Public Internal Performance Contracting – Managing and financing energy-efficiency measures in public administrations

Wolfgang Irrek and Stefan Thomas, Wuppertal Institute for Climate, Environment, Energy
Sophie Attali, I.C.E.
Georg Benke, The Austrian Energy Agency
Nils Borg, Borg & Co AB
Arkadiusz Figorski and Mariusz Filipowicz, Akademia Górniczo-Hutnicza
Nicola Labanca and Andrew Pindar, Politecnico di Milano
Amalia Ochoa, ICLEI Europe

Keywords

public internal performance contracting, PICO, public administrations, public buildings, energy services

Abstract

Public Internal Performance Contracting (PICO) is a type of in-house "third-party" financing or energy performance contracting scheme. In theory, once triggered, PICO provides a ?perpetual motion" finance mechanism for public authorities by which energy efficiency savings fund new investments in an upward virtuous cycle.

One unit of the public authority, e.g. the technical department, delivers the financial and technical energy efficiency service to another unit of the same public administration. Remuneration takes place through cross payments between these units, according savings made in energy costs. The initial investments require "seed funds" to kick start the process, after which the cross payments provide sufficient means to fund further measures.

How can the PICO mechanism be initiated in times of tight public budgets? What difficulties are faced during the implementation process and how can these be overcome? What kind of energy-efficiency measures is PICO best suited to? And what role can national and European policy play to facilitate implementation?

These are the key questions that the EU-funded PICOLight project aimed to tackle. This was done through testing and disseminating the PICO schemes, first used in Germany, in six European countries, developing these further and making the necessary adaptations. PICO schemes were piloted in seven public administrations with the technical focus on energy-efficient lighting retrofits. The experiences gathered in these pilot projects should help to introduce PICO schemes on a larger scale in public administrations in Europe. The paper presents the preliminary results from these pilot projects.