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ManagEnergy is a technical support initiative of the Intelligent Energy - Europe (IEE) programme of the European Commission which aims to assist actors from the public sector and their advisers working on energy efficiency and renewable energy at the local and regional level.

Building on a long-standing history of energy efficiency and innovation, Stuttgart has created an original funding tool that has been bringing energy efficiency improvements to the city for almost 20 years.

PIONEERING PERPETUAL CHANGE – The Stuttgart Model

‘It is said that the people of this region tend to be frugal, innovative and diligent,’ says Dr Jürgen Görres, head of Stuttgart Energy Management Department, ‘This culture combined with Stuttgart’s exemplary role for the region of Baden-Württemberg might have set the foundation of Stuttgart’s efforts in energy management and using renewable energies.’

Winner of the 2004 Climate Star and a 2011 prize from the federal ministry for the environment, nature conservation and nuclear safety(bmub), Stuttgart has become an exemplary city for energy-efficiency innovation not only for Baden-Württemberg, but for the whole of Europe.

The city started to perform energy management tasks and install concrete measures for efficient energy use as early as 1976, even developing its own software tool – the Stuttgart Energy Controlling System. Today Stuttgart has a network of creative policies and systems all successfully working towards a 40% reduction in CO2 emissions between 1990 and 2020. This year Energy Cities launched a new project INnovative FINancIng for Local SusTainable Energy Solutions (INFINITE Solutions) under Intelligent Energy Europe (IEE), aiming to help to spread energy-efficiency funding solutions across Europe. The project will spread the word and support other European cities in implementing the ‘Stuttgart Model’; Stuttgart’s energy-efficiency funding solution that has reduced the city’s CO2 emissions by tens of thousands of tonnes since its implementation in 1995.

A TIMELY SOLUTION

While Stuttgart’s early emphasis on energy efficiency was exceptional, many other European cities are now looking to make the same changes. In response to the European Union (EU)’s Energy Efficiency Directive 2009, municipalities and households across Europe are coveting the financial and environmental benefits of energy retrofitting, renewable energy and energy-efficient devices. But without an existing energy-aware structure, many struggle to generate these changes within the limits of existing funding. Using internal contracting and a revolving fund to create perpetual energy-, and water-saving measures, the ground breaking Stuttgart Model could offer a timely solution for many European cities currently struggling with funding restrictions.

AHEAD OF ITS TIME

‘The fund is part of the city budget,’ explains Görres, ‘every 2 years the city council approves the budget, but throughout the year we can finance projects independently within the limits of the fund. We have to report the measures which we have financed by the fund, but afterwards not beforehand. That is the advantage of intracting.’ Internal contracting cuts out extra expenses and time wastage, and the revolving loan means that initial budgets are recuperated and reused. In this way the tool can initiate a cycle of energy efficiency with whatever funds are available.

By 2011, Stuttgart was saving around 7200 tonnes of CO2 each year through this form of internal contracting. Attributed as the first successful implementation of intraction, the Stuttgart Model has since been applied with great success in cities like Kiel, Wuppertal and Dresden. It is now considered the basic intraction model and a viable financial tool for instigating energy-saving measures which help both to reduce the energy cost burden of tight public budgets and to reduce CO2 emissions.

THE STUTTGART MODEL

The Stuttgart Model works on similar principles to performance contracting. Like performance contracting, the initial investment costs are recuperated through the cost savings achieved by implementing energy-saving measures, with resulting savings used to pay the costs. While performance contracting involves an external third party, intracting incorporates this role into the city administration. A unit of the Stuttgart administration (customer) takes on the role of the Energy Service Company (ESCo), offering energy services to other units of the municipal administration. Investments are financed by a special budget item, to which the energy cost savings are later returned. Over time, the budget item is replenished from ongoing savings, so that, after an initial start-up phase, further funds can be made available for new intracting measures.

PROJECTS BIG AND SMALL

The advantages of the system are that intracting avoids possible financial risks and extra costs because no interest is charged on the invested capital. The absence of an external contractor cuts out transaction and administration costs. The method also allows small scale projects, which might be unattractive to an external contractor, to be promoted;

‘Small but effective measures which we financed by our internal contracting were installing thermostats, new circulatory pumps and controls to update the heating system of some schools. The largest project was replacing a fossil fuel [gas] heating system by a wood chip boiler of 600 Kilowatt with an investment of 1.3 Million Euro. It produces 1,800 megawatthours of heat and saves 400 tons CO2 and 100,000 Euros yearly.’

The annual savings obtained from the projects amount to 13.900 MWh savings on heating, 1.850 MWh savings on electricity and 31.700 m3 savings on water. The implemented measures lead to a total annual cost saving of EUR 1.1 million.

TRANSFORMING ENERGY

Not only does the Stuttgart Model perpetuate funding possibilities, but these energy-conscious changes help to create a culture of energy efficiency,

‘All our public buildings greater than 1,000 square meters have energy certificates...’ says Görres, ‘and smaller buildings will soon be certified too. Buildings which are targets of advanced energy improvements or installations of renewable energies have information panels on the outside or at the entrance area to display the measures, the energy savings and the produced renewable energy. We hope that these promotion measures have an impact on our citizens and their behaviour dealing with energy.’

With energy efficiency and citizen awareness an essential ingredient for the Europe 2020 Strategy, Stuttgart’s innovation proves a welcome contribution to Europe’s future.

Further Information

Read more about the approach the transforming the energy system in Germany.

Recent study carried out by the Institute for Building Efficiency in 2013, identifies the most significant barriers to energy efficiency investments in Europe and the United States.