings, resulting in a financial saving over the period of the arrangement, while also taking responsibility for the risk associated with the delivery of energy savings. The programme streamlines the procurement process by providing standardised, EU-regulation compliant framework contracts for the design and implementation of energy-conservation measures. This simplifies the process for public sector clients and also reduces supplier bidding costs and time, thereby reducing costs for both parties. Moreover, the model allows for buildings to be grouped for retrofitting, facilitating greater energy, carbon and monetary savings through economies of scale.

The unique feature of the London RE:FIT model is the creation of the RE:FIT Programme Delivery Unit (PDU) in February 2011, facilitated by European Commission funding under the ELENA Programme. The Unit manages the RE:FIT framework and promotes the programme’s uptake by London-based public sector organisations. It also provides specific support throughout the RE:FIT process, from providing initial information to verifying energy savings once the project has been delivered.

Results

RE:FIT is now being used by more than 160 of London’s public sector bodies, including 28 of the 33 London Boroughs, 23 NHS organisations and 109 other organisations (retrofitting government buildings, schools, libraries, museums, etc.). A pilot retrofit programme to reduce energy use in 42 public buildings, implemented from 2008 to 2010, resulted in overall energy cost savings of £1 million per year against a total investment of £7 million. This encouraged the Greater London Authority (GLA) to expand the programme eligibility to all city public buildings (as of 2012, 111 buildings have been retrofitted),^xxxvi while aiming to retrofit 600 buildings and generate estimated savings of 45,000 tCO₂ by the end of 2015.

Reasons for success

Economies of scale were created through bundling together a number of energy efficiency projects. London also benefitted from external funding (EU ELENA Programme), as well as from strong institutional capacity and experience with complex projects to launch its RE:FIT PDU. The city was therefore able to streamline energy efficiency improvement projects across the city departments and agencies at lower cost, by keeping the expertise and capacity “in-house”.

When/why a city might apply an approach like this

Cities considering comprehensive municipal buildings retrofits should exploit the opportunities of bundling projects together and engaging an expert ESCO to reduce the cost and risks associated with such a programme. Different ESPC models can be applied depending on the city characteristics, such as: regulatory powers; financing capacity; risk tolerance; and the degree of access to low-cost finance. 

C40 Good Practice Guides

C40's Good Practice Guides offer mayors and urban policymakers roadmaps for tackling climate change, reducing climate risk and encouraging sustainable urban development. With 100 case studies taken from cities of every size, geography and stage of development around the world, the Good Practice Guides provide tangible examples of climate solutions that other cities can learn from. 

The Municipal Building Efficiency Good Practice Guide is available for download here. The full collection of C40 Good Practice Guides is available for download here.  

All references can be found in the full guide.