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Publishable Report
February 2008
The sole responsibility for the content of this publication lies with theauthors. It does not necessarily reflect the opinion of the EuropeanCommunities. The European Commission is not responsible for anyuse that may be made of the information contained therein
Imprint
published by:
Berliner Energieagentur GmbHFranzösische Straße 2310117 Berlin, GermanyTel: +49 (0)30 2933 30-0Fax: +49 (0)30 2933 30-93
Internet:www.eurocontract.netwww.berliner-e-agentur.deDate of Publication: 02/2008All rights reserved.
Content
Overview Executive SummaryIntroductionQuality Assuring InstrumentsMarket Development by Countries
GermanyAustriaFinlandFranceGreeceItalyNorwaySweden
Beyond basic EPCEPC and Comprehensive RefurbishmentEPC and Facility Management
Financing options for EPC EPC in the context of European Processes
EPC and White CertificatesStandardisation and ESCO Certification
Outlook and Recommendations
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countries. Know-how and awareness,information availability and case studieson EPC have been increased. Theexchange among market actors is beingsupported by a Central Platform.
Where EPC already has a certain marketshare, focus was put on the developmentof the model, establishing links to otherinstruments such as facility management,or its expansion in scope to include com-prehensive refurbishing measures.
The ten project partners from the eightEU countries Germany, Austria, Sweden,Norway, Finland, France, Italy, andGreece have managed to contribute tothe market development of energy servi-ces. They have developed and imple-mented the instruments in pilot projects.The consortium has elaborated docu-ments and guides, looking at innovativefinancing, quality standards for EPC, orthe link between White Certificates andEPC. Partners contributed to the (ongo-ing) discussions on ESCO certification.
Energy efficiency in buildings leads tobudgetary savings and contributes to cli-mate protection and the security of ener-gy supply. For the implementation ofenergy efficiency, various instrumentscan be applied. Since much of thesavings potential is economic, marketbased instruments are a very effectivetool. Energy Performance Contracting(EPC) is such a tool. In an EPC project,an Energy Service Company (ESCO)provides its know-how and takes on theperformance risk to ensure that adequa-te measures are implemented and thatthe stipulated energy savings are achie-ved. The investment is refinancedthrough the savings achieved.
The large market potential has not yetbeen fully realised, therefore fromJanuary 2005 until December 2007, theproject EUROCONTRACT has been stri-ving to improve the market conditionsand contribute to the acceleration of theEPC market in Europe. By providing pro-ject development standards and suppor-ting the implementation of around thirtyprojects, project partners showed theviability of the instrument in each of their
EUROCONTRACT - Guaranteed Energy Performance
Overview EUROCONTRACT
Project Partners
Institutions involved in EUROCONTRACT
Germany Berliner Energieagentur GmbH (Coordinator)
Austria Grazer Energieagentur Ges.m.b.H | Graz Energy AgencyÖsterreichische Energieagentur | The Austrian Energy Agency
Finland Motiva Oy | Motiva
France ADEME | Agence de l'environnement et de la Maitrise de l'Energie
Greece CRES | Centre for Renewable Energy Sources
Italy Agenzia Regionale della Regione Liguria SpA | Regional Energy Agency of LiguriaFederazione Italiana per l'Uso Razionale dell' Energia | Italian Federation for the Rational Use of
Energy
Norway Norsk EnØK og Energi AS | Norwegian Energy Efficiency Incorporation
Sweden Energimyndigheten | The Swedish Energy Agency
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Eurocontract Implementation
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Between 2005 and 2007, ten institutionsfrom eight European countries (seeopposite page) formed the consortium ofEUROCONTRACT. The project with atotal budget of 2.3 M€ was supported bythe European Commission's "IntelligentEnergy Europe" Programme(EIE/04/211/S07.38673) and was co-financed by several bodies on the levelof the participating countries.
Coordinated by the BerlinerEnergieagentur GmbH, the project part-ners showed the viability of EPC andsuccessfully contributed to its furthermarket development.
This report, which is the final publishablereport of EUROCONTRACT, has beenelaborated by the co-ordinator with sup-port and input of the other consortiumpartners early in 2008.
One important goal of EUROCON-TRACT was to supply customer orientedinformation and to ensure the transpa-rency of the procedures to build up trustamong the market partners for energyservices. Based on successful provenproject development standards, the con-sortium elaborated innovative schemesfor EPC implementation, adapted to therespective national situations. Additionalmodels and support guides on the topicsof
- EPC + White Certification - Quality Standards- Comprehensive Refurbishment & link
to Facility Management- Norms / Certification - Financing
were developed with intensive stakehol-der involvement. Finally, several part-ners managed to initiate pilot projectsapplying the new tools on the nationallevel, thereby underlining the validity ofthe chosen approach.
Conference “Energy Services 2007 - Moving ahead”
This very successful conference tookplace on November 22, 2007 in Brus-sels and was also the final conference ofthe EU project EUROCONTRACT. Theconference also featured the EuropeanEnergy Service Award Ceremony 2007.
"Europe and Europe's regions areforced to deal with numerous chal-lenges", stated Lucio Gusetti, Director ofthe Directorate for Consultative Works atthe Committee of the Regions. Pointingout that a stable and reasonably pricedenergy supply is essential for a sustai-nable development in regions and com-munes, he added that "Energy Servicesare an important instrument for energyefficiency".
In a video speech, EU Commissioner forEnergy Andris Piebalgs underlined the
need to learn from best practices as wellas mistakes that were made in the past inorder to bring energy efficiency forward.
The project EUROCONTRACT, of whichthe final results were presented on theevent, increased know-how and confi-dence in Energy Services and thus con-tributed to the further market develop-ment of this innovative instrument.EUROCONTRACT aimed at increasingthe number of Energy Saving Contrac-ting projects in Europe. To do so an infor-mation and expert platform on develop-ments on the market for Energy SavingContracting was built up.
"In the last three years we initiated morethan 30 projects in eight countries withan energy cost baseline of over 10 mil-lion euros and an average savingspotential of 15-20 %. We hope that theseexamples will find many who follow", saidMichael Geissler, Managing Director ofBerliner Energieagentur which coordi-nated the project.
"For many companies the implementa-tion of energy efficiency secures compe-titive advantages on markets with enor-mous growth potential", highlighted OlafWeber, Head of Unit Central Sustainabi-lity Unit in the KfW Banking Group.Energy Services effectively contribute totap economic energy saving potentials inall sectors. It is now of great importance,to "use these instruments broadly and toestablish them area-wide."
Best European Energy Service Provider:HEP ESCO d.o.o., Croatia
Group photo of Award Ceremony 20076
In the framework of the conference, thebestowal of the "European Energy Ser-vice Award 2007" took place. The awardhonours institutions, persons and pro-jects that have achieved outstandingaims in the context of energy services.Claude Turmes, MEP and spokesmanfor Energy politics of Group of theGreens/European Free Alliance in theEuropean Parliament bestowed theawards. The award as "Best EnergyService Provider" was bestowed to HEPESCO d.o.o. as one of the first energyservice companies in Croatia for itscommitment against numerous barriers."Despite many legal, technical, financialand social barriers we have managedthe implementation of ten energy effi-ciency projects in the building and ligh-ting sector as well as in industry sinceour foundation in 2003. A result of whichwe are proud of", explained GordanaLucic, Managing Director of the com-pany.
Randall Bowie from Sweden washonoured as "Best Energy Service Pro-moter". He made major contributions tothe drafting and adoption in the Com-mission, Council and the European Par-liament of the Buildings Directive(EPBD) and the Directive on Energy
Services (ESD). Furthermore, he wasresponsible for the Commission's twoEnergy Efficiency Action Plans. RandallBowie thus played an important role increating a stable framework for energyefficiency in Europe. "The recent Euro-pean Directives on energy efficiencyand the accompanying Action Plans pro-vide a clear signal to the market and tothe Member States. They are usefulinstruments for realising Europe's goalof playing a leading role when it comesto energy efficiency, security of energysupply and climate protection" he says.Two projects were honoured as "BestEnergy Service Project": the energeti-cally refurbished Swimming pool Brigit-tenau in Vienna as well as the lightingequipment in the Spanish town Motril."This Brigittenau Energy PerformanceContracting Project is exemplary toshow the present-day possibilities of aneconomic modernisation using energyefficiency measures. The building ownerachieves lowered overheads, higheravailability through new technical instal-lations, all while making a valuable con-tribution to climate protection", pointsout Gunnar Liehr, Vice-President andHead of Energy and EnvironmentalSolutions of the implementing Con-tractor Siemens Building Technologies.
Antonio Jesus Bueno Granadino asrepresentative of the town of Motril isvery pleased about the award. "Motril isthe Spanish town when it comes toenergy efficient lighting. By implemen-ting the measurements we save 1.9GWh energy annually and unburden thepublic budget of approximately 200,000€ per year".
Best European Energy Service Promoter:Randall Bowie
Best European Energy Service Project:Streetlighting in the City of Motril, Spain
Best European Energy Service Project:Siemens Building Technologies for theSwimming Pool 'Brigittenau' in Vienna
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Executive Summary
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The objective of the EUROCONTRACTproject was to contribute substantially tothe acceleration of the market for energyservices in Europe through promotionand the further development of EnergyPerformance Contracting (EPC)Schemes in Europe. The actionfocussed on EPC only in its key aspectsin order to achieve tangible results. It was, and still is to date that a large partof the available energy savings potentialthat exists today lies within existing buil-dings. It is also clear that much of thispotential can be effectively realisedusing a market for energy services andother energy end-use efficiency mea-sures. Energy performance contractingis an instrument that ensures cost-effec-tiveness based on a calculated andguaranteed commercial potential. Theassumption under which the projectstarted was that given the necessaryinformation is provided on energy ser-vices, if contractual, financial and legalinstruments are put in place, if credibilityand guarantees of performance andsavings are established and if end-usecustomers and financial marketsrespond rationally, this would create amarket for energy efficiency worth bet-ween 5 and 10 billion euros per year. Another starting point for the project wasthe diverse situation regarding themarket for energy services in the diffe-rent European Countries, and the needfor an overall increase on awareness,trust and transparency in the processes
behind setting up an EPC project. Ger-many and Austria are no doubt the pio-neers in the market, with high marketstandards and a steady development. Inrecent years, the EPC market hasbecome a significant business forseveral energy service companies(ESCO) in these countries. In most other European countries themarket was still at an early stage. Theproject aimed to develop a Central Plat-form for exchange, to aggregate know-how and to provide and further developthe tools available, fostered through trai-ning multipliers and involving marketactors. The platform was to be flankedby activities that were beyond (at thetime) current levels of application.The core idea behind EUROCON-TRACT is that tested standards, modeldocuments, and local capacity buildingare essential for generating marketdevelopment for Energy PerformanceContracting (EPC). The projects aim isto develop national support tools, valida-ting their applicability through the imple-mentation of 'pilot' projects. The conti-nuous dialogue with and among themarket actors including potential custo-mers is an important element in this pro-cess. Contributing substantially to theacceleration of the market for energyservices in Europe by further develop-ment of Energy Performance Contrac-ting Schemes towards new applicationsand sectors is another main objective.
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- EU wide network of actors on EPC- Standard documents and pilot projects- Quality standards for Energy Services- Market development in real estate sector- Integration of Energy Services and Facility Management- Integration of Energy Performance Contracting with building envelope refur-
bishment- Guiding principles for ESCO certification- New approaches in innovative energy services and financing schemes
Some country specific results:
- Austria has 36 newly trained EPC consultants- in Sweden 7 regional energy agencies were trained on EPC project deve-
lopment- in Italy large scale training was held with 50 participants- 23 EPC projects have been realised and received direct support through the
consortium partners to date, applying the developed documents- In Norway, the tender and contract documents are developed in cooperation
with various partner such as the national standards body and association ofmunicipalities providing additional security for users
- Guidebooks for different user groups are available for example in France formunicipalities, the retail sector as well as for multi-family housing.
Supporting documents for EPC projectdevelopment have been made availablein all consortium countries through theconsortium partners, some also on thecentral project website. Consortiumpartners are available as national know-how and information hubs on EPC pro-ject development. For further capacity,trainings were held.
Key Results
Energy Performance Contracting
Introduction
Energy Performance Contracting (EPC)is an instrument with the aim of reachingambitious objectives for climate protec-tion and reducing energy costs in theface of limited investment budgets. EPCcan be applied to projects of publicauthorities as well as in the private sec-tor.
The basic principle is quite simple: a pri-vate specialised energy service compa-ny - the so-called contractor - brings hisknow-how and the necessary financialmeans into the project. It is his responsi-bility to ensure adequate investmentsare made in the buildings and thus toguarantee the energy savings. Bothpartners share a handout of the costreductions. Profits are reaped by bothclient and contractor - not forgetting theenvironmental benefits of reduced ener-gy consumption.
An EPC project runs according to thefollowing sequence:
The client (for example the local authori-ty) is responsible for the upkeep ofvarious buildings, such as kindergartens,schools, or offices. It is bound by con-tract to energy suppliers who deliverelectricity and heating (e.g. gas or districtheat). In order to reduce energy, costs,and carbon dioxide emissions, the clientruns a competitive tendering process totransfer the financing, planning, imple-mentation, and monitoring of energysaving measures to a private energysaving partner - the contractor. The suc-cessful contractor undergoes a tenderingprocess. The existing contracts betweenthe client and the energy suppliers cove-ring the delivery of electricity and heatingare not affected by the project. The con-tractor, however, agrees the necessarytechnology and supply with the energysuppliers.
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Energy Performance Contractingworks because
- it guarantees savings by con-tract
- it reduces energy consumption in large building complexes or a building pool through invest-ments by the contractor
- it refinances the investment through the savings in energy
- it allows the building owner toparticipate in the saved costs
Concept
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The EPC Contract regulates
- Level and structure of the invest-ment
- Level and division of the annualsavings
- Implementation, controlling andmaintenance of the energy savingmeasures
- Duration of the partnership
- Rights of proprietary and usage ofthe systems
An EPC project is not limited to largebuilding complexes. It often makessense - as demonstrated for instance bythe Energy Saving Partnerships in Berlin- to group smaller projects and create"building pools". These pooled buildingshave different levels of energy consump-tion, construction material, fixtures andfittings but lead to a profitable cross-cal-culation. This means as well that lessprofitable buildings can be integratedinto the project.
The contractor signs a contract to gua-rantee the client a minimum level ofenergy savings. Experience shows thatover 25 per cent of energy costs can bereduced - savings not normally realisa-ble by a (public) owner of real estate onhis own. The contractor only receives hisagreed earnings if the stipulated energysavings are reached. The client is alsoable to save money through savings onheating and electricity achieved throughthe energy efficiency measures.
The investments carried out by the con-tractor are refinanced through thesavings. Any remaining savings are sha-red by the partners according to a ratiosystem agreed to in the contract for theduration of the project. The contractorremains responsible all this time for themaintenance and service of thesystems. The client profits from the fullsavings once the contract has expired.
Implementation
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Contract
It is not merely a matter of trust whichbinds a contractor to the project. In orderto ensure long-term quality, the coopera-tion has to be based on a balanced con-tract. The contract takes all the specificdemands of the project into account andlegally guarantees the client's interests.The contract includes all details of tech-nical measures taken, the nature andextent of any investments made by thecontractor as well as the duration andlevel of savings. All areas of responsibili-ty, the maintenance and the rights of pro-prietary and usage are clearly laid downin the contract.
The contractor is responsible for the per-formance of the technical systems andtherefore also for any risks caused incase of a system's break down. He alsoguarantees the client a minimum level oftargeted energy savings and conse-quently carries the risk of refinancing,hence full payment is just gained by rea-ching the energy saving guarantee.
The client provides the contractor withthe necessary factual basis to makecorrect calculations for the duration ofthe project. This involves the adjust-ment of the actual energy costs accor-ding to the fixed baseline costs, inclu-ding weather adjustments, taking intoaccount changes in utilisation of thebuilding, and energy price changes. Ifthe building is used for more purposesthan originally thought, the contractor isnot burdened by any unforeseeablerises in energy consumption.
