An Example of

Public Private

Partnership (PPP)

7/10/2014

City of Creteil (Paris Suburb)

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By PPP, we mean contractual forms of

cooperation between public or

institutional authorities and private

companies aiming at ensuring the

financing, design, construction,

renovation, management, maintenance

of an infrastructure or the supply of a

service

Titre de la présentation | mm/aaaa

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Creteil

PARIS

City of Créteil

10 km from Paris

91 000 inhabitants

Former heating network

340 000 MWh

33 000 blocks of flats supplied

Network Lenght : 33 km

Renewable Energy rate in 2005 = 16 %

Energy production : Gaz CHP and

geothermal source

Créteil Needs and Expectations

Exension : + 50 GWh (Hospital, new districts)

Increase Renewable Energy rate > 50%

Improve the energy bill for citizens

Modernize its network

but….

No investment for the city

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Pay the energy bill

Public Services Delegation : a form of PPP

4

Private

Operator (PO)

Local

Authority (LA)

Final

consummers

Supplies energy to

Builds, finances & operates the asset PPP Scheme

• Asset paid by PO and

returned to the City at

the end of the contract

• LA takes recovery

risks

Private

Operator

Local

Authority

Final

consummers

PSD Scheme

Handover contract

rent Pay the energy bill

Supplies energy

• Asset Improvements paid by PO (belong to LA at end of the contract)

• PO manages the contract at its own risks

Tariff includes all the costs

Lump sum

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Créteil chose a PSD contract with a private operator

Renewable Energy mix > 50%

Heat pump on

geothermal return

&

Connection to

Waste Incinerator

55% 45%

GAZ

Creteil delegated its network to

Dalkia for 30 years through a

PSD contract

Dalkia designs, builds, finances

and operates the network at its

own risks

An attractive Tariff for citizens

Improvment of the quality of the

service

Dalkia commits on

quality, availibility and the price of the

energy supplied

0 € invested by the City

€ / MWh 70

€ / MWh 55

€ / MWh

Citizens with

gaz boiler

Citizens

connected to

the DHN

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Tariff : A strong Indicator to monitor the balance of the

situation

Rent paid to the Local Authority

Amortizing & financial costs for new

assets (production / network)

Operating and maintenance costs

Costs of Relationship with consumers

(especially Invoicement and collecting

cost)

Energy sourcing

Industrial risks (construction,

operation, collection, volume…)

European Subsidies

Private Operator

Commits on a tariff which includes

Others energy sources

(gaz / fuel individual boiler)

Controled by the Municipality

Tariff

Not Controled

by the Municipality

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Bidding process

Call for

applications

Questions about

proposals Act of

attribution

2 months

Submit an

application

Selected companies

have 2 months to

make their proposals

1 month

Proposals

analyse

2 weeks

Questions

answers &

auditions

2 months 3 weeks

Contract

adjustment

Lo

ca

l Au

tho

rity

P

riva

te O

pe

rato

r

European Tender (Competitive Dialog)

Open to all private European operators

About 8 months between Call for Applications and Act of Attribution

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The main difficulties of this solution

To Underestimate the take-over of the whole activity

Team of Experts from the headquarter in support

HR

IT

Technical

Methods

Finance …

To Build a strong Patnership with the municipality along the contract

duration

To be part of the social improvements and urbanization programs of the city

Local Employment

Moderation of the heationg expenses for the citizens

Sustainable solutions

Extension of the network…

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Benefits for cities

Titre de la présentation | mm/aaaa

Retain ownership of the heating/cooling network

Transfer all risks (Finance & Ops) over to the private operator

Retain the right to inspect / monitor the service

Keep the control on energy bills of local residents

Standardize DHN business

Have access to the most innovative technologies and processes Develop staff skills through experiment from hundred of other

installations

Enable sustainable development comply with the EU targets

Eligible for European subsidies

For a local authority, subscribing a PSD contract involves