A prime example of how economics and ecology has been brought into line: the Eco-Watt Project at Staudinger comprehensive school. Here, a project using energy performance contracting financed by citizen was completed in September 2007, completing a successful eight year contract term.

This project demonstrates that climate change is not expensive, but can pay off for all parties. In the Staudinger project, the Eco-Watt company gave citizens the chance to invest in energy saving measures, as well as in a solar energy system which in total required an initial investment of € 260,000, and resulted in energy cost savings of € 80,000 per year. With this annual income and project duration of eight years, the citizen investors received an average return of 6%. The school has also benefited from annual savings during the project contract term, and also in the years following the project’s completion. In total, the Staudinger School received proceeds of 79000 €. From these resources, the school could for example, purchase new theater equipment, speakers for the school band, equipment for the plant play house and another photovoltaic system. The city of Freiburg will continue to benefit from the energy savings improvements and solar technologies over the next 10-15 years.

For this project, a balance between environmental and economic demands was obtained: for example, the investment in a less cost effective (but environmentally beneficial) solar thermal system was cross-subsidized by other highly cost-effective energy saving measures.

The balance of interests is expressed in particular by the design of the financial arrangements. A critical point in the implementation of so-called contracting projects is the sharing of "profit "(the economic advantage of the savings compared to the existing state) between the environment and the people who gave their money. When only the best savings are carried out, the energy savings are small, while the recoverable profit is large. On the other hand, if the package of energy saving and improvement options is broadened to include less economic measures, then the energy savings and environmental benefits will be greater; however, the return on capital will be lower over the same period of time.

For the Eco-Watt Project, investors received payments that were adjusted according to the cost-saving performance of the project. Specifically, investors were provided with a return of 3 percent on their investment when the project’s income surpassed a certain threshold level. If the project income was higher, investors would also be rewarded with a higher return on investment (up to 6 percent); any additional energy cost savings (income) generated through the project would be used for further energy saving measures at the Staudinger comprehensive school, which would directly contribute to the environment and in the end, benefit the city's budget.

Meanwhile, changes in the Renewable Energy Act (as well as law promoting combined heat and power) have made similar renovation projects even more attractive investement options. Specifically, now larger more ambitious (and profitable) projects may be undertaken with the help of citizen participation and performance contracting. With support of Ö-quadrat, the Wuppertal Institute has already successfully implemented four similar projects in Engelskirchen, Emmerich am Rhein, Gelsenkirchen and Cologne. 

Further information
 www.solarundspar.de     
ECO-Watt-Project

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