The partners also agree to matters inaddition to the guaranteed savings.This can act as an incentive for the buil-ding's "users" - such as tenants - tosave even more energy than stipulatedby the contract.
Situation nach Abschluss der Energiesparpartnerschaft - niedriger Verbrauch, niedrige EnergiekostenSituation after the Energy Saving Partnership has been signed - low consumption, low energy costs
Bauliche UnterhaltungConstruction
maintenance
EnergiesparendeMaßnahmentechnische InstandhaltungEnergy saving
measures
technical maintenance
AbstimmungVersorgung TechnikAgreement covering
technology and supply
VergütungPayment
EinspargarantieGuaranteed savings
VergütungPayment
EnergiesparpartnerEnergy Saving Partner
GebäudepoolBuilding pool
Land BerlinState of Berlin
EnergieversorgerEnergy supplier
GasGas
FemwarmeDistrict
heating
StromElectricity
ÖlOil
The main objective of EUROCONTACTis to contribute substantially to the acce-leration of the market for energy servicesin Europe by further development ofEnergy Performance Contracting (EPC)schemes in Europe. To achieve thisobjective, the following key principlesand core activities have been followedwithin the project:
Building on current know-how
While EPC has become one of the stan-dard instruments in building energymanagement in countries like Austriaand Germany, in most other Europeancountries the market is still at an earlystage. The idea is to let young marketsprofit from more advanced markets,while all are able (based on the expe-riences and the needs in the countries)to contribute to the increased knowledgeon the mechanism throughout Europe.This was ensured through direct involve-ment of relevant stakeholder, buildingowners and ESCOs as well as financialinstitutions.
Building a network of actors
The project developed a centralEuropean Platform in EnergyContracting. It enables exchange amongmarket players - including financial insti-tutions - on needs, necessities and thecurrent know-how. It helps to provide andfurther develop the tools available, foste-red through training multipliers and invol-ving market actors. The platform wasflanked by activities that were beyond (atthe time) current levels of application.
Providing tested standards, increa-sing market capacity
The core idea behind EUROCONTRACTis that tested standards, model docu-ments, and local capacity building areessential for generating market develop-ment for Energy PerformanceContracting (EPC). The projects aim is todevelop national support tools, validatingtheir applicability through the implemen-tation of 'pilot' projects. Neutral marketmediators were trained in the participa-ting countries to increase trust in theinstrument of EPC by minimising the per-ceived risks such as non-transparentprocedures.
Approach of Eurocontract
Developing innovations in energyservices
New approaches on innovative ener-gy services and financing schemeshave been explored and developed:
- Innovative implementation sche-mes for comprehensive refurbish-ment of buildings
- Innovative financing schemes forenergy services
- Cooperation models and interfaceswith facility management
- Quality securing instruments - Certification and qualification sche-
mes and networks for ESCOs- White certificates for EPC models
Following these principles and activities,the framework situation and the actualimplementation of EPC has been furtherdeveloped in the participating countriesand beyond. Furthermore, the groundwas laid for an additional acceleration ofthe European markets for energy servi-ces.
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Energy services are individual packagesof construction, planning, financing,energy supply etc. in which one serviceprovider covers all aspects relevant forthe client. The client can outsource cer-tain complications (many suppliers etc.)and risks (financing etc.) to the serviceprovider, who in turn provides a pre-defi-ned result (energy savings, energy sup-ply etc.) for a pre-defined price. Up tonow, energy services could not developtheir full market potential. This is partlydue to a kind of reserved client attitude:Clients do not trust fully the new servi-ces and are restrained by certain otherbarriers.
In order to acquire broad confidence onthe market, energy services need todemonstrate a constant good quality.Different quality assurance instruments(QAI) are already applied in energy ser-vices projects; however there is nosystematic set of QAI an ESCO or aclient could rely on. On the other hand,there are other possible instruments thatcould be potentially included into energyservices, gaining even more client confi-dence. Most of these QAI give the com-munication of the good quality towardsthe client equal importance than to actu-ally assuring this quality, or simply makecontractual procedures more transpa-rent. Indeed, energy services will needboth kinds of instruments: Those thatensure a constant high quality of the ser-vice provided, as well as those thatserve as a communication meanstowards the client.
The idea of the EUROCONTRACTmanual "Quality assurance instruments(QAI) for energy services" was to pre-sent instruments that convey the out-standing quality of energy services tothe client, so that the services continu-ally gain more and more confidence onthe market. The answers of 42 per-sons, who were interviewed about QAI,their application and their verification,were an important input to the analysis.
21 Quality Assurance Instruments arebeing presented in the manual: 13 QAI,which are already used in certain ener-gy service projects, accompanied by 4QAI from related branches (construc-tion, facility management) and 4 QAIfrom other service branches (mobility,tourism etc.). Their benefits and effortsconnected to their verification from theclient's perspective are evaluated, aswell as the efforts and risks on theESCO side associated with them. Theevaluation shows that there are severalinstruments that provide benefits toboth sides: They add security for mostof the clients, are easy to verify and caneven relieve ESCO-s' efforts and risks.There are mandatory guarantee ele-ments without which energy servicesare not viable; beside these, there areadditional guarantee elements, con-tractual and communication instru-ments which can add value to an ener-gy services project.
* This chapter summarises the EUROCONTRACT manual "Quality assurance instruments (QAI)for energy services" (downloadable at www.eurocontract.net). Authors of the manual are GrazEnergy Agency and Austrian Energy Agency in cooperation with Berliner Energieagentur GmbHand input from further EUROCONTRACT consortium partners.
Quality Assuring Instruments*
Assessed quality assurance instruments
Quality assurance instruments used wit-hin energy services
1. Energy Savings Guarantee2. Supply guarantee 3. Guaranteed service price - all costs
included 4. Operation and maintenance guaran-
tee 5. Comfort guarantee 6. Environmental benefit guarantee
(climate protection) 7. Standardized model contracts for
EPC services 8. Functional tender to facilitate inte-
grated approaches 9. Reporting and documentation
agreement10. Client determination of components
and construction quality 11. Flexible contract terms 12. Communicating the use of high qua-
lity components within EPC projects 13. Communicating the high construc-
tion quality within EPC projects
Quality assurance instruments in "EPCneighbouring" industries: Construction,cleaning, facility management
14. Satisfaction guarantee (someFacility Management Companies)
15. Following acknowledged stan-dards/guidelines
16. EPC Service certification 17. Supplier Certification (construction
etc.)
Guarantee elements of other serviceproviders: (Car industry, transport andmobility, tourism, medicine)
18. Function guarantee with pricereduction (diverse branches)
19. Function guarantee with functionreplacement (Mobility guarantee,car industry, public transport)
20. Function guarantee with productreplacement or repair
21. Best Price Guarantee (tourism)
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Within the performed analysis, theauthors arrived at the following main con-clusions and recommendations:
1. Quality assurance instruments areessential for satisfied clients of energyservices.
2. Even if they are applied in their man-datory or contractual perspective theyhave also the need to be communica-ted in the right way to the client.Furthermore they can be used forindividual negotiation in the variousprojects.
3. Focussing on the various needs of dif-ferent target groups as e.g. publicbuilding owners, large real estatecompanies with rented out buildings,large companies with owner occupiedbuildings as well as small companieswith owner occupied buildings theright QAI can be chosen to avoid pro-blems.
4. QAIs need to be adjusted to the rele-vant project and could of course alsobe applied if energy service projectsare smaller.
5. Quality assurance instruments couldhelp to reach the most importantgoal - that the client is satisfied withthe energy service provided by theESCO. Any effort to better show andcommunicate the quality bringsmore satisfaction and trust into theenergy service market and its deve-lopment.
Naturally any guarantee or QAI has itsprice. Nevertheless, for the develop-ment of the energy services market, ahigh level of confidence, satisfactionand trust on the clients' side is the bestway that energy services can developtheir full market potential.
Conclusions
EPC Market Development
In all participating countries, EURO-CONTRACT successfully contributed toa further development of the nationalEPC market. Some key data:
Building up of awareness and capacities
- Awareness raising and building confidence in the instrument ofEPC
- Dialogue with all market actors - Building owners- Financial institutions - ESCOs
- Capacity Building and Train thetrainers:
- Providing independent compe-tent process management,bringing in the customer viewwhile understanding the ESCOview
- Working towards quality stan-dards and expanded sectoralapplication of EPC
- Implementing Pilot projects based on common but differenti-ated model documents develo-ped in the countries
- Increased in awareness and confidence in the instrument ofEPC
- Building owners- Financial institutions
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Wide-spread dissemination
- Over 100 events organized and atten-ded, over 2 000 participants reached
- Among these about 60 are newEPC experts
- Positive Feedback from targetaudience
- Requests for information fromnon-participating countries(Belgium, Spain, CEE coun-tries) but also beyondEuropean Union
Successful Implementation
- Over 360 buildings have been scree-ned, audits performed
- 30 more concrete projects have recei-ved further support
- 17 have resulted in concrete EPCprojects, or tenders are out or underpreparation
- Covering about 1 million squaremeters
- Energy cost baseline of almost 10million Euros of annually
- Estimated energy savings bet ween10% and over 25%
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Market Development by Countries
In recent years, the German EPC markethas become a significant business forseveral energy service companies -ESCOs, also called "contractors" in Ger-many. The market was and is still con-taining large economic energy savingpotentials: Firstly, because the existingpotentials have not been tapped com-pletely in the past. Secondly, the marketsize will increase further due to the con-tinuous development of EPC. There arevarious reasons why the market has notbeen tapped stronger in Germany. Thisstudy describes and discusses the chal-lenges and possible solutions on politicallevel, from the viewpoint of the contrac-tors as well as the customers for furtherEPC market development. It providesrecommendations for the two maingroups of market players - policy makersand contractors, on how to successfullyshape the future market development.
Currently, the German EPC market ismainly influenced by continuous andplanned changes within the overallframework conditions.
- On the legal and political level, EPCwill most likely be part of diff e r e n tmeasures within the German energyefficiency action plan (EEAP) in orderto fulfil the obligations under theEuropean energy services directive.Furthermore, a fixed share of heatfrom renewable energy sources isexpected to become legally bindingfor newly built and major refurbish-ment of buildings.
- On the economic level, rising energyprices increase the attractivenessfor EPC. This is true for both sides:higher cost pressure on the custo-mer side and an improved economicefficiency of the energy efficiencymeasures for the contractors.
- On the financial level, there areincreasingly beneficial circumstan-ces for EPC through an upgrading ofpublic funding of projects focusingon energy efficiency and the secu-ring of financial risks through public guarantees and funds. This is espe-cially advantageous for projectsincluding more comprehensiverefurbishment measures, i.e.including measures to upgrade thebuilding shell.
The status quo on the demand side forthe public sector is characterisedincreasing investment backlog and lackof investment despite excellent credit-worthiness. This urgency to invest inenergy efficiency measures faces onthe other side challenges arising fromthe public procurement requirementsand the insecurities regarding theusage of public buildings for the dura-tion of an EPC contract.
The main influencing factors for hospi-tals to undertake EPC projects are astrong increase in energy consumptiondue to an increasing stock in technicalequipment combined with a need foreconomic competitiveness.
Germany
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Industry and business often require spe-cific contracting demands (e.g. pres-surised air) and mostly combinedservice between energy supply and per-formance contracting (full serviceoffers). EPC in industry and businessoften cover shorter contract period dueto a larger financial contribution of thecustomers. Framework conditions forEPC in business offices are similar tothose in the housing sector. This seg-ment seems to be the most difficult inregards to a further market developmentdue to complexities arising through theGerman rent law. The dilemma here isthe conflicting and unsolved landlord-tenant conflict of interest regarding theallocation of the investments and theresulting savings in energy.
Current market size and trends
Currently, EPC services make up a 15 %share (total investments) within thewhole contracting market in Germany.So far around 750 million Euros havebeen invested in EPC projects. Thepublic sector alone could account foraround 200 million Euros annual energysavings in the middle term. Regional
project hotspots can be found in theGerman Länder of Baden-Württemberg,Bavaria, Berlin and Hessen. The supplyside consists of around 500 potential butonly 10-15 actually active contractors inthe field of EPC. Generally the market isvery competitive. EPC is a core productof several companies or an expedientsupplement to their service portfolio. Thecontractors belong to three main busi-ness groups: utilities, energy equipmentmanufacturers or automatic control engi-neering companies. Their product port-folio consists of "classical" as well astechnology specific EPC. The customerrequirements on the demand side differsignificantly depending on the customergroup. Increasingly, variations of thestandard EPC are demanded or neededrespectively.All interviewed market players (contrac-tors as well as customers) expect a posi-tive market development. Calculationsmade within the study show that around3,853 million Euros annual energy costscould be tapped through contractingservices. Around 22 % of these i.e. 840million Euros could be saved alonethrough EPC services annually. The fol-lowing table shows the shares for the dif-ferent customer groups.
Savings [million €/a] CO2-equivalent [t/a]
Public sector 210 1,141,026
Hospital 360 1,956,044
Industriy 140 778,841
Street Lighting 130 739,200
total 840 4,615,111
It is expected that the EPC market grows+7 % annually on average. The publicsector as well as the market for EPC inhospitals is expected to grow strongeri.e. with + 10 %. In industry and busi-ness, growth rates are assumed to reachan increase of +5 %. The other tertiarysector is not expected to increase bymore than +2 % per year. An increase inprojects will first and foremost take placein the regional hot-spots i.e. Baden-Württemberg, Bavaria, Berlin andHesse. This has a role model effect onsurrounding regions. The next Land onthe hot-spot list will most likely beBremen.Looking at the EPC market trends inGermany they are distinguished bet-ween product and market trends.Product trends encompass the develop-ments in regards to EPC as a serviceand product. One of the first trends is theextension of the product portfolio.Generally, this means the integration ofenergy saving elements into technicalequipment management projects andenergy supply contracting. Furthermorethere will be connections between EPCand other energy or facility managementservices. In the past refurbishment mea-sures have already been integrated intoEPC (EPC+), the financial share of theservice has however always been largerthan the amount for the refurbishment(ESC+ light). Within EPC+ new business
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models for general entrepreneurs(Generalunternehmer) will be formed aswell as an integration of public-private-partnership (PPP) projects. Finally, it ismost likely that an expansion of the pro-duct portfolio towards additional, tech-nology specific contracting offers (e.g.street lighting) is needed to fulfil futurecustomer requirements. Other producttrends will be the development of newpart-financing models for EPC (throughcustomer contributions or public fundingrespectively), the simplifying of contractand accounting modalities, a muchstronger focus on renewable energies,and the introduction of a quality assu-rance.
Market trends cover the trends withinthe market i.e. between the contractorsand other actors. The first main block ofdevelopments are the specialisation ofthe contractors towards specific custo-mer groups (e.g. industry) and services(e.g. street lighting), the extension of thetechnical qualification, and the acquisi-tion of more international customers(within the respective segment infocus). The second block is the formingof new, strategic partnerships. Most like-ly those will be made with facilitymanagement companies as well asregional energy supply companies forthe regional market development.
Within EUROCONTRACT, BerlinerEnergieagentur has developed severalnew tools to facilitate EPC project imple-mentation. Among them are a mainte-nance cost baseline tool, a data entryform for building data for the advancedmodel and a model presentation of theadvanced model. Additionally, a contractadaptation was drafted to integrate com-prehensive refurbishment measures thatare going on in parallel to the ongoingproject development.
In the course of the project, BerlinerEnergieagentur has kick-started and sup-ported the preparation and implementa-tion of several new EPC projects:
Nine real estates used by the BerlinPolice Department and owned by theBerliner Immobilienmanagement GmbH(BIM) received the full package with com-prehensive refurbishment measures (seeseparate presentation).
In another project, "Bremer Bäder" wasplanning the modernisation of the three
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swimming halls Sebaldsbrück, Huchtingand Aqualand in Bremen. In the prepara-tion of the tender, a comprehensiverefurbishment including the buildingenvelope was discussed. However, thebuilding owner finally decided to includethe replacement of the water installa-tions, which also needed modernisation,in the tender instead of the refurbish-ment of the building envelope. Thetender was realised successfully. Thecontractor Axima is now implementingtechnical energy saving measures andthe replacement of the water installationswithin one contract. The envisaged sav-ings are 3.6 % for electricity, 7.4 % forheating and 12.0 % for water. The CO2reductions are estimated at 464 t/a (5,0%). The measures are being imple-mented in 2008.
