# Improving the Efficiency of Energy Consumption in Buildings: Simulation of Alternative EnPC Models
## 2 State of the Art
### Types of Models
#### 2.3.2 Alternative Acquisition Models  
Among the various barriers facing the public sector in conducting energy efficiency projects, public budgetary constraints, both in terms of cuts to public expenditure and contraction of available public funds, as well as the lack of effective and efficient technical and management skills in public administration, are the most important [19; 20]. To overcome these barriers, alternative public procurement models are needed that increasingly exploit the skills of the private sector in delivering energy efficiency projects [2; 21; 22].  
These alternative models assume the structure of typical public-private partnership (PPP) models that involve the financing, design, construction, operation, and maintenance of infrastructure, which are usually acquired and provided by the public sector, such as hospitals, schools, libraries, etc. [23]. Due to the fact that many public energy efficiency projects have some characteristics of PPPs, the provision of public services, transfer of construction risk, and risk of availability, among others, can be carried out through the PPPs model [24]. The main objective of the implementation of energy efficiency projects according to the PPP model is reflected in the provision of public services, and not only in the realization of energy savings, as is the case in the alternative models presented earlier [2].  
In a typical PPP contractual model structure, the private sector bears risks related to construction and reconstruction, to which it associates at least one of the following risks: risk of availability or demand risk [25; 26]. In addition, PPPs have better room for maneuver to transfer risks compared to traditional acquisition models and the alternative acquisition models mentioned above, such as the fact that public sector payments are not fixed, are not based on expected savings, and can be retained until assets are in operation, which motivates contractors to complete energy efficiency projects on time and on budget [26]. Consequently, public authorities can fully focus on defining results specifications and achieving the expected cost-benefit ratio [27].  
Guaranteed Savings Contracts  
In Guaranteed Savings Contracts, ESCOs are responsible for \"designing and implementing the project but not for financing\" it, i.e., projects are financially supported, for the most part, by customers [18]. In this case, as the risks of savings performance are assumed by the ESCO, the EnPC should include clauses specifying the obligation of the ESCO to ensure energy savings and pay the difference in the event that it is not obtained, and it is recommended to require a guarantee of savings in energy costs at prices contained in the base year, comparing different proposals [17]. If the savings exceed the guaranteed level, the excess is divided between the customer and the ESCO according to the provisions specified in the contract (usually, the customer receives at least 50% of the excess savings) [17].  
Figure 1 shows the structure of the relationships between the three main players (client, ESCO, and financial institution) when opting for a guaranteed savings contract.  
Figure 1: Guaranteed Saving Contract (adapted from [28]).  
The main advantage of these contracts is the promotion of the growth and viability of newly established ESCOs with limited resources and a credit history [29]. In countries with an underdeveloped banking structure, insufficient technical knowledge, and little understanding of energy efficiency projects, the implementation of Guaranteed Savings Contracts can become a challenge [29].  
In this case, there is no transfer of construction risk and financial risk to the private entity. These contracts must be considered \"on-balance\" with regard to public accounts, which represent a disadvantage for the public client [18], in the sense that they have to include the investment made into their balance sheet.