Budget-Neutral Financing to Unlock Energy Savings Potential: An Analysis of the ESCO Model in Barcelona - Green Energy and Efficiency: An Economic Perspective - page 185

energy costs. In order to stay a oat, many established construction and maintenance

companies have begun to diversify by offering ESCO services for renovation pro-
jects. Moreover, a number of young energy management companies have sprouted
up, offering fully-integrated energy management services to private companies and
public administrations. For instance, a growing number of Spanish cities and towns
have contracted ESCOs to replace traditional incandescent street lighting with
energy ef cient LEDs, which have short payback periods and save considerable

amounts of scarce public resources. Finally, the increase in energy costs in Spain is
forcing consumers to make energy conservation and ef

ciency a priority. Although
the ESCO model is a proven vehicle with which to unlock the country s enormous

energy savings potential, it is still new and widely unknown among Spanish citizens.

'

3.1 Public Support for Energy Conservation and Ef ciency

Programs

Starting in 2004, the Spanish government implemented various programs, most
notably the E4 program (National Energy Ef ciency Strategy) and Plan 2000

ESCO, in efforts to promote demand-side measures in the following sectors:
buildings, industry, transport, agriculture, public services and appliances. This
program supported the implementation of energy audits by subsidizing 75 % of the
cost. Depending on the solutions proposed as a result of these audits, a subsidy was
given in order to help nance the execution of the suggested actions. Also, the wind

and solar industries were highly stimulated by generous feed-in-tariffs. However,
given the current economic environment, the government has been forced to change
its priorities. As a result, IDAE is expecting a drastic drop in money from the state,
reduced from 61.4 million Euros in 2011 to 5.4 million Euros in 2012, as a result of
proposed budget cuts.
Another budget-related issue is the expected reduction in the

nancial support
electric companies are required to contribute to programs under IDAE ' s Strategic

Plan for Energy Ef ciency. These contributions constitute the main nancial sup-

port for a number of programs designed to improve and promote energy saving
technologies. Thus, many planned energy ef ciency programs are now paralyzed.

Although each autonomous region has their own energy strategies, this constant
decrease in state support for energy ef

ciency projects is considered a major barrier
to the development of the ESCO market in Spain.

3.2 Spanish Legislation

The principal EU legislation related to ESCOs is the Directive 2006/32/EC on
energy end - use ef ciency and energy services. The directive stresses the importance
of managing end-user demand for energy and the need to improve the security of