Further projects are in presently inpreparation, such as the state theatre inthe City of Hannover and a building poolin the City of Sehnde. The implementa-tion of both projects will be decided in2008.
Main results Germany
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New Project Approach in the State of Berlin
EPC plus
The "Berliner ImmobilienmanagementGmbH" (BIM), is the administrator ofthe "Sondervermögen Immobilien"(special real estate) of the State ofBerlin (SILB). Of its stock nine realestates used by the Berlin PoliceDepartment will be energetically refur-bished in an "EPC plus" project.
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At BIM´s real estate stock there is a highdemand for refurbishment, to stop thedecline of building substance and value.Six million Euro are the needed costs forthe required refurbishment measures ofthe 30 buildings. By implementing an"EPC plus" with measures of a classicEPC as well as a broad energetic refur-bishment of the building envelope, ofexternal walls, windows, roof-tops andbasement ceilings, about 1 Million Euroof the direct investment costs will besaved through the energy savings. Toachieve this, the Energy Saving Contract
No. of buildings part of investmts. Saving of heat
Wall 15 30% 15,8%
Window 18 43% 11,5%
Basement 2 2% 1,1%
Ceilling 4 6% 0,4%
Rooftop 30 19% 26,9%
total 100% 55,7%
Refurbishment of the building envelope and resulting savings (of heat)
is recommended to be signed for theduration of 15 year.
Before signing an EPC there has to bea Europe wide awarding and tender pro-cedure. Until today all relevant prepara-tions regarding the tender have beentaken. There was an inspection of thebuildings as well as an evaluation of thestatus quo, the compilation of the stan-dardised project description (Annex 2)and the calculation of the baseline forheat, electricity and water.
The "EPC plus" is a combination ofthe successful model of the "BerlinEnergy Saving Partnerships" (ESP)and the refurbishment of the buildingenvelope. This holistic energy con-cept is supported by the BerlinSenate's decree of February 2005.The decrees´ main target is to includethe heat insulation in the refurbish-ment to progressively convert allpublic buildings into low energy con-sumption buildings. Thus a higherCO2 reduction potential is possible.The financing model is the effectiveEnergy Saving Contract. Both compo-nents of the "EPC plus" are to beassigned to a single contractor.
BIM - Berliner Immoblienmanagement GmbH
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Location and Titel of ProjectState of Berlin, Germany
Type of ProjectEPC Plus (refurbishmentincluded)
Number of Buildings9 real estates, 30 buildings
Type of Buildingspolice stations and Administrative buildings ofthe Berlin police depart-ment
Total floor area68.000 m2 (floor area varies from building to building)
Energy/ Fuel Source usedDistrict heating,in the biggest building onlynatural gas
Energy consumption per year - electricity
2.988.7 MWh
Energy costs per year - electricity 254,025 €*
Energy consumption per m20.044 MWh/m2
Energy consumption per year - heat15.540.7 MWh*
Energy costs per year - heat656,042 €*
Contact:
BIM GmbHOranienstr. 10610969 BerlinTel.: +49 (030) 90 166-0Fax: +49 (030) 90 166-1414
Energy consumption per m21.7 MWh/m2
Water consumption per year 42,885 m3*
Water costs per year280,539 €*
Total energy consumption - per year18.529.4 MWh*
Total energy costs baseline1,190,606 €
Tender process Tender process has not star-ted yet, planned for 2008
*Baseline year 2003
Case Study
Austria
ESCOs in the Austrian EPC market
The Austrian ESCO market includes 15to 20 ESCOs offering EPC services.However, just about 5 ESCOs coverabout 70 to 80 % of all EPC-contracts.Since the EPC market is still only in thedevelopmental stage, these companiesare still building up their capacity. TheBundescontracting-Offensive (FederalContracting Campaign) has already tiedup all the existing resources of many ofthese ESCOs. For ESCOs governmentprojects offer long-term security. ESCOsconsider private businesses to be com-paratively unreliable partners, sincethey are far more likely to go bankruptthan the public authorities. For thesereasons, ESCOs seldom engage insales canvassing, which naturally hasan impact on the number of projects tobe found in this sector.
EPC potential in Austria
Private service buildings include shop-ping centres, hotels, banks, churches,private office buildings, private hospi-tals, etc. About 25% of the energy con-sumption of all Austrian buildings isaccounted for by the service sector. Dueto the higher level of technical equip-ment in this sector, both energy con-sumption and energy savings potentialare higher than in the residential sector.55% of all private service buildings aresuitable for the EPC classic model. 20%and more energy savings can be expec-ted in buildings of that target group. Ayearly reduction of CO2 emissions ofabout 300.000 tons could be achievedthrough exploiting this potential.
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EPC: An innovative model for themodernisation of private service buildings
Since 1997 Energy PerformanceContracting (EPC) became an oftenused tool to optimise and modernisefederal and municipal buildings inAustria. Since then, more than 1.000buildings have been energy-optimisedwith this tool. Most of these contracts arestill active and successful. One remarka-ble point, however, is that still nearly allof these buildings belong to the public(federal and municipal) administration.In the frame of EUROCONTRACTAustria private service buildings are tar-geted. Despite the well developed EPCmarket in the public sector, EPC did notget a food hold in the private service sec-tor. Nearly no EPC project in that sectorexists in Austria. This results from diffe-rent reasons: Low awareness of buildingowners of the positive effects of energysaving measures, concentration on corecompetence not on building performan-ce, EPC relatively unknown in that sec-tor, building owners do not like long termcontracts, bad experiences with EPC(contracts without competition of ideas).Within EUROCONTRACT this targetgroup shall be stimulated to implementEPC-models. Within one year projectduration of EUROCONTRACT (2005)two EPC tenders and one DC tenderwere completed and the measures willbe implemented in two of this projects.Several talks with building owners star-ted, some of them seem to be success-ful.
In Austria the national work for EURO-CONTRACT is integrated runs under theecofacility.
At the end of the project EUROCON-TRACT, 60 consultants attended regulartrainings on energy efficiency in buil-dings and Energy PerformanceContracting (EPC). There are consul-tants who are specialised in refurbishingsmall buildings as well as consultantswho develop efficiency concepts forlarge buildings with complex technicalbuilding services equipment.
Consultants pay a lot of attention to theFacility Management (FM) Manual deve-loped in the course of the project EURO-CONTRACT. The manual is very usefulfor them when supporting their clients inthe development and implementation ofEPC projects. The Manual informs aboutthe basics of EPC, three different EPC-FM cooperation models and how to findthe best EPC-offer. Furthermore it con-tains helpful texts to compile an EPCcontract.
Approximately 65 articles were releasedduring the project to inform buildingowners and facility managers about thepossibilities and advantages of EPC andthe related offers of the Austrian marketdevelopment programme.
Main results Austria
To cope with the huge energy savingpotential in private service buildings anetwork of independent EPC- and refur-bishment consultants network was esta-blished. The trainings for the consultantsrun in the frame of ecofacility - theAustrian EUROCONTRACT programme.Within April 2006 about 30 active consul-tants market their service actively all overAustria.
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At the environment workshop, entitled"Energy Efficiency in Retail Markets -What Can We Do?", Austrian expertsinformed about energy efficiency measu-res, problems and solutions in the fieldsheating, air conditioning and cooling.Furthermore the audience was introdu-ced to the topic of EPC. Two major retailchains were very interested in refurbis-hing their buildings and in the coopera-tion beyond the completion of the projectEUROCONTRACT. For one of them arough concept was already developedwhich will be further elaborated andimplemented in 2008. These actions willinclude shops in Austria, Germany, theCzech Republic, Poland, Slovakia,Hungary and Slovenia.
The Austrian EPC- and refurbishment-consultants network
Finland
means, that most clients normally preferto implement the saving measures bythemselves rather than by utilising anESCO service.
ESCO business has been growing inFinland but not to meet the expectationsfollowing the early information fromforeign ESCO and EPC markets andthe growth of this business. Earlierexpectations of a fast market develop-ment were unrealistic because:
- The energy auditing program subsi-dized by the government and combi-ned to the Voluntary EnergyConservation Agreements has beenone of the most important tools toimprove energy efficiency in thecounty. As far as the energy auditingprogram and the ESCO conceptwork as complementary tools toeach other, both concepts can beexpected to have growing markets.
- Until now the ESCO concept hasbeen strictly focused on improvingenergy efficiency in Finland. In manyother countries EPC projects tieenergy efficiency activities and reno-vation needs closely together.
- To create EPC business in the mar-kets, where the expected savingpotential is relatively low is challen-ging and leads to tough require-ments in verification and utilisationcorrection.
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Motiva Oy is a state owned companypromoting energy efficiency and renewa-ble energy sources. ESCO concept is atool to get energy efficient technologyand solutions implemented. Motivaworks together with market actors forpromoting and developing ESCO andEnergy Performance Contracting (EPC)concepts in Finnish energy markets.
When starting the introduction of theESCO concept in Finland it was conside-red more or less as a tool for the imple-mentation of energy saving measuresidentified and reported in connection withenergy auditing. This is a consequenceof the fact that a lot of energy audits indifferent client categories have been car-ried out in Finland during the past tenyears. Energy auditing is supported bythe Finnish government and is linked tothe national energy and climate strategy.
The average economic energy savingpotential of 17 % in heat and fuels and 7% in electricity has been reported in theauditing reports. About two thirds of thesaving measures proposed in the reportshave been implemented. The high imple-mentation rate is easy to explain becau-se the average pay back time of allreported energy saving measures is rela-tively short: about 80 % of the energysaving potential reported is achievablewithin 2 years pay back time in municipa-lities and in the public sector. This
The ESCO business has been marketedwidely in Finland and the governmentgives financial support to the ESCOinvestment projects. There is room alsofor ESCO business focusing strictly onenergy efficiency improvements (as wehave seen especially in our industrial suc-cess projects) but e.g. the lack of know-ledge and slowness in adapting newmethods are hindering the growth ofapplying the concept in areas where itcould be utilized more widely.
National approach
Motiva's activities in the Eurocontract pro-ject are linked to the national study: "Life-cycle Models for Indoor Environment andBuilding Services - CUBENet". The targetof that project is to create new servicemodels for new buildings and renovationprojects where the contractors would beresponsible for the building engineeringsolutions and systems for a longer periodthan normally in building projects.Furthermore, they would take responsibi-lity of the management, maintenance andindoor quality (including energy costs) ofthe building.
To increase the impact of the ESCO/EPCenergy efficiency actions nationwidemeans that the target group should alsoinclude buildings that need renovation.When increasing or changing the buil-ding activities or services, improvingindoor comfort levels or increasing buil-ding engineering services, the opportuni-ties to economically increase the energyefficiency of the building is much greaterthan later when all the important basicselections have already been made.That is why we aim in Finland at develo-ping new models or tools to emphasizethe energy costs in procurement proces-ses. Developing ESCO concepts forthese purposes is one option. It seems tobe obvious that the EPC procedure cre-ated in Germany and Austria should bemodified for the Finnish conditions e.g.because of the lower economical energysaving potential in buildings.
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The main results of Eurocontract projectin Finland relate to the following threecategories:
- Marketing and information dissemina-tion
- Developing ESCO concepts and toolsand starting pilot projects
- Creating innovative models for reno-vation projects especially inmunicipa-lities
Marketing and information disseminationmeans that Motiva has continued to workas a link between the ESCO's and theirpotential clients and supports new inter-ested actors in entering the market. Themarketing includes ESCO seminars,publishing press releases, articles andcase cards about ESCO activities andgood examples of ESCO projects.
Two ESCO seminars were arranged byMotiva in the course of half a year's timein Oulu and in Jyväskylä. Several articlesabout the ESCO concept could bepublished.
Main results Finland
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The most important results in the view ofFinnish national project plan and targetsin Eucontract project are the "ESCO-guide" for municipalities and the report"ESCO Service for Municipalities". Thematerial has been also utilized in a pro-ject where four Finnish ESCO's havecontacted municipalities marketing theservice and training the staff to under-stand the ESCO service flexibility e.g. inrenovation projects.
Development and pilot studiesThe ESCO project bidding documentsfor municipalities have been created incooperation with the Cubenet andEurocontract partners. The pilot projectwhere the documents were tested wasthe City of Turku in 2006.
In Finland the City of Turku has comple-ted one pilot ESCO-project linked withthe IEE Eurocontract and with the natio-nal Cubenet project. This has also beenthe platform for creating new ESCO ten-dering document templates and guidesfor municipalities. These documents areshown in Motiva’s web-page. The City ofHelsinki has made a pilot in theEurocontract project context which hasgiven new information about the benefitsof bundling municipal buildings to forman ESCO project. The City of Helsinkihas considered the results promising.
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Linked with the Eurocontract project anew ESCO marketing project has beenstarted in the beginning of the year 2007by Motiva. Financing for the project hasbeen received from the Ministry of Tradeand Industry.
The project is a marketing and informa-tion dissemination project for municipali-ties in nature and is carried out by fourFinnish ESCO’s who take the info andguides created in the Eurocontract pro-ject to the administration and technicalpersons in municipalities (e.g. ESCOGuide and ESCO Service forMunicipalities, see www.motiva.fi/toimin-ta/ESCOtoiminta/ cubenet). This projectis due to end in the end of the year 2007when dozens of municipalities havebeen contacted. As a preliminary resultof the latter effort ESCO’s have beenable to agree numerous further activitieswith contacted municipalities focusingenergy efficiency improvements. Fourmunicipalities and two other organisa-tions have until now completed or aregoing to start a tendering process bund-ling their buildings into an ESCO project.These can be expected to grow newESCO projects to be called pilots, becau-se the approach and procedure is newfor those municipalities or organisations.
Location of Pilot ProjectFour municipalities and 2 other publicorganisations around the country
Type of Project ESCO/ EPC project, also refurbish-ment needs taken into consideration
Number of BuildingsA number of buildings, exact number
not known by Motiva
Type of BuildingMany categories of municipal buil-dings
Contact:
Mr. Perrti KoskiMotiva Oy
P.O.Box 48900101 Helsinki, Finland
eMail: [email protected]
Case Study
ESCO service is already widely knownamong Finnish customers. Still a lot ofwork will be needed to correct the com-mon misunderstandings and to take theinfo about ESCO service and it's flexibili-ty to all technical and administrative per-sons dealing with energy efficiencyimprovements and renovation projects inmunicipalities.
In Finland the implementation of theenergy service directive, ESD and ener-gy efficiency improvements is based lar-gely on voluntary energy conservationagreements. In 2008, a new period ofEnergy Efficiency Agreements will startand will involve all important branchorganisations and their members andclients in the country.
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For municipalities the new EnergyEfficiency Agreement will imply e.g thatthe municipality
- will use new procedures to get ener-gy efficient solution to be implemen-ted in renovation projects and in newbuilding contracts and if necessary,independent on its own investmentbudget
- will find the necessary knowledgeand understanding to be able to utili-ze ESCO service in investments
- finds out the possible obstacles inenergy efficiency decisions in its ownadministrative and decision makingprocesses and tries to solve therevealed problems
- when beginning new investmentstakes into account the option to utili-ze ESCO service when the scarcefinancing sources will hinder costeffective investments to come true
Thus, the Energy ConservationAgreement will further increase theneed for information and training aboutESCO service among municipalities,despite the intensive information anddissemination work performed in thecontext of EUROCONTRACT.
Outlook Finland
The P4 (financing of new equipments) isforbidden in the public sector.
This contract is slightly different to theBEA definition an EPC contract, becauseESCO are not paid only on energysavings. Nevertheless this contract caninclude a profit share which leads to sub-stantial energy savings.
Ther French market is characterized bya strong concentration of players, mainlythree are dominating the market : Dalkia,Elyio, Cofathec. Each one is a subsidia-ry of one of three main energy utilities inFrance : EDF, Suez Electrabel, Gaz DeFrance.
