Country:Russia
Year:2009
Policy status:In Force
Jurisdiction:National
Date Effective:2009
Policy Type:Economic Instruments>Market-based instruments
Policy Target:Buildings>Existing buildings, Buildings>Building Type, Industry>Energy management, Industry>Industrial processes, Industry>Industrial subsectors
Agency:the Ministry of Energy of the Russian Federation
URL:http://www.russianlawonline.com/law-firms-publications/new-developments-russian-legislation-saving-energy-increasing-energy-efficiency
Legal References:The Federal Law of November 23, 2009 № 261-FZ "On energy saving and energy efficiency improvements and on amendments to certain legislative acts of the Russian Federation"; Order of the Ministry of Economic Development of the Russian Federation of 11 May 2010. №174 "On approval of the approximate conditions of an energy service agreement (contract) that could be included in the contract of sale, supply, transfer of energy (with the exception of natural gas)."; Decree of the Russian Federation dated 18 August 2010. № 636 "On the requirements for the contract for energy services and the characteristics determine the initial (maximum) contract price (lot price) for energy services"; Order of the Ministry of Regional Development of the Russian Federation (Russian Ministry of Regional Development) on June 27, 2012 N 252 "On approval of the approximate conditions of an energy treaty aimed at preserving and (or) increase the efficiency of the consumption of utilities by using the common property in an apartment building";
Description:

The Federal Law No. 261-FZ “On Energy Conservation and Increase of Energy Efficiency” introduces a new type of civil-law agreement - the energy performance contract (EPC). The contractor under this kind of arrangement undertakes to take steps aimed at energy savings by the customer and increasing efficiency of energy resource consumption. The Civil Code of the Russian Federation (the “Civil Code”) provides no regulation for such contracts, while the Law itself offers special regulation for only some of their aspects, so that in the remainder the parties to an energy performance contract are free to agree upon its terms and conditions subject to the Civil Code’s general provisions on contracts.

The Law defines the following terms and conditions of an energy service contract as material:

(a) the extent of energy savings to be achieved by the contractor;

(b) the term of the contract, which may not be shorter than the period necessary to achieve such savings; and

(c) such other obligatory conditions as are required for energy performance contracts by the applicable legislation of the Russian Federation.

A contract price does not constitute a material condition of an energy performance contract.

EPC, as a new type of contract, should be particularly attractive to the public sector, as it allows public entities and state-owned companies to invest in energy efficient technologies and/or renewables at limited cost. Indeed, no or little upfront investment is usually required from the customer, as the investor takes upon itself some of the key project risks and gets paid from the energy savings made by the customer.

The energy performance contract, as a new type of contract, should be particularly attractive to the public sector, as it allows public entities and state-owned companies to invest in energy efficient technologies and/or renewables at limited cost. Indeed, no or little upfront investment is usually required from the customer, as the investor takes upon itself some of the key project risks and gets paid from the energy savings made by the customer.

The key role in every EPC mechanism play energy service companies (ESCOs). ESCO might be a commercial or non-profit business providing a broad range of comprehensive energy solutions for energy end-users. The main aim of ESCO projects is to enhance energy efficiency and savings and, consequently, to reduce greenhouse gas (GHG) emissions. An ESCO may provide further value-added services, such as energy auditing, energy management, comprehensive engineering, project design, and specifications and implementation, but also procurement and installation of equipment, facility and equipment operation and maintenance (O&M) for the contract period, monitoring and verification (M&V) of the savings results etc. In Russia, ESCOs can take a significant role to promote energy efficiency and savings, as well as to address environmental issues of the country.

In line with the Federal Law No. 261-FZ “On Energy Conservation and Increase of Energy Efficiency” the Federal State Unitary Enterprise “Federal Energy Service Company” (FESCO) was established in July 2011 under the supervision of the Ministry of Energy of the Russian Federation (in accordance with Decree No. 274). The main goals of FESCO are the development of the energy services market in Russia by expert and informational support through technical solutions for ESCOs; technical expertise and monitoring of energy efficiency project implementation; unification and type-design of engineering solutions; establishing centres of competence; activity-planning at regional and municipal levels; bringing energy service activities to international standards; integration of energy service agreements into the federal budget system; advancement of international cooperation; promotion of domestic production of energy efficiency- and energy saving technologies and technological development in the field of alternative energy sources etc. Most energy service contracts are planned to be accomplished under the supervision of FESCO in the public and industrial sectors. Additionally, establishing of regional (municipal) public-private energy service companies (RESCO) is planned. It is envisaged to create a network of such companies in the regions to cover with their activities all the territory of the Russian Federation. These regional ESCOs will, however, only serve state-owned enterprises and municipal buildings. Under Russia’s public procurement law, ESCOs must include financing as part of the services they provide within an EPC. Effectively, this means that ESCOs must accept the financial risk for the project and carry the financing on their own books.

To download reference documents click on links below:

Energy efficiency in Russian Industry

Energy Efficiency Investments in Public Facilities Developing a Pilot Mechanism for Russia and Chelyabinsk Region

Russia’s Emerging ESCO Market: Prospects and Barriers for Energy Efficiency Investments

Related policies:Energy Conservation and Energy Efficiency Increase Law (261)

Last modified: Tue, 20 May 2014 15:19:12 CEST