|Pilot Name||City of Karlovac – Public Lighting system|
|Solution Type||Contract stipulations|
Located in central Croatia at the meeting point between the Croatian lowlands, Croatian highlands, Pokupje and Kordun. Karlovac is framed by four rivers – Kupa, Korana, Dobra and Mrežnica. Since it is located at the narrowest part of Croatia, it is only 50 kilometres away from Slovenia and from Bosnia and Herzegovina. As a city, Karlovac has an important traffic and economic significance.
Since its founding until this day, Karlovac has always developed around roads connecting Europe with Adriatic ports. Witnesses that remain even today are historical routes Karolina, Jozefia and Lujzijana, pathways which enabled Karlovac of the past, but also modern Karlovac to become an important commercial and traffic centre. Karlovac is located less than 50 kilometres from Zagreb, the capital of Croatia, and about 90 kilometres from the port of Rijeka. This favourable geographic position can also be seen in relation to other capital cities of the region. Ljubljana is only 104 kilometres in a beeline. Sarajevo is 386 kilometres away, Budapest around 400 km. Even the capital of Austria – Vienna is only 410 kilometres from Karlovac.
City of Karlovac has a population of just over 40.000 residents and city is cultural, industrial and administrative centre of Karlovac county which has a population of just over 110.00 residents. Planned Budget of city of Karlovac for 2023 is just under 80 mil. EUR. of which 800.000,00 EUR is planned for maintenance and energy cost for public lighting system.
Significant increase in cost of energy has made problems for cities and municipalities when it comes to planning their yearly budgets. Managing energy costs has become even more in focus then it has been during last years. National programmes for promoting energy efficiency and energy transition funded through EU and national funds are highly promoted and planned in upcoming period with extensive grants available for cities and municipalities. Even though energy consumption of public lighting systems can represent a significant share in overall energy cost of cities and municipalities, announced programmes don’t plan for grants or subsidies for public lighting energy efficiency projects.
Since there are no available grants or subsidies for public lighting projects and since the needs for financing other infrastructural projects are high City of Karlovac has decided to carry out project of reconstructing public lighting system using EPC model. Scope of the project includes replacement of around 9000 old luminaires with new led luminaires equipped with communication modules and managed with web- based central management system.
City of Karlovac decided to procure project of reconstruction of public lighting system using EPC model. To ensure project success and that the project will be developed according to best practice, City of Karlovac has contracted REGEA as consultant in the whole process. Since REGEA has extensive experience in developing public lighting EPC projects in Croatia City of Karlovac has assigned REGEA to develop EPC tender and contract documentation for selection of EES provider.
During development of draft of EPC contract documentation by REGEA, standardised contract stipulations developed under REFINE project were used to allow for easier refinancing of the project by EES provider if needed.
Significant increase in prices of energy has made energy efficiency projects even more attractive than they were during the last ten years. Even though increase of energy prices should have positive effect on feasibility of EES projects realised through EPC model there is still no change in preference of clients to procure projects using traditional models. This is mostly result of extensive subsidies for energy efficiency projects from EU and national funds in form of grants that are available to clients if they procure projects traditional way. Unavailability to blend EU and national funds with private funds, due to rules and procedures of national programmes remains biggest obstacle in larger uptake of EES projects realised through EPC model. EES projects like reconstruction of public lighting systems were there are no subsidies form EU or national funds, and which can be financed from energy savings in relatively reasonable periods remain only potential EES projects on market.
Until there is a larger uptake of EPC type projects on the market and until EES providers have problems with initial raising of capital and finance for development of future projects the refinancing will mostly remain unneeded to EES providers.
Standardized contract clauses provide help in form of guidance to consultant when developing draft of EPC contract. They help to define contract stipulations that are of relevance to financial institutions in order to make projects more suitable for financing/refinancing.
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