France
The term energy services appearedsome years ago in France due to libera-lization of energy markets and the prepa-ration and debate on the proposal for theEuropean directive on energy end-useefficiency and energy services.
The dominant model of energy serviceUntil now, one model of energy service isdominating the French Market. This
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model is developed by French operatorswith success abroad in some Europeancountries (Spain, Italy, UK). It is mainlybased on an operation and maintenancecontract on HVAC installations. It wasinitiated in the public sector and thengeneralized in the private sector. Thestandard contract contains often 4 ele-mentary services:
Today these companies previously cal-led "exploitant de chauffage"(heatingoperator) try to renew their image by cal-ling themselves SS2E (Energy EfficiencyService Companies)
New actors with new services
- Energy suppliers: facing a strongcompetition on the eligible market (allthe professional customers are eligi-ble to choose their energy suppliernow), energy suppliers want to beco-me multi-energy and service providertrying to keep customers or gettingnew ones. At this moment the energyservices are: consultancies, auditsand load curve analysis. The mainplayers (EDF, Suez) can provide as
The Club gathers the following professio-nal associations:
- FG3E, the French Federation of Firmsoffering Services dealing withEquipment, Energy and Environment
- GIMELEC, a group of firms manufac-turing electric equipment, control andrelated services
- SERCE, the Union of Companiesdealing with electrical engineering
- UCF, the Union of Companies dealingwith environmental engineering, as apart of the French Federation ofBuilding
- UFE, the French Union of Electricity,Professional Association of the elec-tric sector.
The ClubS2E was established as theplace where the different actors of EPCcan work together on federative subjectssuch as model of procedure for tenderingprocess, or definition of a commonmethodology for measuring and evalua-ting the energy guarantees of EPC, allthis will contribute to securing the con-tracts and so to developing further theEPC market in France. The ClubS2E is asupport partner of ADEME within theEurocontract Project and has contributedto an investigation piloted by an Austrianpartner of Eurocontract (Grazer EnergieAgentur) about quality standards, certifi-cation issues for EPC and innovativeenergy services. ADEME has providedinput with the ClubS2E to the certificationwork within the CEN/CENELEC (TF189), furthermore, the ClubS2e is wor-king on standardised M&V methodolo-gies.
well for the very big multi-sites custo-mers (Renault Europe, AirbusFrance) energy services called pro-gress contract : the utility warrants alevel of energy savings without astrictly penalty. This contract is basedon the business to business betweenthe customer and the energy supplierwho has an interest to achieve theobjectives if he wants to keep his bigcustomer for a future contract of ener-gy supply.
- Big installers: actors like Cegelec (exAlstom contractor), Amec SpieandVinci provide directly or indirectlyvia subsidiaries and services in com-petition with the historical HVAC ope-rators.
- Equipment suppliers: actors likeSiemens, Schneider and JohnsonControls provide EPC in Franceaccording to the BEA definition.Schneider just after buying a Swedishcompany is now beginning this busi-ness in France. For other players itseems that this business is quite limi-ted in France.
During the last years, the French situa-tion has evolved and could be morefavourable for EPC development in thefuture: Incentives for EPC are given inthe framework of the white certificatesmechanism; there is the clear will of thegovernment to simplify the PPP procedu-res in 2008; finally, the governmentadopted the objective to reduce theenergy consumption of the state buil-dings by 20% in 5 years.
Within EUROCONTRACT, intensive acti-vities were followed in France to bringtogether actors of the supply side ofenergy services. An important elementhere is the Energy Efficiency ServicesClub (Club S2E), which was founded inNovember 2005 by five main Frenchactors in the field with the support ofADEME.
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Another focus was on the developmentof EPC guidelines for local authoritiesand for the retail sector. In France, thesubject of energy performance contrac-ting is far from being mature for localauthorities. However, the implementationof the new PPP's should make the imple-mentation of EPCs more feasible.Furthermore, training courses and exten-sive dissemination activities supportedthe promotion of EPC on the Frenchmarket.
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As a result, two concrete pilot projectsevolved in the course of the work. TheConseil Regional of Alsace has decidedto launch the competitive dialogue in2008 within the new PPP procedure. TheConseil presented with ADEME the pro-ject at the ESCO conference in 2006 inPrague and has sent a preliminary eva-luation of the project to the MAPPP(ministry of finance), who will give hisresponse about the opportunity to imple-ment the EPC through the classical wayof the public market code or through thePPP procedure.
main results France
* The Conseil Regional Alsace manages 77high schools, representing 1.3Millions m2 and7M Euros energy bills.
The project is to be implemented in atleast 20 high-schools*.
Furthermore, ADEME supported theUniversity of Versailles Saint-Quentin enYvelines to do an audit of all the buil-dings and select suitable ones for EPC.The university has already launched thecall for tender for the legal and financialsupport for the competitive dialogue. Theproject will be implemented on buildingsrepresenting 105.000 m2 (38 buildings)and 1.1 M euros energy bills.
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Location of Pilot ProjectLe Chesnay, Versailles, Velizy,Mantes la Jolie,Rambouillet, Saint-Quentin
Type of Project EPC with refurbishment
Number of BuildingsAround 30
Type of BuildingAdministrative, technical servi-ces, education, research
Total Floor Area105,000 m2
Energy/Fuel SourceGas
Energy Consumption per Year - Electricity6,100 MWh
Energy Costs per Year - Electricity 500,000 €
Energy Consumption per Year - Heat15,600 MWh
Université Versailles SaintQuentin en Yvelines, France
Energy Costs per Year - Heat593,000 €
Energy Consumption per m² 155 for gas62 for electricity
Energy Consumption per unit 1,435 kWh/student
Total Energy Cost Baseline1.1 M €
Tender process Preparation of the evaluation study to get the permission of the ministry of finance (MAPPP) tolaunch the competitive dialoguefor a PPP
Contact:
Kleber PINTO SILVAUniversité de Versailles Saint-Quentin-en-Yvelines37 rue du Maréchal de Lattre deTassigny F-78150 Le ChesnayeMail:[email protected]
Case Study
35
Location of pilot project Région Alsace (France)
Type of ProjectEPC with special objectives con-cerning CO2-emissions
Number of Buildings 33 schools (including 12 with restrictions) "pre-chosen" by DCT Région Alsace, scope willstill evolve during the project
Type of buildings Secondary schools (lycées), partly with gyms, studios andapartments for caretaker
Total floor areaappr. 660 000 m² (average20.000m²)
Energy/Fuel Source used 18 (8) gas as main source; 2 (1) fuel as main source; 1 (3) districtheatingAdditional: electricity in fivecases
Energy consumption per year - electrici-ty (in 2005)
between 300.000 kWh and 1.140.000 kWh
Contact:
Mauro RampazzoDirection des Services Techniques
Région Alsace1 place du Wacken
F-67000 StrasbourgPhone +33 (0) 3 88 15 67 13 Fax +33 (0) 3 88 15 69 28
eMail: Mauro.rampazzo@region-alsa-
Energy costs per year - electricity (in 2005)
between 20.000 € and 90.000 €,
Energy Consumption per year - heat(in 2005)
between 1.100.000 kWh and 5.400.000 kWh
Energy Costs per year - heat (in 2005) between 50.000€ and 320.000 €
Water Consumption per year(in 2005)between 2000 m3/a and 20.000m3/a,
Water costs per year (in 2005) between 5000 €/a and 36.000 €/a
Energy Consumption per m² (in 2005)between 126 kWh/m² and 374kWh/m²
Total Energy Cost Baseline~5.000.000 € in 2005 (without water)
Tender process Tender process has not started yet. Evaluation by the MAPPPongoing.
Les Lycées en Alsace, France
Case Study
36
use energy management is often neglec-ted, and there is little attention given toenergy consumption and to possiblesavings, in most of the public buildings,but in a great deal of private as well (e.g.in sports centres). On-site expert person-nel and the top management are usuallydisconnected, thus information aboutenergy use matters does not reach thedecision makers.
In the course of EUROCONTRACT,through a range of dissemination activi-ties, among them information material,three workshops, an internet site, a wideracceptance and understanding of howan EPC scheme works could be commu-nicated to the potential market actors. Araise of the awareness and better infor-mation among the possible end-users forenergy services was attained, in whatconcerns the economic and other bene-fits connected to energy efficiency mea-sures and what they offer. Decisionmakers from the demand side have beeninformed about their options concerningthe energy upgrade of their buildings,and can clearly see the multiple benefitsfrom the implementation of an EPCscheme.
With the help of a market survey and astatus report on public EPC institutionalproblems and legislation vacancies havebeen identified. The need for issuing alaw for ESCO business was highlighted,given that it would clarify the operationalenvironment and allow many companiesactive in the RE/SE field, to enter withoutdoubts into the energy services market.
The ESCO activity is negligible inGreece, and so far ESCO business hasbeen restricted only to a few pilot EPCprojects, that concerned renewable ener-gy technologies (mainly solar thermalsystems). Energy performance contrac-ting has not deployed yet either in thepublic, or the private sector. It can besaid, that the EPC market is taking itsfirst steps, and is now starting to grow.
The lack of ESCOs development is attri-buted to the absence of a positive legaland institutional environment for the initi-ation and viability of ESCOs operation.This includes the lack of clear, straight-forward and supportive procurement pro-cedures, and the absence of contractualand administrative guidance for theselection, control and repayment of ener-gy services. However legislative chan-ges have taken place, and are expectedto boost the ESCO activity (e.g. Law3389 on Public Private Partnerships).
On the side of financing institutions, suchas commercial banks and insurancecompanies, there is a noteworthy interestin financing energy efficiency and ESCOprojects. However, specific financialschemes, and procedures have not beendeveloped, due to the not yet active mar-ket.
In addition, on the demand-side of themarket for energy services, is present alow level awareness and lack of informa-tion, of how an EPC scheme works, andwhat are the benefits (economical andother) associated to it. In particular, end-
Greece
An active operating actors network con-sisting of political decision makers fromministries, local authorities, energy servi-ce companies, associations of compa-nies (contractors, construction etc), buil-ding owner's federations and financialinstitutions was established. Additionally,a guide for public EPC implementationwas prepared, in which key issues andprocedures are described, always alig-ned with the existing legal framework,and also typical categories and measu-res of intervention are presented.
The ESCO/EPC situation in Greece asmanifested until the end of 2007, exhibitsat least an attentiveness uptake bothfrom the public and private sector. Theidentified weaknesses and barriers -mainly legislative, some fiscal, and thereluctance of entering in long term con-tracts - will be tackled by new legislativedocuments and market initiatives sincethe potential of such schemes is hencef-orth well accepted and documented.
Furthermore, within the EUROCON-TRACT project, CRES has succeeded topromote these schemes in key-publicorganisations and to be actively presentin the design and implementation phaseof public investment and developmentprogrammes. Moreover, the liaison rolethat CRES has developed for the privatesector companies in relation with the pro-motion of the EPC/ESCO business inGreece is going to further enhance thesejoin efforts and will also built up continui-ty for the specific goals of the EURO-CONTRACT project.
Lately, CRES took over a consulting rolein the context of the agreement reachedbetween the Central Union ofMunicipalities and Communities ofGreece (KEDKE) and the Ministry ofDevelopment, concerning the identifica-tion of the actions that will be included inthe Operational Programme ofCompetitiveness 2007-2013. All inter-ested parties agreed that the new OPCshould include among else, actions con-cerning the implementation of energysaving measures through EPC models inthe building sector of local authorities.Additionally, CRES will play an activerole in the effort of the Hellenic PublicReal Estate Corporation (HPREC),which is the first public sector body tohave taken the innovative step of utilizingmodern financial tools and Public PrivatePartnership (PPPs) schemes for theAccommodation Programmes of theCentral and Regional MinisterialServices.
Concluding, it is positive and hopeful thata public sector body has taken the inno-vative step of utilizing modern financialtools and Public Private Partnership(PPPs) schemes, for upgrading existingpublic buildings and procuring new ones.This is of great importance; since thepublic sector can and must play anexemplary role in the implementation ofEPC schemes, so that the energy servi-ces market will start developing and theprivate sector will eventually follow.
37
38
In Italy there has been a 20 years expe-rience in energy services, with manyESCOs active since early 1980s. Inthese 20 years, many third party finan-cing (TPF) projects have been imple-mented, for example on HVAC, cogene-ration in hospitals, BEMS, lighting effi-ciency improvements, etc.
An energy service companies' tradeassociation also exists since the 80s(AGESI, formerly ASSOCALOR). Thisassociation has recently promoted, inaccordance with other French compa-nies, a corresponding European associa-tion (EFIEES), which also includes othercountries.
Actually there are a few dozen ESCOsactive on the Italian market, some ofwhich are large multinational companies,the others are SMEs. Many of thesecompanies implement quite a few TPFprojects, and are using their own "modelcontracts", of which they are very proudand jealous. This means that there arestrong motivations and self confidence,and that energy service companies arestill evolving and enhancing their activi-ties.
Guidelines and model contracts for EPCand TPF have been published by a cou-ple of Regions (like Lombardia andPiemonte). Also, a centralised procure-ment procedure for energy services hasbeen established by the governmentcontrolled CONSIP Agency, available to
Italy
all public administrations and mandatoryfor government administrations.
The Italian decrees 20.7.04 (formerly24.4.01) on energy efficiency entitle"Energy Service Companies" to get the"White Certificates" for the energy savingprojects implemented for their custo-mers. However, no clear definition ofESCOs has been issued yet, causingconfusion and distortions in the market.As a consequence, a "jump-in-the-wagon" syndrome following the EEdecrees has risen, leading to the up-coming of many ESCOs with no qualityand competence guarantees.
AEEG had opened on their website apublic list of self-defined ESCOs, withouta real control on the quality level of thethose companies, which is, in most of thecases, unsuitable. This is clearly eviden-ced by the fact that more than 600 com-panies were enlisted. AEEG has therefo-re closed that list, showing now the list ofcompanies that have applied for gettingWhite Certificates, where about 130companies are included, roughly 50%being ESCOs.
This development strongly underlinesthe need for a clear definition of ESCOs,of their essential characteristics, theirmost appropriate "modus operandi" andthe minimum requirements, for a signifi-cant up-grading, and for a "public recog-nition" of ESCOs.
In the implementation, quite a few diffi-culties have resulted from the failure ofthe expected cooperation with AGESI,the national ESCO Trade Association.Nevertheless an acceptable number oftraining courses for ESCOs has beenorganized with more than 250 partici-pants.
Also two on-line "e-Learning" trainingcourses have been prepared for ESCOsand for "Energy managers and experts"also working of ESCOs.
Further difficulties came from the slow-ness of the Standardization andCertification processes which are out ofour control. Nevertheless, the partnerswere successful with lobbying on theEuropean and national Standardizationand Certification Organizations, resultingin the starting of the institutional work onESCO Standards and certification regu-lations, which will be made available inthe next future.
As a consequence of the non availabilityof the needed standard at the end of theEUROCONTRACT project span of time,FIRE and ARE have decided to supportthe goal of ESCO certification by organi-zing a voluntary "pilot - certification" of aselected number of ESCOs by a"Conformity assessment" to a commonlyagreed requirements specification.
As a result of intensive disseminationwith training courses and contacts tomore than 60 municipalities, three con-tracts could be prepared completely withall the tender documents, the calls fortenders are to be published early in2008. Further municipalities showedinterest and at least other two EPC willbe carried out within 2008.
In the context of EUROCONTRACT, the two Italian partners ARE Liguria and FIREfollowed the objectives to
- improve the knowledge, capabilities and quality level of the existing and newESCOs. This should help to better respond to the needs of the changing marketand the requirements of the new laws and directives, and to facilitate the diffu-sion of the harmonised EP Contracts.
- prepare and promote a qualification, certification and accreditation process, insupport of the Energy Service Directive 2006/32/EC, in order to give the appro-priate credibility to the ESCOs offering the Energy Services and EPC
- promote the adoption of the harmonised EP Contract in the Italian market, most-ly among the Public Administration, and locate suitable projects to apply and testharmonised EP Contracts.
