successful practices & case studies in energy … · qualifying criteria for doe qualified...

ZAINI ABDUL WAHAB 3rd MAY 2018

EMPIRE HOTEL, SUBANG JAYA

SUCCESSFUL PRACTICES & CASE STUDIES IN

ENERGY PERFORMANCE CONTRACTING PROJECTS &

PROGRAMMES IMPLEMENTATION

ANNUAL GENERAL MEETING 2018

OUTLINE

WHO CAN PERFORM EPC PROJECTS?

THE EPC IMPLEMENTATION MECHANISM-SHARED SAVING MODEL & EVALUATION CRITERIA

DELIVERABLES OF INVESTMENT GRADE AUDIT

INVESTMENT PROPOSAL FOR EPC PROJECTS

KEY ELEMENTS IN EPC CONTRACT DOCUMENTS

CASE STUDIES OF SUCCESSFUL EPC PROJECTS AND

PROGRAMMES

WHO IS QUALIFIED TO PERFORM EPC PROJECTS?

ESCO DEFINITION:THAILAND

ESCO or ESCo) is a commercial business providing a broad range of comprehensive energy solutions including…

… designs and implementation of energy savings projects, energy conservation, energy infrastructure outsourcing, power generation & energy supply, arrange financing for projects and risk management for which performance contract & measurement & verification is a core part to ensure that the project technical performance is fully guaranteed during the contract period

Source: Thai ESCO Association

THE CRITERIA TO REGISTER AS AN ESCO: THAILAND

Thai ESCO Association Registration Guidelines

ESCO DEFINITION:USA

Energy service companies (ESCOs) develop, design, build, and fund projects that save energy, reduce energy costs,& decrease operations & maintenance costs at their customers' facilities.

distinguished from other firms that offer energy-efficiency improvements in that they use the performance-based contracting methodology

the company's compensation is directly linked to the actual energy cost savings

Source: U.S Department of Energy

DOE Qualified List of ESCOs in accordance with the Energy Policy Act of 1992 and 10

C.F.R. 436.

Companies approved for the DOE Qualified List of ESCOs may compete for energy

savings performance contracts(ESPCs) with federal agencies.

QUALIFYING CRITERIA FOR DOE QUALIFIED ESCO: USA

Has provided EPC services or services that saved energy/reduced utility costs for at least 2 clients

Possesses the appropriate project experience to successfully implement the technologies that it proposes to provide

Previous project clients provide ratings that are fair/better.

The company/any principal of the company, has been neither insolvent nor declared bankruptcy within the last 5 years

The company/any principal of the company, is not on the list of parties excluded from procurement programs (in other words, has not been debarred by the federal government) under 48 CFR part 9, subpart 9.4

There is no adverse information that warrants the conclusion that the company is not qualified to perform energy savings performance contracting


U.S. EPC CONTRACT LENGTHS

Source: Thomas K. Dreesen,EPS Capital,2016

THE EPC IMPLEMENTATION MECHANISM:

SHARED SAVING MODEL

Owner’s Share(10-30%)

ESCO’s share(70-90%) (Loan & interest, O&M, spare parts,

insurance, profit & etc)

EPC contract period BEFORE

Install

M&V

facilities &

establish

baseline values

1. Detailed Energy Audit

2. Present EPC investment proposal

3. Negotiate & sign EPC Contract

100% saving

enjoyed

by owner

After EPC contract period

Energy bill

saved

YEAR

EN

ER

GY

BIL

L

Implement EPC Project

THE MECHANISM

“ZERO Upfront Cost” to the owner

Ap

po

int

the

ESC

O

APPOINTMENT OF THE ESCO

Appointment to implement EPC projects

Approval to conduct detailed energy audit at ESCO’s own costs

Access to energy data, information and selected facilities

The commercial commitment to sign

EPC contract will subject to the findings of detailed energy audit by

the ESCO

SELECTION CRITERIA FOR ESCO

Experiences in EPC Projects /Track

Records in energy services

Financial Strengths

Management capacity in

energy services

Technical Competency &

Expertise

ESCO

Ability to secure

financing & ensure sustainable

operations

• TO CREATE A STRATEGIC PARTNERSHIP • SELECTED & TO BE INVOLVED IN THE PROJECT DEVELOPMENT STAGE

EPC PROJECT IMPLEMENTATION PROCESS FLOW

EPC Contract Negotiation &

Signing

Install Data Logger/

permanent sub-meters

Collect energy data to establish energy

baseline values

Improve & optimize energy

consumption with proposed

& agreed energy saving

measures

Measure & monitor actual energy savings

achieved against agreed baseline values

Monthly payment to

ESCO at agreed %.

