# Improving the Efficiency of Energy Consumption in Buildings: Simulation of Alternative EnPC Models
## 1 Introduction  
Buildings represent around 40% of the European Union's (EU) total energy consumption and generate approximately 36% of Europe's greenhouse gases (GHGs), making it one of the most polluting sectors [1]. In 2016, the European Commission proposed an update directive on energy efficiency, based on, _\"putting energy efficiency (EE) first, achieving global leadership in renewable energy and providing a fair agreement to consumers\"_. The aim was to achieve the goal of reducing CO\({}_{2}\) emissions by at least 40% by the year 2030 [2]. According to [3], in 2017, 75% of buildings were energy inefficient and, depending on the member state, only between 0.4% and 1.2% of the stock of buildings is renovated every year.  
By 2040, total energy consumption in the world is expected to increase by about 40% and, despite developments in the field of alternative energy sources, fossil fuels are expected to continue to account for more than 75% of the energy used, which means that CO\({}_{2}\) emissions will continue to increase [4]  
Although new energy-efficient buildings can be built, existing builds will continue to account for most of the energy consumption, making it extremely important to improve the energy efficiency of these properties [5].  
This creates an enormous challenge for investors, owners, and users. To improve the energy performance of the building, it is necessary to invest in saving measures, whichoften represent a significant financial effort in the short-term with relatively long pay-back periods. The market has identified this difficulty, and several new business models have emerged towards providing one-stop shops for renovations, as discussed by [6]  
From the need to improve the energy efficiency of existing buildings, Energy Performance Contracts (EnPC) have emerged. To improve the energy performance of buildings and consequently decrease energy consumption and emissions of pollutant gases into the atmosphere, EnPC are being used as a tool to stimulate and encourage the adoption of energy saving actions [2] and monitor activities [7]. EnPC have the potential to increase the speed of energy renovation of existing buildings and foster the implementation of energy-efficient measures in buildings yet to be constructed [2]. These contracts are designed between the client and a private company acting as a service provider, frequently referred to as an \"Energy Service Company\" (ESCO) [8]. Put simply, the contracts establish that the ESCO will be responsible for designing and implementing the energy-saving measures, will be remunerated over the duration of the contract and will use distinct risk-sharing mechanisms, as will be presented and discussed in this paper.  
The existence of different types of EnPC makes it necessary to carefully design and structure their business model so that it is possible to choose the type of contract that favors not only the customer but also the ESCO. The design of the energy management model is the main driver for unlocking the potential of improving energy efficiency [9].  
The main objective of this paper is to discuss and analyze the various types of EnPCs. The methodology involves a state of the art EnPC, an international benchmark showing real examples of EnPC application and its results, and, finally, the simulation of using alternative EnPC models for a real case of a public school in Portugal. The paper provides a unique analysis that helps academics and practitioners to understand the financial impact of choosing different EnPC contracts.  
The paper is organized as follows: after this introduction, Section 2 presents the state of the art method; Section 3 contains the international benchmarking; Section 4 presents and discusses the case study; and Section 5 highlights the main conclusions.