39
40
Location of Pilot ProjectSassello municipality, Savona province, Liguria Region, ITALY
Type of Project EPC
Number of Buildings1
Type of BuildingAdministrative
Total Floor Area850 m²
Energy/Fuel SourceOil
Energy Consumption per m² 189 kWh/m²
Total Energy Cost Baseline15,000 €
Tender processTender documents ready to be published
Ortovero, Italy
Contact:
Ing. Paolo Bisio, ARE Liguria SpAvia XX Settembre 41 16121 Genova tel.010 548 8719 fax.010 570 0490 eMail: [email protected]
Sassello, Italy
Location of Pilot ProjectOrtovero municipality, Savona province, Liguria Region, ITALY
Type of Project EPC
Number of Buildings1
Type of BuildingSchool
Total Floor Area1,590 m²
Energy/Fuel SourceOil
Energy Consumption per Year - Heat10,000 lt
Energy Costs per Year - Heat10,000 €
Energy Consumption per m² 86,5 kWh/m²
Total Energy Cost Baseline10,000 €
Tender process Tender documents ready to be published
Contact:
Ing. Giovanni ArnaldiARE Liguria SpAvia XX Settembre 41 6121 Genova eMail: [email protected]
Case Studies
In Norway the EPC market is immature,even if there have been sporadic casesof EPC or similar projects the last fifteenyears. The municipalities of Fredrikstadand Hvaler have about ten years ofexperience as clients. Different compa-nies have since 1990 offered differentversions of "energy saving with guaran-teed results", but the market responsehas not been overwhelming.
Through a SAVE project some pilot pro-jects on energy outsourcing / performan-ce management have been initiatedmainly in the private sector, but it is notclear whether this is really EPC.
Øvre Eiker, Nedre Eiker and Lier munici-palities went in 2003 - 2004 (as probablythe first in Norway) through a public pro-curement procedure on EPC, and arenow in the implementation phase. Sør-Odal municipality also has signed anenergy performance contract.
Today there are too few contractors andtoo little demand to constitute an effecti-ve EPC market. The procurement, con-tracts and implementation is very hetero-genous and partly unprofessional fromboth sides. There is a need for develop-ment of guidelines and standards tosecure quality projects, as well as a needfor more training and active marketing ofthe EPC concept.
Market actorsThe term ESCO is not well established inNorway. Mainly there are three types ofEPC contractors:
1. Entrepreneurs/suppliers (e.g. HVAC )2. Consultants/advisers3. Energy companies (electric utilities
and oil companies)
Norway
41
They may cover alone all parts of the con-tract incl. financing, or pair up w/otheractors. However, only one company canbe responsible towards the client andhence take the risk. The other actorsinvolved are sub-contractors deliveringproducts and services. Late experiencesare that 5 - 8 contractors participate inEPC tendering process.
Main target group on demand sideThe municipalities are seen as the mostrelevant target group for an initiative onEPC.
- Municipalities are interesting clientssuited to develop the contractors mar-ket
- Public sector is regarded less riskyfinancially than the private sector
- Public buildings have a more predicta-ble and stable consumption patternthan private buildings
- Public buildings have a large energysaving potential. Municipal and countymunicipal buildings constitute 30 %(34 mill. m2) of non-residential buil-dings.
- Municipalities have a general need forinstruments that can ease the imple-mentation process, strengthen theoperations budget and relieve theinvestment budget. Half the municipa-lities have a very strained debt situa-tion.
- There is in Norway little probability ofacquiring EE grants, which previouslycontributed to realizing investments inthe municipal sector. Investments inmaintenance and upgrading of publicbuildings are also generally low, whichmeans there are fewer investments forEE measures to "stick on to".
- In implementing the "buildings directi-ve", public buildings are to be goodexamples provided with an energycertificate.
As the Norwegian EPC market is veryimmature and limited, there was a needwithin EUROCONTRACT to spend timeon establishing the background and sta-tus and on looking into existing projectsand experiences. An initial study wasmade for internal use and for structuringof information. The platform was used todevelop dissemination material and todevelop the initial market survey and toincrease the knowledge among both theproject and the reference group.
As part of the platform model documentsfor tenders and contracts were develo-ped. These were based on input frominternational projects and partners andwere adapted to the Norwegian frame-work and public procurement legislation.Input from the reference group was usedto ensure that the documents were prac-tical and useful.Two survey elements were implemented:a preliminary market survey in the formof an extensive questionnaire, and a fol-low-up survey in the form of interviews.
The pilot project development was themost important part of the national workpackage. Five municipalities were ableto complete the EPC process and havesigned contracts with an ESCO. To pro-vide feedback on the project and pro-cess interviews with both municipalitiesand ESCOs were conducted.
Next to the successful work with the pilotprojects, a market survey was elabora-ted and several dissemination taskswere performed, among them an EPCbrochure, various slide presentationsand articles in magazines and newslet-ters.
The project has involved various natio-nal actors in a reference group, whichhas been used extensively throughoutthe project. The group members camefrom the organization for municipalities(KS), representatives from the ESCOsector (Siemens) and the financial sec-tor (Elcon/SG Finance) and from thenational standardization authorities. Thenational energy agency (Enova SF) hasbeen involved in the project as co-fun-ding partner.
42
- 5 EPC contracts signed between municipalities and ESCOs (pilot projects)
- Model tender and contract documents and EPC guide developed, tested and adap-ted
- EPC platform established
- Norwegian EPC brochure developed
- Norwegian EPC strategy drafted and discussed with National Energy Agency andother relevant actors
- Market survey implemented
- Evaluation of previous and recent projects implemented and analysed.
Main results Norway
43
Location of pilot project Nord-Trøndelag - 4 municipalites(Leksvik, Fosnes, Namdalseid, Rissa), Norway
Type of Project (EPC and EPC with refurbish-ment
Number of Buildings 23
Type of buildings School, hospital administrative,apartment, etc.
Schools, sports hall, nursinghomes, nursery, town halls, pool
Total floor area (m²)63824
Energy /Fuel Source used Electricity, oil
Energy consumption per year - electricity
8,61 GWh
Energy Consumption per year - heat5,04 GWh
Energy Costs per year - heat (€)(price pr kWh available for calcu-lations)
Energy Consumption per m² (kWh/m²)214
Tender process Tender still open (deadline13.11.07 - 4 ESCOs interested)
Nord-Trøndelag, Norway
Contact:
Robin BuvarpNamdalseid municipality, 7750Namdalseid, NorwayPhone: 74 22 72 [email protected]
Case Study
44
Location of pilot project Sørum municipalityAkershus county, Norway
Type of Project EPC and EPC with refurbish-ment
Number of Buildings 16
Type of buildings School, hospital administrative, apartment, etc.Schools, sports hall, nursingho-mes, nursery, town hall
Total floor area (m²)40 165
Energy consumption per year - electricity
5,84 GWh
Energy Consumption per year - heat1,59 GWK
Energy Consumption per m² (kWh/m²)209
Lessons learned: - Municipalities needs considera-
ble assistance (time and knowledge)
- Data is not always available- Building owners are positive but
unsure of the concept
ESCO: AF group Vitaminveien 1 A, 0485 OsloPB34 GrefsenN-0409 Oslo, NorwayPhone: 22 89 11 00
Contact:
Kari TillerSørum kommunale eiendomsselskap KF
ByggforvaltningPhone:+47 63 82 53 34
PO box113, 1921 Sørumsand, Norway
Sørum municipality, Norway
Case Study
45
Overall EPC and ESCO market development
The renewed and somewhat reinventedSwedish market for EPC and similarenergy services has, since its restartaround year 2000, experienced a verypositive development expressed in a sig-nificant growth in contract volumes.Today most of the previous bad expe-riences from the 1980's that createdreluctance towards EPC are left behind,and also the conservatism previouslydominating public procurement andpublic sector initiatives has started togive in, as more and more successfulprojects are being carried out.
This development is the result of a stra-tegy composed of a range of projectsinitiated by the Swedish Energy Agency.The strategy is based on a cooperationbetween the Swedish Energy Agency,the Regional Energy Agencies, the lea-ding real estate branch organisationsand a broad group of ESCOs. While thepublic sector actors focused on "compe-tition neutral" capacity building as well asstructural and practical support to thehouse owners, the ESCOs intensifiedtheir marketing and promotion activities.
Today, there are approximately sevenmillion square meters - equivalent tonearly eight percent of all municipal,regional and state owned buildings inSweden - under some type of EPC orsimilar energy services contract in diffe-rent stages of development. However, asevery other rapidly growing market, theSwedish EPC market is experiencingsome "infancy problems", such excessi-ve market concentration and lack of skil-led and experienced workforce.
Competition on the EPC and ESCOmarket
The EPC (or EPC similar) market inSweden is currently composed of con-tracts for municipalities, publicly ownedreal estate companies (dwellings, public
office buildings and schools), and lessoften, County Councils (hospitals etc.)and to some extent private commercialreal estate companies. However, themajority of these contracts have hadlong and costly sales cycles due to thedifficulties experienced by the EPC com-panies to convince the customers ofEPC benefits. As a consequence, thereis a very clear market dominance of theearly adaptors such as TAC EnergyServices and Siemens PerformanceContracting.
The market is growing fast and should inprinciple give room for new players.However, the competition seems to takeplace mostly between the establishedcompanies, and in particular for skilledand experienced staff. The market wouldcertainly benefit from more diversity. Onebarrier hindering diversification is thelack of competition in the procurementprocess consultancy, which results invery similar RFQ's. This stresses furtherthe market concentration as it continuesto give advantage to established playersthus making it more difficult for newcomers.
Energy prices, policy instruments andthe bank sector
The situation regarding energy prices inSweden differs from that of the EU main-ly regarding electricity prices. Thesehave been relatively low but have in therecent years been successively conver-ging to European prices.
District heating prices have also increa-sed, following oil prices. Furthermore,many public bodies also have publictenants, and it is therefore also very diffi-cult for them to increase their lease. Thisincrease in energy prices is causing aneed for action, which the EPC sectorcan benefit from, especially if focusingon financial relief.
Sweden
46
The Swedish commercial banks andfinancial institutes have so far not reallymoved into the energy service businessand there is no specific financing toolavailable for EPC. However there aresome exceptions. Nordea, one of the lar-gest banks in Scandinavia, has used asubsidiary to set up an EnergyInvestment fund linked to SchneiderElectrics Swedish affiliate TAC EnergySolutions. Also Siemens Financial servi-ces allow similar financial support fortheir EPC business in Sweden.
The increase in energy prices and theneed for massive refurbishment in thepublic sector have caused some increa-sed interest from banks. Some banks aretoday offering "energy-loans" often linkedto the installation of boilers and otherenergy efficiency investments. However,how this development can be transferredto the broader energy service sector isyet to be seen.
One general condition limiting the actualneed for banks backing EPC projects, isthe so far very high creditworthiness ofthe Swedish public sector. They are nor-mally able to take up credits on far betterterms than the ESCO's, and if their per-formance guarantees and payment plansare well structured, they can actuallybalance both the costs and the cash flowin a very positively way. The need forThird Party Financing becomes as aresult very limited.
An instrument that has had a significantinfluence in energy efficiency investmentin the public sector is the "EnergyEfficiency Investment Programme forPublic Buildings". This programme, star-ted in 2005, provides an investment sup-port of 30% for public buildings for: ener-gy audits; energy savings measures;conversion from electricity or fossil fuel-led heating to renewable energy sourcesand district heating. The Government, inits 2008 budget Bill, decided to extendthis programme to 2008. The support is
administered by the counties' administra-tive boards and the National Board ofHousing, Building and Planning(Boverket). This programme has a totalbudget of SEK 2 billion (EUR 217 mil-lion).
Challenges for the further develop-ment of the EPC market
The Swedish EPC and energy servicemarket, as mentioned before, is growingsignificantly. However there are still fac-tors preventing an even faster and morecomprehensive development. These fac-tors are:
1. Some remaining hesitance amongpublic real estate owners of the bene-fits of entering into energy servicecontracts compared to do it "inhouse";
2. Some genuine uncertainty regardinghow to handle the investments andcash-flows in the internal accountingsystem, independent of if TPF isinvolved or not;
3. There is a worrying market concen-tration in the consultancy segment aswell as among the contractors. As aresult, new players experience thethresholds for entering the market tobe very high;
4. The strong domination of a few play-ers in the (1) EPC provision and (2)procurement consultancy services,which leads to very similar RFQs,hinder the development of new ener-gy services in the market;
5. The current situation with a genuineshortage of skilled and experiencesenergy analysts and project devel-opers, are in fact risking to make theproblems mentioned under point 4and 5 above even worse.
47
ment of the EPC market in Sweden haveactually helped developing the marketand what potential hurdles still remain.
Evaluation
Evaluation of the strategy to developEPC in Sweden
In spring 2007, an evaluation was car-ried out by the Swedish Energy Agencywith the objective of studying how the dif-ferent initiatives promoting the develop-
IEA-DSM
Task 10
FES EPEC EURO-CON-
TRACT
PUbenefits
IntercoPPP
Ground study, including definitions, literature review,analysis of legal framework, and identification of barriers
xx x - x - x
Market study in form of country picture - x - x - x
Development of guidelines and model contract - partly x x - -
pilot projects - xx x x -Direct client oriented information - xx x - -
information and capacity building - x x x - x
other OECDcoun-tries
National National EU-per-spective
EU,Interregio
nal
EU,Interregi
onal
"-" : not addressed; "X": partly addressed; "XX": strong or main focusSource:", Forsberg, A., Lopes, C., Öfverholm, E., "How to kick start a market for EPC- Lessons learned from a mix of mea-sures in Sweden", European Council for an Energy Efficient Economy, in proceedings of the eceee summer study 2007, alsoavailable at www.eceee.org
The evaluation was conducted via a qua-litative survey, complemented by phoneand face interviews. The results present-ed below are based on the answers from23 individuals from 20 organisations.
Interviewees included municipalities andcounty councils, Governmental bodies,professional organisations, RegionalEnergy Agencies and the ESCO sector.
48
have received some subsidy in con-nection with their EPC project saythat they would have carried out theEPC project anyway, sometime with aless ambitious investment plan;
- Regarding Eurocontract it wasobvious that the strategic impact ofhaving the Swedish Energy Agencycooperating with experienced andskilled European partner's, brought alot of credibility to the EPC discus-sions. And furthermore the well elabo-rated 2-stage procurement modelreceived a lot of positive feedback,even though there was no grater inte-rest in specific templates etc.
- Finally the actors answering to theinquiry (20 companies and organisa-tions) all indicate that EPC has thepotential of being a regular choicewhen performing energy efficiencyprojects among building owners in thefuture.
- Criticisms include that more actorswould like to become involved andthat the FES (Forum for EnergyServices) should work more activelyto encourage that.
- An important request is related tomonitoring and evaluation.Stakeholders want to have provisionsfor monitoring and evaluation of con-tracts in order to investigate their longterm effects.
- Another criticism is that there are sofew "independent" advisors to con-sult, and that this type of projectstends to highlight some very activeESCO and leave the rest behind.More in detail did several actors high-light the need for "internal" EPC andenergy service experts/ambassadorswithin their own organisations, andwanted the Swedish Energy Agencyand SALAR to focus more on thisissue, especially in respect to theforeseen additional demands put onthe public sector by the implementa-tion of the Energy Service Directive.
The main conclusions are:
- There is a common view among theinterviewees that there has been anincrease in knowledge concerningEPC especially among public buildingowners. Further this knowledge incre-ase is believed to depend to a largeextent on the activities focusing ondissemination and capacity buildingrather than on the subsidy schemeintroduced in 2005 for public buildingowners;
- The actors who answered also revea-led that they appreciated that thetransmitter of information aiming atraising interest, creating confidenceand stimulating action was coordina-ted by a public administration since itmaintains independence;
- The general knowledge about EPCand the attitude towards projects areexperienced by the respondents as ithas made great progress and beenimproved during the latest three years.The various activities introduced bySTEM are believed to largely havecontributed to this development. Theknowledge raising information materi-al, guidelines, templates etc are belie-ved to have improved the transparen-cy and credibility for performancebased contracts.