M&V of savings achieved.

MEASUREMENT & VERIFICATION(M&V) OF ACTUAL

SAVING ACHIEVED

Energy saving measurement for verification • baseline data/performance indicator

• measuring type & point

Require energy metering

“The long term success of energy management projects is often hampered by the inability of the project partners to agree on an accurate, successful M&V plan.….. M&V protocol discusses procedures that, when implemented, help buyers, sellers and financiers of energy projects to agree on an M&V plan and quantify savings from energy conservation measure (ECM) projects.” - (IPMVP, Volume I, March 2002)

M&V REFERENCES AVAILABLE

• IPMVP (International Performance Measurement and Verification Protocol) (http://www.ipmvp.org)

• FEMP (Federal Energy Management Program of the U.S. Department of Energy) (http://www.eren.doe.gov/femp/financing/espc/measguide.html)

KEY ELEMENTS IN EPC CONTRACT DOCUMENT(1)

What is guaranteed?

The minimum amount of savings expected to be achieved

The method, report formatting and formula for calculating shared savings will be paid to the ESCO

Conditions to be applied if savings achieved are less/more than guaranteed by the ESCO

KEY ELEMENTS IN EPC CONTRACT DOCUMENT(2)

The cost savings measurement with significant changes of operations at the facilities

The responsibilities of building owners and the ESCO throughout the contract period

Maintenance, use & modification/ removal of the equipment that was installed by the ESCO by the facilities owner

If the equipment installed by the ESCO is lost or damaged

Guarantee of losses and liabilities by ESCO to the facilities owner

DELIVERABLES OF IGA

Energy performance data & analysis

Identified & proposed energy saving measures to be implemented

Total energy saving potentials with detailed breakdown of minimum guaranteed performance

Cost for each energy saving measure proposed

M&V plan

• ESCO must have the IGA capability

preferably in-house

• No obligation for ESCO to submit the

detailed IGA report to the facilities

owner.

• ESCO bear the IGA cost

IN THE INVESTMENT PROPOSAL…(1)

Detailed financial investment proposal

Minimum guaranteed energy cost savings

ROI/IRR

Options of funding(Normal procurement/EPC)

EPC Shared saving details

• sharing % by each party

• Contract period


Detailed investment costs to cover

Equipment & installation

O&M

Spare parts

Others(insurance, taxes & etc.)

Approach & strategy to project implementation

Organizational & communication structure

Design engineering, construction management & QC procedures

Support services provided

Sub-contractors/other parties involved


• Baseline calculation • Performance tracking methodology

• Determination of saving amount

• Baseline definition

• Measure savings

• Non-measured savings

• Detailed M&V plan and facilities needed

• Financial information • Documents on company’s financial stability & credit-

worthiness

• Financing strategy

SUCCESSFUL CASE STUDIES OF EPC PROJECTS AND

PROGRAMMES IMPLEMENTATION

MALAYSIA CASE STUDY : WAREHOUSE

FACILITIES

Application Areas:

- Fluorescent Lamps

- High bay Lighting - HID After Installation:

20,000 pcs x 26W/1000

Before Installation:

20,000 pcs x 45W/1000 Total annual Saving = 42.2%

= 3,283,200 kWh, = RM 920,000

Source: MAESCO

member

MALAYSIA CASE STUDY : INTEGRATED

SHOPPING COMPLEX FACILITIES

Areas of energy saving measures implemented

• Transformers (MSB)

• Cooling System – Chillers, C/Tower, AHUs, CHW & CDW Pumps

• Lighting System – Internal, External & Parking

• Peak Demand Control

Total Actual Saving Achieved

= RM 1,495,000/year

Total Proposed Saving

= RM 905,000/year

Source: MAESCO member

INTERNATIONAL CASE STUDY : BUREAU OF LAND MANAGEMENT-

A SUCCESSFUL EPC ACROSS SIX STATES

Focused areas Lighting & associated controls • HVAC

controls • Digital HVAC control upgrades • New boilers • Ground source heat pumps • Advanced meter installations

