Overcoming barriers for decarbonisation of multi residential buildings with Energy service company (ESCO) model - Is the REPowerEU plan game changer for ESCO model?

Due to climate change, the EU Green deal and initiatives from Glasgow COP 26 require intensive mitigation measures toward decarbonisation of the buildings sector. One of the biggest challenges for achieving CO2 reduction goals will be the residential sector, especially multi residential buildings. Although there are well-known technologies and energy efficiency (EE) measures that can greatly contribute to decarbonisation of buildings, experience shows that the main barriers for implementation of EE measures originate from the potential client side and have social, economic and regulatory character. These barriers include: lack of awareness about climate change and necessity for urgent actions and long payback period for investment. On the other hand, market and ESCO company side barriers predominantly have economic and technical character, such as a lack of integrator who has professional capability to implement deep renovation projects as well as financial capability for investing in energy service through ESCO model with a long return of investment. Although there is different definition of ESCO model in the world and it is evolving and the model has been implemented for decades there is a little progress in implementation of such model in multi residential building sector. Additionally, there is a necessity for deep renovation of buildings where ESCO model is not desirable due to long payback period. However, there is a new reality now after two years of COVID pandemic and recent EU decision to dramatically decrease its dependency on fossil fuels through the REPowerEU plan. These have created new circumstances and drivers for intensive rethinking of implementation of ESCO model in multi residential buildings. This paper discusses barriers and drivers with associated risks for implementation of ESCO model in the residential sector and gives future direction of actions for implementation of this model in multi residential buildings. Barriers and drivers discussed in this paper also reflect practice and experience on the ESCO market in Croatia.