- The most important components forstimulating the market has been theactual reference cases and the relati-vely small en regional seminars andworkshops, and least important wastemplates and web pages. When pre-paring national and EU projects theseperspectives needs to be better reflec-ted when prioritising between differenttypes of activities.
- Further the subsidy scheme for publicbuildings concerning specific energyefficiency measures seem to havelead to that more measures havebeen conducted within each EPC pro-ject receiving public funding. This is incomparison to what would have beendone otherwise. Six municipalities
49
Beyond basic EPC
EPC-projects realize demand reductionmeasures which typically encompassbuilding technologies like HVAC, electri-cal applications and control systems. Inmost cases, building envelope refurbish-ment and other construction measuresare excluded. As a consequence, largesaving potentials are neglected in therefurbishment process and they are lostuntil the next comprehensive refurbish-ment cycle of the building some 30 yearslater. Obstacles like no integrated plan-ning approach, too long pay back peri-ods of the energy efficiency investmentmeasures, procurement problems or alack of knowledge on implementationmodels and various others are some ofthe reasons behind. Therefore theauthors from GEA, BEA and A.E.A. ela-borated the manual "ComprehensiveRefurbishment of Buildings with EnergyServices". In this manual they proposedand described models how to integratebuilding refurbishment measures intoEPC-models, in order to achieve a com-
prehensive refurbishment (CR) of buil-dings as indicated above (CR-EPC-models).
Three different basic models for the imple-mentation of Comprehensive Refurbish-ment projects were differed and descri-bed: a "General Contractor" (GC), a"General Planner" (GP) and a "CR-Light"-EPC-model. The decision for an imple-mentation model can be taken after com-pletion of preliminary project planning.
Factors for applicability of the models(especially for the public sector) are des-cribed out of which the most importantones are 1. share in building constructionmeasures from project total, 2. whetherfunctional or detailed specifications for theawarding of the CR-works and servicesare applied and 3. who the building ownerwants to put in charge of detailed plan-ning, overall optimization and supervisionof the project: a GC or a GP?
EPC and Comprehensive Refurbishment
Introduction
General Contractor
- EPC
CR-Light -EPC
1. Share of building construction
measuresfrom project total?
General Planner -
EPC
2. Functional or detailed specifications?
3. Who does the building owner entrust with optimization
and detailed planning?
ad 1. => Constructionmeasures > 50 %
ad 1. => Technologymeasures > 50 %
ad 2.: => Detailed andfunctional specifications
ad 3.: => General Planner
Buildingowner +
Consultant
=> Building owner defines functional specs.
ESCo
Construction company
ESCo(+ Sub-Contr.)
GC (Constr.+ESCo+ Sub-Contr.)
0. Preliminaryplanning
To sum up, the manual gives conclu-sions and recommendations for theimplementation of CR-projects and a
short outlook on future activities and rese-arch.
50
At energy performance contracting, thebuilding owner and energy service provi-der enter into a long-term contractualrelationship. Short-term focusing on profitwill not lead to success for either of theparties involved. The term "EnergySaving Partnership", which has beengiven to the energy performance contrac-ting campaign of the Berlin Senate men-tioned above, expresses this well. Building technology measures can most-ly be refinanced from the future energycost savings within a project period of 10years. This is not true for building con-struction measures, such as building
envelope insulation, with today's energyprices. Therefore, the building ownerhas to participate in financing the buil-ding measures e.g. by means of a buil-ding cost allowance, (which may, e.g.,also be taken from maintenance reservefunds or subsidies), and/or paying a resi-dual value at the end of the contract (seefigure "business model …"). CR-EPCmodels can also be implemented with aleasing finance partner.
The CR-EPC business model is shownin the following chart:
Energy Services combined with CR measures
Optional: Residual value to contractor
CR-Contracting rate for• comprehensive refurbishment
measures• prefinancing the investment• increased comfort + added value
(Non-Energetic Benefits (NEBs))• operation & maintenance• taking over risks
CR-EPC contract contract
ends
Service l ife of the
investment
Energy costs after
refurbishment
Saving investment
Overall energy costs (new)•...
Service l ife of the
investment
Energy costs after
refurbishment
Saving investment
Overall energy costs (new)•...
Present costs = baseline
Present state
annual costs
Time
Total energy costs
•fuel;•electricity;•maintenance;
•repair (substituteinvestment);
•personnel;
•other
Present costs = baseline
Present state
annual costs
Time
Total energy costs
•fuel;•electricity;•maintenance;
•repair (substituteinvestment);
•personnel;
•otherAccounting adjustments (yearly):
• energy price (reference prices from baseline)
• climate (outer temperature by # of “degree days”)
• changes in utilization of facility
Energy cost savings for facility owner
O&m cost
Energy cost savings for facility ownerEnergy cost savings for facility owner
O&m cost
Investment cost subisdy!
Figure 2: Business Model of Comprehensive Refurbishment Energy PerformanceContracting (CR-EPC)
The three approaches can be summarized as follows:
General Contractor Model (GC) In this model, the majority of the CR-works and services are not describedwith detailed specifications. Instead thebuilding owner provides functional speci-fication defining the project's technical,financial, organizational, legal and eco-nomic performance requirements andthe framework conditions for implemen-tation of the measures.
In summary, the key features of theEPC-model are:
- A CR-EPC-partner plans and realizesenergy efficiency measures includingbuilding construction measures andis responsible for their operation andmaintenance throughout the contractterm.
- Depending on the implementationmodel, the contracting partner toimplement the measures is either ageneral contractor (GC), a generalplanner (GP) or an Energy ServiceCompany (ESCo).
- The ESCo has to guarantee energycost savings compared to a presentstate energy cost baseline. Furtherguarantees and quality assuranceinstruments can be included such ascomfort, operation & maintenance oremission reduction guarantees*.
- Typical EPC contract terms amountto 10 years. Investments for CR-EPCprojects - depending on their magni-tude - can be refinanced only partial-ly from future energy cost savings.The building owner has to directly paypart of the investments, e.g. with abuilding cost allowance. Anotheroption is extended contract periods of15 - 25 years. Also leasing finance
can be an option and should be consi-dered. After termination of the contract,the entire savings will benefit the client.
- The ESCo's remuneration is the con-tracting rate and depends on thesavings achieved. In case of underper-formance the ESCo has to cover theshort fall. Additional savings are sha-red between the partners.
Based on the previous remarks,Comprehensive Refurbishment EnergyPerformance Contracting (CR-EPC) canbe defined as:
A comprehensive energy service packageincluding building construction measuresaiming at the guaranteed improvement ofenergy performance and cost efficiency ofreal estate objects. A general contractor, ageneral planner or an Energy ServiceCompany (ESCo) implements a customi-zed package of refurbishment measuresand services (planning, building, opera-tion & maintenance, (pre-)financing, usermotivation, …) and takes over technicaland economical performance risks andguarantees for the project. The measuresare partially repaid out of guaranteed futu-re energy cost savings, but with (substan-tial) contributions by the facility owner**.
All services, ranging from overall optimi-zation, detailed planning, constructionthrough operation & maintenance anduser motivation, and compliance with theenergy service quality guarantees overthe contract term are contracted to ageneral contractor (GC, which can be onecompany or a consortium).
*Basics for possible "Quality assurance Instruments / Guarantees for Energy Services" have beencompiled in a unpublished EUROCONTRACT manual by Graz Energy Agency 2007
**Following Seefeldt, Leutgöb (2003) "Energy Performance Contracting - Success in Austria andGermany, Dead End for Europe?" eceee paper id #5158. 51
General Planner Model (GP)
In this model the building owner can spe-cify detailed solutions of the CR-measu-res (e.g. design of the facade). The buil-ding owner commissions a general plan-ner who is responsible for overall projectoptimization, detailed planning, specifica-tions, supervision and quality assurance.Typically, the GP tenders building con-struction measures (e.g. building envelo-pe) on the basis of detailed specifica-
tions; whereas energy services are ten-dered with functional specifications.Hence building construction works andESCo services are awarded in separatecontracts. This model is basically a com-bination of a standard construction pro-cedure (Independent planner + con-struction company) combined with theES-concept.
GC (Construct. + ESCO)
FI
Consultant(+ Building
owner)
1. Functional specs.
2. => CR-EPC Contract
Subcontractors:•Architect, special planners•Construction companies•Technical companies …
•Project coordination•Overall optimization
• Detailed planning• Implementation
• Operation&maintenance•Financing (facilitation)• (Subsidy acquisition)• Savings-, comfort-,
… Guarantees•…
• Overall project coordination• Functional planning• Procurement + awarding• Financing• Subsidy acquisition• …
• Financing•…
General Contractor EPC-Model: Key actors, responsibilities and contractual relationships
General Planner EPC-Model: Key actors, responsibilities and contractual relationships
GP (+ Building
owner)
• Construction works(Acceptance with quality assurance
instruments)• …
• EE-measures• Operation&maintenance
• Financing (facilitation)• …
• Savings-, comfort-, … Guarantees
• Overall project coordination • Consultation of building owner• Overall optimization• Detailed + functional planning• Procurement + awarding• Supervision, acceptance and quality assurance (construction works)
• (Subsidy acquisition)• Financing (building owner)• …
1. Funct. specs.2. => ES contract
1. Detailed specs.2. => Construction contract
FI
ESCo
Construction company
•Financing•…
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53
Comprehensive RefurbishmentLight" Model (CR-Light)
Within this model, individual buildingconstruction measures (such as top floorceiling insulation) can be realized with astandard EPC contract. If less than halfof the total project cost can be attributedto construction works, the building ownercan define detailed specifications forthese for the tendering process. One
energy services company is awarded anES-contract and realizes overall optimiza-tion, detailed planning, and operation &maintenance and provides all guarantees.The main difference to the GC-model liesin the smaller extent of building construc-tion measures. Because only simple buil-ding construction measures are involved,we propose to call this the"Comprehensive Refurbishment Light"model (CR-light-EPC).
ESCo(+ Sub-Contr.)
FI
Consultant(+ Building
owner)
1. Functional specs.2. => CR-EPC Contract
Subcontractors:• Construction company• …
•Project coordination• Overall optimization
• Detailed planning• Implementation
• Operation&maintenance• Financing (facilitation)• (Subsidy acquisition)•Savings-, comfort-,
… Guarantees• …
• Overall project coordination• Functional planning• Procurement + awarding• (Financing)• (Subsidy acquisition)• …
•Financing•…
CR-Light EPC-Model: Key actors, responsibilities and contractual relationships
This translates into procurement praxis as follows:
1. The bidder must be allowed sufficientfreedom of scope in formulating hisproposal (e.g. selecting EE-measuresto be implemented). "Sufficient free-dom of scope" requires that a mini-mum of 50 % of the project cost mustbe subject to negotiations.
2. In order to provide sufficient freedomof scope, the tender documents mustbe formulated as functional specifica-tions (as opposed to detailed specs.),defining the project's technical, finan-cial, organizational, legal and econo-mic performance requirements andframework conditions for the imple-mentation of the measures.
3. The negotiated procurement procedu-re must actually allow negotiationsboth for the bidder and the contractingauthority.
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If the project predominantly is comprisedof services (energy and/or other servi-ces), the "Comprehensive refurbishmentlight" model can be used. However, if theproject mainly involves constructionworks, the "general planner" or the"general contractor" model must be app-lied. The "General Planner" model shouldbe used, if the building owner wishes tospecify detailed solutions. Otherwise thebuilding owner must decide, whom hewishes to instruct with the optimizationand detailed planning: GC or GP?Although in praxis most EPC-projects are
tendered with a negotiated procedure, aremark with regard to prerequisites forthe applicability of negotiated procure-ment procedures is appropriate here. Inprinciple, the execution of a negotiatedprocedure is the exception and not therule, which is subject to prerequisitesdefined in the public procurement laws.For energy services the following prere-quisite has to be fulfilled: "A prior andglobal pricing is not possible, because ofthe nature or because of the risks asso-ciated with the delivery of the services*."
* BVergG 2006 § 30 (2) Austrian public procurement law (translation by authors)
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EPC and Facility management
Managing and maintaining a buildinginvolves numerous activities and servi-ces, which often go beyond a company'score competencies. These services mayrange from procurement and propertymanagement, to in-house postal servi-ces, cleaning services, security services,product and logistics services. Facilitymanagement can help to organize andoptimize these activities to enhance theoperating efficiency of facilities.
Facility management also involves ener-gy management, which is not offered in astandardized form, as of now. Due torising energy costs, however, it hasbecome crucial to be aware of a buildin-g's energy consumption and to identifyand evaluate the building's energysavings potential. Energy service com-panies provide the expertise needed toimplement such tasks as part of savingscontracting. This type of contractinginvolves developing measures to reducecosts and/or to supply and use energyefficiently. Structural, technical, econo-mic and organizational aspects of facilitymanagement are combined. The energyservice company guarantees the savingsagreed upon. The benefits for the busi-ness are as follows:
- professional development of energy-saving measures
- outsourcing installation and operationrisks
- wide range of services for maintenan-ce, plant management and servicingof equipment and buildings
- company's image - perceived as envi-ronmentally friendly and sustainable
There are two major kinds of contractingmodels which can be used when integra-ting energy management into facilitymanagement:
- Energy supply contracting- Energy performance contracting
With this type of contracting the energyservice company or contractor assumesfull responsibility of financing, installingand operating your energy supplysystems. It is primarily applied whenupgrading existing boiler systems in servi-ceable buildings or in buildings whichrequire renovation.
The energy service company or contrac-tor installs and operates the systems,while assuming all technical and financialrisks. Other services provided include fuelprocurement and the handling of regulato-ry permits.
The energy service company is responsi-ble for financing and investment. The faci-lity owner may choose to contribute to thebuilding cost grants or final payments (atexpiration of the contract). As a result, theannual basic rate (contracting rate) isreduced, or more extensive renovationsmay be commissioned.
Refinancing is done solely through thesupplied heat. To cover the fixed costsand investment costs, the fee is typicallydivided into a kilowatt-hour rate for usage-bound heat (Euro/MWh) as specified inthe contract, and a fixed annual basic rate(demand rate).
As already mentioned above, the energyservice company accounts for the plan-ning, financing and installation/executionof the required structural and technicalmeasures over the contract period. Thegoal is to optimize the overall facility con-ditions and to achieve efficient equipmentperformance. Thus this type of contractingis a viable option to ensure energy effi-ciency in a facility. The energy servicecompany provides the expertise neededto guarantee maximum energy savings,which, in turn, are used to refinance theenergy saving measures.
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If the stipulated savings are not achieved,the energy service company is requiredto compensate the facility owner.Changes in climate, usage or price areincluded and adjusted accordingly in theannual account. If savings are greaterthan projected, the excess savings areshared with the energy service company.
The facility owner benefits from the widerange of services provided, including ser-vicing, maintenance and upgrading of thesystems and buildings. In addition, theenergy service company assumes instal-lation risks, and, if desired, financing(TPF = Third Party Financing). The pak-kage of services is tailored to meet indivi-dual customer needs.
There are different ways for combiningenergy management with facilitymanagement. Here are three options:
- The facility manager has the expertiseand resources to evaluate potentialenergy savings, to develop savingsmeasures and to guarantee thesavings suggested. In that case thefacility manager will assume the con-tracting himself.
- If the facility manager lacks the exper-tise, he can outsource the energymanagement to a contractor.
- The third option for a client is to out-source energy management separa-ted from facility management.
The procedure of setting up a tenderwhich combines energy managementwith facility management is as follows:
1. Target setting2. Defining the general framework3. Potential analysis 4. Selecting suitable facilities5. Calculating the energy cost baseline6. Calculating the amount saved7. Defining the rights and obligations of
the contractor and the client8. Specifying penalties9. Methods of payment
The mentioned manual provides a detai-led description of the nine steps andcomponents, which serve as a basis forinviting, assessing and selecting bids.Once the decision for a bid has beenmade, the contractor conducts a detai-led analysis, which helps determinecosts and savings on the basis of thegeneral analysis. Next, the objectivemeasures are discussed and tailored tothe customer's needs. After implemen-ting these measures done by the con-tractor, the customer carries out theinspection. During the main performan-ce stage the contractor delivers the sti-pulated contractually guaranteed servi-ces.