Benefits

3,986,750 pounds per year of carbon dioxide (CO2)

6,114 pounds per year of nitrogen oxides (NOX)

5,321 pounds per year of sulfur dioxide (SO2)


INTERNATIONAL CASE STUDY : U.S. DEPARTMENT OF ENERGY PANTEX PLANT, AMARILLO, TEXAS

Focused areas Lighting

consolidating & centralizing a

distributed chilled water and

steam distribution system;

replacing rooftop HVAC units

solar domestic water heating

system

water heater resets

controls for preheat coils &an

ozone laundry system

new energy management

control system

Benefits

the first delivery - saved

about $480,000 annually in

energy bills & operation &

maintenance (O&M) costs

Should reduce energy bills

by about 15%

Will save approximately

$10.4 million in energy-

related costs over the next

18 years


THAILAND: RECOGNIZED & SUPPORTED BY VARIOUS STAKEHOLDERS

• Thai government agencies (i.e. DEDE,

EGAT), financial institutions, Provincial

Electricity Authority (PEA) & PTT PLC - act

as key facilitators for the ESCO business

• Resulted in growing awareness of the

effect of the energy crisis on the country’s

long-term and sustainable energy

utilization

• Promoted and supported energy savings

and energy efficiency through ESCO

services.

Source: Thai ESCO Association

THAILAND: EPC MARKET TRANSFORMATION

& IMPACTS

Overall number of ESCOs grew from 30

in 2009 to 60 by the end of 2014

10 matchmaking events were held

• averaging 15-20 ESCOs & over

100 customers attendees at each

event

Cooperation with ESCO associations

from three countries

Establishment of Thai ESCO Association

for Sustainability

Source: ESCO Information Centre, Thailand

Impacts

429 EPCs implemented via

ESCOs - total savings of USD

364 million per year

Stimulating total investment

of USD 364 million/year

2011-2013 ( 233 guaranteed

and shared savings

contracts)

ESCO FUND IN THAILAND

UNITED STATES OF AMERICA

Federal, State, and local governments in the US invested over $21 billion in EPC since 1997

The US Federal Government’s 2009 economic stimulus package included an additional $3.1 billion for efficiency in existing federal government buildings

Federal and State governments have passed specific laws to facilitate EPC and accept up to 15-20 year payback periods.

Research in the US indicated that EPCs have delivered general benefit to cost ratios of 1.6 to 1, with higher 2.1 to 1 ratios for EPCs in health facilities.

EUROPEAN PLATFORM FOR THE PROMOTION OF EPC

Development of manuals on

additional models and support-EPC

+ White Certification

• Quality Standards

• Comprehensive Refurbishment

& link to Facility Management

• Norms /Certification

• Financing

Intensive dialogue with market

actors - Building owners - Financial

sector - ESCOs

Capacity building & Increased

awareness, know-how & exchange • Over 100 events organised and

attended, 2,000 participants

with about 60 are new EPC

experts

Pilot projects • Over 360 buildings screened

• 30 more concrete projects

received further support

• 17 resulted in concrete EPC

projects

• About 1 million square meters

• Energy cost baseline of almost

10 million Euros/year

• Estimated energy savings

between 10% and over 25%

AUSTRALIA:QUEENSLAND GOVERNMENT

The Strategic Energy Efficiency Policy for Queensland

Government Buildings - to reduce their energy consumption

by 5 % below 2005-06 levels by 2010, and 20 % by 2015.

Shares some key features with the Victorian program - the

use of EPC and facilitation by a single department, the

Department of Public Works.

The Department of Public Works has so far invested over $20

million in improving the energy efficiency of 25 of the sites

that it owns

Has reduced its energy use in those buildings by 18

megawatt hours per year

KEY FEATURES & SUCCESS FACTORS IN EPC PROJECTS IMPLEMENTATION

Energy Cost savings based on

ACTUAL & MEASURED data-

before & after CAPABLE ESCO

COMPREHENSIVE EPC Contract

Document

TRUST & TRANPARENCY in

strategic partnership to reduce

business costs

UNDERSTANDING of the how

EPC works & it long term

benefits by facilities owners

Commitment to get FASTER results!

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My communication points on

energy efficiency matters.

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