Energy Performance Contracting (EPC)

Vic Government EPCs since 2009

29 projectscovering

745 buildingssaving

37% (average GHG saving)

and

$418 million (net over life)

and

savings are guaranteed

Federation Square EPC

$6.85 million55% greenhouse gas

saving

$11.8 million30% greenhouse gas savings

Government office buildings EPC

$4.1 million31% savings guaranteed

Melbourne Sports and Aquatic Centre EPC

$1.8m32% greenhouse gas

saving

South West TAFE EPC

$2.8 million28% energy saving

Parks Victoria EPC (46 parks)

RMIT EPC

$99 million36% greenhouse gas

saving

Scope being finalised

Melbourne Cricket Ground EPC

Scope being finalised

Museums Victoria EPC

$3.4 million45% greenhouse gas

saving

City of Yarra EPC

Frequently asked questions

What is an EPC?

An integrated process with a savings guarantee

Request for Proposal

Detailed Facility Study

Install solutions

M&V

EPCDFSA

Why EPC? Why not just do it ourselves?

More savings

Guarantee reduces risk

Low risk supports financing

Doesn’t require customer to be an expert

How can anyone guarantee the savings?

Careful application of the M&V protocol:

A. Data logging systems/equipment

B. New meters on relevant circuits

C. Annual site bills

D. Modelling

As per blue box in upper right corner

Measurement and verification of

savings. This text box not really

necessary, but has been added to

deliberately make the page look

overly busy… for visual effect and

nothing else really.

EPC measurement & verification

Request for Proposal

Detailed Facility Study

Install solutions M&V

Initial M&V outline

(for pricing)

Methodology agreed (option, sample, timing & duration)

Baseline agreed

Some measurements taken (e.g. option A ‘before’)

Comprehensive MVP developed

Some pre-install

measurements

Post-install measurements

Reporting

Making good

Financial reimbursement

EPCDFSA

IPMVP Options:

A: Partly measured retrofit isolationB: Fully measured retrofit isolationC: Whole of siteD: Simulated Calibration

Ongoing M&V reporting:

• Annual M&V reports

• One off M&V reports (e.g. option A solutions)

• Annual commissioning requirements

Do we have to install everything they recommend?

No

Do we have to share the savings?

No

Does the ESCO take over our electricity bills?

No

What about maintenance contracts?

No

Do we lose flexibility in use of our buildings?

No

Are we big enough?

If you spend over $200K per year on utilities

How do we pay for it?

1. Cash

2. Debt finance

3. Finance Lease

Doesn’t it cost a lot to measure and verify?

It will cost more if you don’t.

Did you get what you paid for?

How much will an EPC cost? .. and save?

Hypothetical Local Government EPC

Project scopeCivic centres

Aquatic centresLibrariesDepots

Other facilities

Annual utility expenditure = $800,000

37% savings= $288,000

$2 million

$153,600

$604,000

Capital investment (year 1 debt impact) =

Annual operating statement impact =

Avoided capital (asset replacement) =

What will my chief finance officer think?

They should support this.

Accounting treatment of energy efficiency investmentsFor projects funded with cash OR debt where the payback period is less than the investment life.

BALANCE SHEET– Increased liabilities or less cash– Improved asset value of buildings

OPERATING STATEMENT– Depreciation expense (~1/15th of investment)– Annual cost savings (~1/7th of investment)– Savings more than double the expense

NET DEBT (liabilities – cash)– Increased liabilities or less cash– Increased net debt by value of investment in year 1– Impact reduces to zero over term of the payback period– Positive impact thereafter

zero, then +ve

+ve

- ve for payback term, then

+ve

How do I get started?

Call me

Sam Burke 0408 554 413

Further informationwww.procurement.vic.gov.au, Select ‘EPC’ under ‘State Purchase Contracts’