In order to make the best use of theopportunities described above, energymanagement must be included in thefacility management tender. The manual"Integrating Energy Management incomprehensive Facility ManagementService tenders" provides a clear andvery helpful guideline how to achievethis.
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Financing options for EPC*
Availability of financial resources is oneof the key success factors for the imple-mentation of Energy-Contracting pro-jects. (Pre-) Financing energy efficiencyinvestments has become increasinglyburdensome for ESCOs as well as theircustomers, because they reach theircredit lines. Credit liabilities and fixedassets burden balance sheets, Basel IIand international accounting guidelineslike US GAP cast their shadows.
Consequently, innovative financeoptions like operate or finance lease or"pure" forfeiting options have to be con-sidered (and developed further!) andcompared to classical finance instru-ments like credits. Also the question ofwho is best capable of providing finan-cing - customer, ESCO or a finance insti-tution (FI) as a third party has to be con-sidered. ESCOs are not necessarily thebest source for finance themselves. Butthey can certainly help to arrange forfinancing.
The approach addressed in the EURO-CONTRACT manual "Comparison andEvaluation of Financing Options forEnergy Performance ContractingProjects" is to start from the perspectiveof ESCOs and their customers (compa-nies, real estate owners or public institu-tions), who wish to lend money for pro-ject financing (demand side). The manu-al introduces a comprehensive customerdemand profile to describe the custo-mers financing requirements and speci-fic framework. The customer demandprofile encompasses criteria such as
1. Direct financing cost2. Legal aspects3. Securities/collateral required4. Taxation implications5. Balance sheet & accounting implica-
tions6. Business Management expenditures
On the financial supply side, properties ofdifferent finance offers are described (cre-dit financing, operate and finance leasing,and forfeiting) with regard to the criteriaintroduced in the customer demand profi-le.
To conclude, the above financing offersare compared with the customer demand,their advantages and disadvantages arediscussed and recommendations aregiven for the finance preparation. Factorssuch as financing cost and fees, taxaspects, balance sheet effects, creditlines, Maastricht criteria, applicability ofsubsidies as well as suitable project sizesare considered.
As a result, a comprehensive look at thesum of all business implications of anyfinance option is being advocated. A solelook at direct financing cost as expressedin interest rates or fees will not deliver theoptimal financing solution. The best finan-ce package depends on the borrower'sbackground, subsidies as well as the spe-cific project cash flow. And it requires theintegration of bookkeeping and tax con-sultancy into the financing decision.
Finally, it is proposed to take advantage ofinnovative financing options, which inreturn require knowledgeable (leasing)Finance Institutions. For future develop-ment, e.g. a "pure" Forfeiting financeoption based on selling the future projectcash flow to an FI would be a very desira-ble from the customer perspective. Thiskind of finance model would also help toovercome some of the current balancesheet problems and share project risksaccording to the project partner's strengthand capabilities.
*This chapter summarises the EUROCONTRACT manual "Comparison and Evaluation of FinancingOptions for Energy Performance Contracting Projects" (downloadable at www.eurocontract.net).Author of the manual is Graz Energy Agency with input of Berliner Energieagentur GmbH and furtherEUROCONTRACT consortium partners.
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The manual's main conclusions andrecommendations from the customer (theparty who seeks financing) point of vieware described in the following:
1. Generally, all financing options des-cribed are suitable for financing ener-gy supply and conservation invest-ments. It is not possible to recom-mend any particular financing optionor product as best suited for energyservice financing. Each option has itsadvantages and disadvantages.
2. Finding the best available financingrequires a comprehensive look at allimplications of any financing optionincluding securities required, transac-tion cost, taxation, and balance sheeteffects. The best financing option cannot be recognized by a simple look atthe lowest interest rate or annuitiesoffered. It depends on the borrower'sbackground as well as the specificproject. This requires the integrationof bookkeeping and tax consultancyinto the financing decision. Themanual's customer demand profilecan be used as a checklist to makesure that all important implications ofthe project financing have been con-sidered.
3. The proposed customer demand pro-file offers a comprehensive perspecti-ve and may serve as a checklist to beadapted to the specific situation of thecustomer. Likewise, the attached eva-luation matrix of the different financeoptions allows taking a comprehensi-ve look and can be adapted to com-pare concrete finance offers.
4. A prognosis of the profit and lossaccounts will best reveal the effect ofall quantifiable cost for each financingoption. Additionally, indirect costs likemanagement expenditures or a decli-ne in balance sheet performanceratios need to be taken into conside-ration to find the best finance option.
5. From a customer perspective, it isdesirable to base debt service on theproject cash flow as opposed tobasing it on the customer's credit-worthiness alone. Debt should berepayable from future project incomelike energy cost savings (performan-ce contracting) or delivered energy(delivery contracting). This conceptrequires a better understanding ofthe nature of energy service projectsrespectively of the ESCOs businessmodels on the side of the financinginstitutions.
6. Generally speaking, the loan com-mitment for a credit financing ismostly based on the debtor's credit-worthiness and not on the cash flowof the project invested in. Banks tendto view themselves as pure moneylenders, not being concerned withthe project the funds were borrowedfor. In contrary LFI's own the assetsand make money by leasing it out.They are much closer to the actualusage of the investment and gene-rally have a better knowledge andjudgement of the market of theinvestment and the expected returnon it.
7. Leasing financing legally requiresthat no automatic transfer of owners-hip (without reimbursement) is sett-led in the energy performance con-tract. Otherwise it is considered as asupply contract. In other words: if aperformance contract includes adefinite transfer of ownership to theclient at the end of the contract term,a leasing financing is not possible.Existing EPC model contracts ofteninclude a fixed transfer of ownershipfree of charge after contract termina-tion. These have to be revised if youwant to allow for a leasing financeoption.
8. Not accounted for leasing financeagreements can have a substantial
Conclusions and Recommendations onFinancing Options
influence on the balance sheet per-formance ratios and confine theirexplanatory power. The reader of thefinancial statement, who does notposses additional information, willreceive a distorted image of theassets and financial situation of theenterprise, e.g.
- Creditworthiness performanceratios like debt ratio or equity-to-fixed-assets ratio will bepositively distorted.
- Cash flow and derived ratioslike debt-redemption-durationare misleading.
- Profitability ratios like total-capital-profitability are not hea-vily influenced by lease agree-ments not accounted for.
9. Recommended is a differentiatingbetween financing on the one handside and technical and economicservices on the other. ESCOs areexperts in technical, economic, andorganisational matters of Energy-Contracting, which is what theyshould be commissioned for.Financing is not necessarily theircore business. ESCOs can be consi-dered as a vehicle and facilitator forfinancing. In many cases including afinancing institution (FI) as a thirdparty to take over financing mattersand risks makes good sense.
10. Financing is a service which can betendered for the best offer and condi-tions. It is advisable to make it acompetition between different finan-cing alternatives.
11. It is possible to combine operate andfinance lease, to make use of the taxor balance sheet accounting advan-tages, for the leasable portion of theinvestment. Due to higher transac-tion costs for the LFI, this requires ahigher project volume.
12. To allow FI's (and oneself) a solidbasis for decision, it is important toprepare a meaningful and comprehen-sive project description, including acash flow and profit and loss prognosisover the complete term of the project.This also requires a sensitivity analy-ses for the most critical parameters ofthe project.
13. Sale-and-lease-back contracts aremainly used to finance overall buildingprojects, not just EPC measures. Inmany cases the purpose is to realize"hidden reserves" e.g. in public buil-dings. If a Sale-and-lease-back finan-cing is used for a building project, it isstrongly recommended to write mini-mum performance standards and gua-rantees e.g. for thermal refurbishmentor maximum energy consumption intothe terms of reference.
14. Forfeiting: From the clients' (and espe-cially from the ESCOs') perspective itwould be desirable to further develop a"pure" Forfeiting finance offer. Thisshould primarily be based on the futu-re project cash flow and take the finan-cing burden off the ESCO. This kind offinance model would also help to over-come some of the balance sheet pro-blems and share project risks accor-ding to the project partners' strengthand capabilities. As a safeguard for thebuyer (finance institute), the energysavings and thus the future savingscash flow are contractually guaranteedby the ESCO and backed by a pay-ment obligation in case of non-perfor-mance.
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White Certificates (WhiteCert) is a newapproach to increase energy efficiencyusing market-based mechanisms in acost efficient manner. White Certificatesare also referred to as Energy EfficiencyTitles (EET). Market based policy instruments haveover the past years gained increasingsupport. The development of the EUDirectives from command and controltowards more market based instruments
is clearly visible. They find their applica-tion in a wide range of fields. The expec-tation is increased economic efficiency,coupled with competition and contribu-tion towards liberalisation of the energymarkets as well as cost reduction. For regulatory authorities they can be ameasurable way to track compliancewith policy targets. They are also anadditional possible revenue stream. (IEADSM Task XIV Final Report, p.11).
EPC in the context of European Processes
EPC and White Certificates
Basic principle
The basic principle of a WhiteCertScheme is that a regulatory authoritiyimposes energy efficiency obligations oncertain parties, mostly electricity and/orgas suppliers. These obliged parties candecide whether to implement energy effi-ciency measures themselves or to buyWhiteCert, depending on their marginalcosts. WhiteCert become available andare generated where energy savings arerealized and certified. The philosophyunderlying this system is to combine theguaranteed results of setting obligations(it can also be considered as a smart way
of regulation) with the economic efficien-cy of market-based mechanisms (Pavan,2002). The basic reason for the imple-mentation of WhiteCert is the reductionof the cost of energy saving that is esti-mated to be in many EU Member Statesin the domestic sector around 2.6 €/kWhcompared to the average price for delive-red electricity of 3.9 €/kWh. The certifi-cate market mechanism is expected toidentify the actual costs of energy savingand lead to a high efficiency in the eco-nomy (EC, 2003).
Energy Performance Contracting on theother hand is a mechanism that has pro-ven to be generating cost effectivesavings and improvements in energy effi-ciency.Both instruments are recognised as rele-vant tools in the Directive 2006/23/EC onend use energy efficiency and energyservices. In their principal aims theyseem to be natural allies in improvingenergy efficiency. But is this really so?
Within EUROCONTRACT, the projectteam was looking at the WhiteCertificates Schemes that are already inplace - in the UK, in Italy and morerecently in France - and checked syner-gies as well as possible issues of conflictbetween the two mechanisms.
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The WhiteCert are being discussed andpartly tested as an option to promoteenergy efficiency in the residential andcommercial (non-energy intensive) sec-tors. This is in contrast to the only EU-wide applied scheme of tradable certifi-cates - the European Emission TradingScheme. WhiteCert Schemes have todate only been introduced in Italy, UKand recently France; other countries areconsidering its implementation(Denmark, Netherlands and most recent:Poland) or have similar schemes on aregional basis (Flanders in Belgium).The systems in Italy and the UK differ inthe scope, structure and stakeholders,while the Italian one and the French oneare more similar. There is no unifiedsystem of WhiteCert in the EU countriesso far. However, the Directive2006/23/EC is considering the option tostudy the mechanism of WhiteCert as apossible EU-wide tool.
White Certificates are seen as a mecha-nism to generate energy savings in acost effective way and thus support thecompliance with existing policy targetsand measures. It has more recentlybeen implemented and experiences arestill fairly few.
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Baseline development
For both EPC and the WhiteCerts mecha-nism, the development of a baseline is anessential prerequisite for success. Thebaseline is the reference value againstwhich the savings, i.e. the compliance ofobliged parties is evaluated.Standards for baseline development helpreduce transaction costs and thereforealso the implementation costs for measu-res.
Measurement and verification
M&V is following the baseline, the secondcornerstone of EPC and White Cert pro-jects. Evaluation methods have to find anappropriate balance between costs andaccuracy.
Harmonisation of procedures approaches
Harmonisation among procedures isimportant with view to international tra-ding of white certificates but also withview to transparency and validity of mea-sures, trust in the operating parties andthe instrument.
Mutual impetus for market success ofEPC and WhiteCert s
Both mechanisms are currently interac-ting in existing WhiteCerts schemes,since the ESCOs, implementing partiesfor EPC, are either obliged parties, or eli-gible parties in the existing schemes.EPC and WhiteCerts offer an additionalsource of income for ESCOs and projectowners alike, and can contribute to furt-her implementation of energy efficiencyprojects.
EPC has however the advantage that ithas a systemic approach to energy effi-ciency upgrades, which means that
essentially more efficiency is implementedthan if only singular measures would betackled. By only providing a list of eligiblemeasures however, the WhiteCerts sche-me could actually impede the furtherimplementation of systemic approach pro-jects and thus counteract market develop-ment.
Several players may be involved in imple-menting an energy efficiency improve-ment project giving entitlement to certifi-cates and can compete with each other incapturing the value of energy efficiencyimprovement projects:
- Player 1: the owner of the building is eli-gible to obtain certificates (this is thecase in France) and can sell them onthe market
- Player 2: the obliged player funds themeasures (audit, investment in equip-ment) and receives certificates inexchange
- Player 3: a non-obliged player whichhas no activities in energy services butis eligible (local authorities in France)funds the measures (audit, investmentin equipment) and receives certificatesin return which it can sell on the market
- Player 4: a non-obliged ESCO imple-ments eligible measures in the contextof an EPC and receives certificates inreturn (the case in Italy) which it sells onthe market or transfers ownership of thecertificates to the client, which sellsthem in the market (the case in France)
- Player 5: an ESCO is obliged (becauseof having energy sales activities),implements eligible measures in thecontext of an EPC and receives certifi-cates in return (the case in France).
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Direct link between EPC and WhiteCerts
In this case the services provided are eli-gible to WhiteCerts. The services can be:operation and maintenance of equip-ment that consumes energy, overall con-tract with guaranteed energy savings,third-party financing, etc. An operationmay therefore simultaneously be eligibleto WhiteCerts for the efficient equipmentand to WhiteCerts for services associa-ted with that equipment.
The case of an overall contract withguaranteed energy savings could bedealt with in different ways, of which thefollowing are examples:
- Generic project: For equipment whichis eligible for WhiteCerts, a bonus isawarded if the installation andmanagement of the equipment is thesubject of an energy performance con-tract. The bonus calculation takes par-ticular account of the level of guaran-tee and the duration of the contract.
- Specific project: if the contract imple-ments actions which are notWhiteCert-eligible (e.g. BuildingManagement Systems) because thereare no reliable statistics on their con-tent in terms of energy efficiency,these actions may be eligible forWhiteCerts if the contract guaranteesan energy saving relative to referenceconsumption for the building.
Indirect link between EPC and WhiteCerts
Any EPC which implements equipmenteligible for WhiteCerts in the context of ageneric project, given its additionality,benefits indirectly from the value of thecertificates: the equipment owner has thebenefit of the WhiteCerts and can sharepart of their value with the ESCO if theESCO has participated in implementingthe equipment (design, installation or fun-ding) and in submitting the application tothe administrative authority in order toobtain the certificates. Sharing the valueof the WhiteCerts is the subject of bilate-ral negotiation.
Obtaining WhiteCerts for equipmentrequires an application to be submittedto an administrative authority, this appli-cation containing in particular a docu-ment proving that the equipment wasinstalled (e.g. invoice from equipmentsupplier or installer). ObtainingWhiteCerts for equipment does notrequire a guarantee of energy savingsover the lifetime of the equipment or overthe term of a service contract.
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Conclusions and recommandations
White Certificates are one of the marketbased instruments (MBI) that theEuropean Commission acknowledges inthe Directive 2006/32/EC on end-useenergy efficiency and energy performan-ce.
Energy Performance Contracting and thewhite certificate mechanisms are current-ly interacting in existing WhiteCerts sche-mes, since the ESCOs, implementingparties for EPC, are either obliged par-ties, or eligible parties in these existingschemes.
EPC and WhiteCerts offer an additionalsource of income for ESCOs and projectowners alike, and can contribute to furt-her implementation of energy efficiencyprojects.
