Intracting - A better alternative to performance contracting?

Panel: Panel 5: Energy Efficiency Markets & Financing Mechanisms

Authors:
Kora Kristof, Wuppertal Institute for Climate, Environment, Energy
Stephan Ramesohl, Wuppertal Institute for Climate, Environment, Energy

Abstract

The paper presents the findings of an empirical study and implementation campaign to promote "intracting" in Germany. Intracting - a kind of in-house third-party financing scheme - offers interesting opportunities especially for public authorities and comparable institutions. Different to performance contracting, in the case of intracting the financial and technical service is delivered not by an external agent but through a unit within the same organisation.

Depending on the formal, institutional and budgetary setting this arrangement can offer particular benefits to all participants. In Germany, some municipalities already prefer this approach to reduce energy costs and CO_2 emissions or combine intracting with contracting. Therefore the question emerges: Does intracting represent unwanted competition to contracting or is it a useful enlargement of the range of energy service options?

The paper investigates the relation between intracting and contracting and indicates possibilities to benefit from fruitful synergies, e.g. when using intracting as a door-opener for contracting. Further, the pros and cons of both instruments are discussed and criteria and conditions for an appropriate choice of approach analysed. Finally, the paper points out steps for introducing intracting into public authorities most efficiently. By the help of a structured introductory model the paper gives recommendations how to proceed from the very first initiative over the choice of an appropriate version of an intracting scheme to the optimal adaptation of the instrument to the specific situation (including process evaluation and refinement).