What is Energy-Contracting? The Definition
Energy-Contracting is a service model where a specialized company – the so-called Contractor – takes on the responsibility for the planning, financing, installation, operation, and maintenance of energy facilities. The client – the Contracting Participant – derives energy or energy savings from it, without investing yourself.
Core of the model: The contractor bears the economic and technical risk over the entire contract duration. The client benefits from planned costs and can fully concentrate on its core business.
The Contracting energy model does not focus on any specific energy source or technology. Heating, cooling, electricity, ventilation, and drive technology—all of these can in principle be addressed using Contracting models. In the modern Contracting model, which is geared toward renewable energy, Photovoltaics and Battery storage in focus today especially.
Where does the term come from? The history of Energie-Contractings
The Energie-Contracting has its origins in a crisis: the 1972 oil crisis. As energy prices rose sharply, companies looked for ways to reduce their consumption. The realization was that it is often more sensible to use existing capacities more efficiently than to create new ones.
From this consideration arose Early 1980s in the USA The Contracting concept—initially intended only for large-scale energy facilities with high capital investment. The idea: A specialized company handles the optimization, assumes the risk, and recoups its costs through the savings achieved or energy prices.
The model began to spread throughout Germany and Europe in the 1990s, initially mainly in the municipal sector. Today, Energy-Contracting is increasingly being offered for smaller properties as well—and has gained new momentum with the energy transition. In Germany, Contracting models generated total revenue of approximately 13 billion euros earned.
The four models of the Energie-Contracting
1. Energy Performance Contracting
At the Energy Saving Contracting the contractor takes over – from financing and planning to support – all tasks with a clear promise: they contractually guarantee the client a certain Energy cost savings.
He therefore carries out efficiency measures at his own risk that reduce energy consumption. A portion of the resulting savings is paid out to him as remuneration. Typical measures include:
- Renewal of the heating system (boiler, pumps, hydraulic balancing)
- Installation or optimization of building management systems
- Use of energy-efficient lighting (LED)
- Integration of Combined Heat and Power (CHP) Units
- Comprehensive structural renovation measures
Contract terms typically range between 7 and 15 years. In practice, this shows that savings potential of 40 percent or more is not uncommon – in individual cases, even over 70 percent.
2. Energy Supply Contracting
The Energy Supply Contracting is currently the most common form. Here, the contractor plans, finances, and builds an energy generation facility and supplies the generated energy (heat, electricity, cold, or steam) to the client under contractually agreed terms. This is usually regulated by an energy supply contract (Power Purchase Agreement – PPA) or more precisely, a Corporate Power Purchase Agreement California Consumer Privacy Act.
Ownership of the plant remains with the contractor during the term. After the contract ends, the plant often transfers to the client's ownership. The contractor is compensated through an energy price plus basic and service charges. This model is particularly common in the fields of photovoltaics and battery storage today.
3. Farm Management - Contracting
At the Farm Management - Contracting The contractor takes over an existing energy plant at the client's premises and operates and optimizes it at their own risk. The client does not have to worry about ongoing operations or technical improvements.
4. Plant Construction Leasing
At the Plant construction leasing The Contractor constructs and finances a clearly defined energy facility. The Contractor bears the initial capital expenditure, which the Client repays over the contract term through regular payments, similar to a classic leasing model.
Why Energy-Contracting? An overview of the benefits
Energie-Contracting offers businesses, municipalities, and property owners a range of tangible benefits:
- No self-investment necessary The contractor assumes all investments in the energy facility. The client's liquidity and credit lines remain unaffected.
- Predictable, stable energy costs Contractually agreed prices create cost certainty over many years – an essential protective function against volatile energy markets.
- Risk transfer to the contractor The contractor bears the technical risks, operational risks, and—in the case of the Energy Saving Contracting—the economic efficiency risk. The client is protected.
- Access to expertise and technology The contractor brings specialized expertise, experience, and market access. Clients benefit from solutions that would be difficult for them to implement internally.
- Focus on the core business Without the tasks of energy management, the client can fully concentrate on their core business.
- Sustainable CO₂ reduction Modern energy solutions, particularly in the solar sector, actively contribute to reducing CO₂ emissions and help companies achieve their climate goals.
- Broad applicability Energie-Contracting is suitable for residential and commercial properties, municipalities, industrial facilities, and properties of all sizes.
Energy-Contracting and Rental Properties
A practically relevant aspect: Since the Tenancy law amendment in December 2021 It is stipulated that, for the commercial supply of energy to rented properties, the tenants’ consent is not required. The basis for this is provided by Section 556c(1) and (2) of the German Civil Code (BGB) and Section 11 of the Heat Supply Ordinance (WärmeLV). Sections 8–10 of the Heat Supply Ordinance ensure cost neutrality for tenants. In this way, the legislature seeks to ensure that Contracting contracts do not place tenants at a disadvantage compared to their previous supply arrangements.
When is Energy-Contracting worth it?
The Energie-Contracting is the right model, especially if:
- Equity or credit lines for energy investments are missing or intended to be used otherwise
- Internal technical expertise for planning, operation, and optimization of energy facilities is limited
- Planning security is desired for energy costs over a long period.
- sustainability goals (CO₂ reduction, ESG reporting) can be achieved quickly and without your own investment
- Rooftop areas, open spaces, or grid connection capacities that can be economically utilized
Conclusion: Energy-Contracting as a strategy
Energie-Contracting is much more than just a financing model. It is a strategic tool that enables companies, municipalities, and property owners to implement the energy transition—without any financial risk, without the burden of investment, and with real, measurable savings.
If you are interested in implementing Contracting specifically for photovoltaic systems or battery storage, you can find more information on CUBE Contracting, to, zum PV and Battery Storage - Contracting as well as to the innovative CPFS model for the monetization of unused grid connection capacity.