EPC has however the advantage that ithas a systemic approach to energy effi-ciency upgrades, which means thatessentially more efficiency is implemen-ted than if only singular measures wouldbe tackled.
The current design of existing schemesnormally provides a list of eligible pro-jects. Where this is finite, WhiteCertsschemes could actually impede the furt-her implementation of systemic approachprojects and thus counteract marketdevelopment. Hence careful considera-tion of existing and interacting instru-ments needs to be applied.
A few words on methodologies andissues important ensuring a proper imple-
mentation while avoiding double coun-ting:
Inherently the methods for establishingmeasurement and verification in EPCprocesses can be used for WhiteCertsystems and the mutual benefits can beincreased, including
- Transparency of procedures- Additional motivational value for
implementing projects that otherwisemay not be implemented
- Using existing methods helps in kee-ping administrative costs for a sche-me down and increases its economicvalue and potential.
The integration of EPC in the eligibleproject cycles can be done in two princi-ple ways:
1. For generic projects: For equipmentwhich is eligible for WhiteCerts, a bonuscan be awarded if the installation andmanagement of the equipment is thesubject of an energy performance con-tract. The bonus calculation takes parti-cular account of the level of guaranteeand the duration of the contract.
2. For specific project: if the contractimplements actions which are notWhiteCert-eligible (e.g. BuildingManagement Systems) because thereare no reliable statistics on their contentin terms of energy efficiency, theseactions may be eligible for WhiteCerts ifthe contract guarantees an energysaving relative to reference consumption
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for the building and brings additionality.With view to a potential EU wide imple-mentation the following should be consi-dered:
- M&V procedures for EPC need somemore harmonization across Europe,in their scope with view to being aquality securing instrument. Thiscould be integrated in the currentongoing discussions of a EU standardfor ESCO/Energy Services of CEN.
- The differentiation of the evaluation inex-ante and ex-post is also one thatfor some EPC projects can help redu-ce transaction costs, especially loo-king at electricity. Technologies suchas lighting offer themselves for sim-pler verification.
Two of the main remaining challengesare the issue of additionality, and thepoint of penalty when looking at EPCprojects in the frame of WhiteCertificates schemes.
Additionality
White Cert income perspectives canbecome a motivational tool to fosterdecisions in favour of energy efficiencyprojects beyond current policy require-ments. EPC projects in principal offerthemselves as cost effective tools toimprove energy efficiency and reducecosts, besides providing additional envi-ronmental and societal benefits. The dif-ference lies in the motivation, one beingcommand and control the other in princi-pal based on a rational decision, trying to
find an alternative way of implementationand financing for needed refurbishment.Hence the link in motivation is the fundingopportunity and the potential additionalrevenue through a WhiteCert scheme.
Penalty
A penalty - or bonus-malus system - isalready inherent in EPC projects. If guar-anteed savings are not achieved by theESCO, the difference between guaranteeand verified savings has to be covered bythe ESCO. In a White Certificate schemea penalty for non-performance is onlyrelevant for obliged parties. On the otherhand, EPC schemes offer a bonus forover-performance which is an additionalincentive to the ESCO to increase effecti-veness of their measures. With view tothe WhiteCert scheme, the incentive forthe ESCO to over-perfom is not given,also due to the volatility in prices for thecertificates. This is especially true fornon-obliged parties.
On the whole it can be said that the WhiteCert system can be of advantage toESCOs as an additional source of incomewhen they are obliged parties. The instru-ment of EPC can also be harmed by thesystem and effectively the possible costeffective gains in energy efficiency can bereduced, if the systemic approach, mea-sures such as environmental manage-ment systems or other measures whereverification is not simple, are not eligible inwhite cert scheme, when implementedwith a performance guarantee as is inhe-rent in EPC projects.
Standardisation and ESCO Certification
Energy Performance Contracting and standardisation
Certification is an instrument to ensurequality.
Quality securing instruments have theoverall aims and targets as shown in thefigure below. They serve information andmarketing purposes as well as customersatisfaction providing evaluation basis forcomparison with other services and riskreduction tool. In combination customerconfidence can be ensured.
technical competence, objectivity andreliability, Member States shall ensure,where they deem it necessary, the avai-lability of appropriate qualification,accreditation and/or certification sche-mes for providers of energy services,energy audits and energy efficiencyimprovement measures…"Consequently the directive itself doesnot oblige member states to implement anational certification system.
Introduction
Two principal approaches can be takenwhen speaking about certification in thecontext of energy services.
- Certification of the ESCO- Certification / Quality standards
for the services provided.
Article 8 of the Directive 2006/32/EC ofthe European Parliament and of theCouncil of 5 April 2006 on energy end-use efficiency and energy services states:"With a view to achieving a high level of
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Marketing Risk minimizing
Information
Qualitiyassurance
instruments
Evaluation criteria
Building confidence
Marketing Risk minimizing
Information
Qualitiyassurance
instruments
Evaluation criteria
Building confidence
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Situation in Europe
The situation in Europe is such that situ-ation and needs for a certificationsystem differ from country to country. In Italy there exists a pressing need forcertification procedures which derivesfrom two sources:
- Legislation: The Energy EfficiencyDecrees 24.4.2004 instate the WhiteCertificates which can be issued to,besides the energy distributors, theESCOs, however without specifying"who" they are.
- Market: There is a long history in Italyof energy service outsourcing andcontracting, mostly in the PublicAdministration sector, which is conti-nuously growing.
However the relationship between thetwo contracting parties is quite asymme-tric, as the Public Administration hasgenerally insufficient knowledge andexpertise in facing the aggressive offersof the Service providers in this field.There is therefore the need of recogni-zing the quality level of the tenders, andhaving available appropriate contractmodels.
To state "who" are the energy serviceproviders that can access to the WhiteCertificates, the AEEG (the electricityand gas regulating authority) has fixedthe minimal rule of having in their consti-tutive act the "Energy Service Provision"among their activities. As a consequen-ce the public list in the AEEG website ofsuch energy service providers hasquickly exceeded half of thousand, cau-sing some confusion in the market. Suchlist has now been substituted with the listof companies that have actually appliedfor, and/or obtained, White Certificates.
After establishing firstly a joint workinggroup UNI/CEI/GGE to define Standardswith the definition and minimum require-ments of the ESCOs, and with the mini-mum professional requirements of EnergyManager and experts UNI/CEI/GGE hasthen established two specific workinggroups: one for the definition of the ESCOUNI/CEI Standard, and one for the EnergyManagers. Subsequently have been pres-ented two draft specifications which havebeen then converted in draft UNI/CEIStandards.: one on ESCO and one onEnergy Managers.
SINCERT has subsequently established aspecific "SINCERT/ESCO" working groupincluding all the stakeholders' categories,mainly the ESCOs, the CertificationOrganization and representatives of thepotential customers with the aim to workout a Technical Regulation.
This situation totally differs from the one inother European countries. As the processon the European level currently shows, acommon and satisfactory solution is not tobe found easily.
Against the background of a mandate ofthe EU-Commission to the Europeanbody of standardization (CEN) and theDirective 2006/32/EC of the EuropeanParliament and of the Council of 5 April2006 on energy end-use efficiency andenergy services works for the establish-ment of a norm for ESCOs have recentlybegun in the European Union.
In November 2006 the CEN workinggroup Task Force (TF) 189 "EnergyManagement"with the project team (PT)"ESCO" was set-up. This working groupaims at developing an EU-wide standardon definitions, requirements and qualifica-tion processes for ESCOs. The applica-
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tion of these standards shall be voluntaryand may serve as a reference for thenational certification process.
The first meeting of the PT ESCO washeld on 19th February 07, other meetingsfollowed*.
Member states are represented in theseproject teams by their national standardiza-tion bodies (in Germany e.g. by theDeutsches Institut für Normung - DIN)
CEN/CLN Sector Forum Energy Management
CEN-CLC TF 189: Energy Management and Related Servi ces
PT Energy Management Systems
PT Energy Service Companies
BT CEN-ClC
PT Energy Managers and Experts
CEN/CLC TF 190: Energy Efficiency and Saving Calcul ations
PT Bottom-Up Calculations
PT Top Down Calcuations
Proposed new ITEMS/Technical Bodies
Other CEN and/or CLC Technical Bodies
CEN/CLN Organisation Chart
Status
Very intense discussions took place onthe working paper prepared. Discussionscircled around the scope and the appro-ach towards an ESCO standard.
A preliminary agreement was reachedthat in a first step, a common definition ofterms is needed, and in a second step thefocus and scope should be shifted fromthe company towards the services provi-ded instead. Discussions at this stage arelimited to the scope and the general defi-nitions.
Due to low country presence at the mee-tings, a questionnaire was prepared,also with input of EUROCONTRACTpartners that will provide the basis forfurther discussions. As a first step, anagreement on the definitions of ESCOsand their services as well as on theiressential requirements in order to prepa-re a draft standard on ESCOs needs tobe agreed among CEN members. Basedon this the further discussions will workon the standard /norm will be developed
*
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Bearing this in mind following generalconsiderations should be taken intoaccount.
From the point of view of clients of ener-gy services an implementation of a certi-fication of ESCOs is quite desirable.Apart from building confidence clientsare given evaluation criteria and thustheir risk of a wrong decision is minimi-zed. For ESCOs certification proceduresmight also be beneficial as a certificatecan be used as a marketing instrumentfor the company.
Notwithstanding these positive impactsthere are also some negative aspects tobe mentioned: certification procedurescan cause high transaction costs if bure-aucratic warranties are complex anddemanding. This in turn might imply mar-ket barriers for especially small andmedium sized companies and thereforecould impede the development of a mar-ket which only has been developing for10-15 years in Europe and still is a veryyoung one. In addition to this certificationprocedures are an instrument of marketregulation and therefore influence mar-ket development and leave less room fora development from itself.
Furthermore, from a client's point of viewthe result of a purchasing process ismore important than the process itself orthe body offering the service. Speakingin other words the client is interested inreceiving a high quality of services.Therefore transparency and clear qualitycriteria as well as measurement andverification of the latter are prerequisitesto help clients in their decision makingprocess. The question is if it would nothelp clients more to establish quality cri-teria of services offered by the ESCOinstead of giving evaluation patterns forthe company itself. A commonly agreeddefinition of the core competences of anESCO would be a step into this direction.
Creating a certification scheme is only onemeans of standardization and securingquality of services. Another model of stan-dardization which has very much provedof value in Germany is model contractsbetween an ESCO and its client. Whoeveris the counterpart, once having closedsuch a contract the client benefits from itsregulations at the same time havinginstruments of measurement and verifica-tion of these elements available*.
Another positive aspect of this form ofstandardization is that it leaves enoughroom for individual agreements and there-fore not unifies more of which is necessa-ry and desirable as different businessmodels or energy services still need theirindividual considerations and cannot belumped together.
It can be concluded that a sound ESCOmarket should be based on strong andtransparent customer requirements andrelevant quality securing instruments. Keyfactors for a successful European andnational ESCO development, in line withthe objectives with the directive on energyend-use and energy efficiency, is almostentirely based on the client's perceptionand preparedness to enter into ESCOcontracts. Works on EU-wide certificationprocedures should therefore be based onthe client's perspective and focus on thequality and security of the ESCO servicesprovided. However, bearing in mind thedifferent initial positions of the memberstates of the European Union and the factthat there not even exists a common defi-nition on ESCO and energy services itshould be taken into consideration to first-ly agree on elements of a standard andafter that on the standard itself.
*Example: the ESCO guarantees a reduction of acertain amount of energy costs or energy con-sumption. The achievment has to be measuredand verified by the ESCO by means of certain cal-culations methods which are part of the contract.
Conclusions
Outlook and Recommendations for the futureMarket Development
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The recommended course of action for thecontractors encompasses the develop-ment of modular standard offers (e.g. lightcontracting with or without third party finan-cing) as well as the extension of the pro-duct portfolio with additional services (e.g.total energy management). Also, it isrecommended that flexible financingmechanisms as well as a stronger focuson project acquisition in the industry andbusiness sector should be undertaken forthe further market development. In order tosatisfy the demand and special circum-stances of specific customers, co-opera-tions with specialised companies shouldbe enforced.
Policy recommendations on how to shapethe future framework settings contain thestrengthening of EPC in the national ener-gy efficiency action plan as well as withinpublic support programs. On national andregional level, a common viewpoint of thefinancial regulatory authorities is needed.There is an urgent need for common para-meters for the handling of EPC with view toprocurement and budgetary issues. Thisencompasses also a common standpointon definitions, and contents. Moreover, it isassumed that public support of the projectdevelopment phase as well as of EPC pilotprojects is needed to further stimulate themarket. An increase in information aboutEPC on the political level and a standardi-sation of EPC - increasing market transpa-rency, will support the further market deve-lopment. Publicly funded consulting andinformation campaigns could contributesignificantly to the neutral information/dis-semination of the advantages for custo-mers in all segments - especially in indu-stry and business. Public support for thefinancial insurance of privately owned buil-dings appear promising - e.g. through partguarantees. State founded, regional custo-
mer networks could contribute to thecontinuous development of the EPCmodel and become a marketing tooltowards new, potential customers.Finally, it should be envisaged on thepolitical level to reach a legally framedbalance of interest in the housing seg-ment regarding contracting projects.
There is an additional need for researchregarding EPC in Germany amongothers the collection of neutral and relia-ble information about the effectivenessand the success factors of EPC projects.Furthermore, there is a need for thedevelopment of hands-on and userfriendly guidelines for the successfulEPC project implementation for the diffe-rent customer groups and Länder.What's more, there remains a generallack of targeted information for the eva-luation of EPC, specifically as is mentio-ned bfore by the central market playerslike the financial reagulatory authoritiesof the Länder.
EPC is a cost-effective, saving orientedinstrument for the reduction of the ener-gy demand, costs, and CO2-reduction.EPC and ESCO services needs to bepromoted as "cost efficient tools" for thepublic sector helping them implementingnot only the current Energy ServiceDirective, but also the previous EPBDthat many public real estate owners stillstruggling with.
Wise and tuned actions between policymakers and contractors can stimulatethe predicted positive market develop-ment in a way that EPC will become acentral instrument for energy efficiency,cost cutting, and climate protection -most of all for the public sector and forhospitals.
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Berliner Energieagentur GmbHKallmann, KerstinFranzösische Str. 23, D-10117 [email protected]
Grazer Energieagentur Ges.m.b.H.Bleyl, JanKaiserfeldgasse 13/1, A-8010 Graz+43 316 [email protected]
Austrian Energy AgencyHolanek, NicoleMariahilfer Straße 136, A-1150 Wien+43 1 [email protected]
Swedish Energy AgencyLopes, CarlosP.O. Box 310 SE-631 04 EskilstunaSwärd, Manuel (Energikontor Sydost)+46-16-5442203+46-733707440Carlos.lopes@[email protected]
Motiva OyKoski, PerttiUrho Kekkosen katu 4-6 A, 00210 Helsinki+358 424 281 [email protected]
ADEME - Agence de l'Environment et de l'EnergieRosenstein, Frédéric500 Route des lucioles, 06560 Valbonne+33 (0)4 93 95 79 [email protected]
Contacts EUROCONTRACT
Norsk Enok og Energi AS(Norwegian Energy Efficiency Inc)Mørk, TheaPO box 4101 Gulskogen, 3005 Drammen, NorwayVegel, Magne+47 932 57 234+47 [email protected]@nee.no
Federazione It aliana per l'uso Razionaledell'Energiade Renzio, MarioVia Pompeo Neri, 3,I-20146 Milano+39 (02) [email protected]
CRES - Centre for Renewable Energy Sources -Vougiouklakis, YannisMarathonos Ave. 9 (19th km), Gr-190 09 [email protected]
Agenzia Regionale per l'Energia della Liguria S paTavella, ChiaraVia XX Settembre 41I-16121 Genova+39 (010) [email protected]
Berliner Energieagentur GmbH - Französische Strasse 23 - 10117 Berlin - Tel. +49 (0) 30 29 33 30 - 0Fax. +49 (0) 30 29 33 30 - 99 - [email protected] - www.berliner-e-agentur.de
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