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FINAL REPORT
Preparation of Guidelines for Energy Performance Contracting for ESCOs and Case Study Development
Turkish Ministry Of Energy and Natural Resources
Prepared for:
SME Energy Efficiency Project
Final Report
January 30, 2017
Final Report Preparation of Guidelines for Energy Performance Contracting for ESCOs and
Case Study Development Turkish Ministry Of Energy and Natural Resources
SME Energy Efficiency Project
Project No. 6008 ii
ABBREVIATIONS
EE Energy Efficiency
EPC Energy Performance Contracting
ESCO Energy Service Company
EVD
EYODER
GDRE
Energy Efficiency Consultancy Companies
Energy Efficiency and Management Association
General Directorate For Renewable Energy
IFI International Financial Institution
IGA
IPMVP
MENR
MOEU
Investment-grade Audit
International Performance Measurement and Verification Protocol
Ministry of Energy and Natural Resources
Ministry Of Environment And Urbanization
M&V
NGO
Measurement and Verification
Non-Governmental Organization
NEEAP National Energy Efficiency Action Plan
PPP Public Private Partnerships
RFP Request for Proposals
SME
TOR
UNDP
Small and Medium Enterprise
Terms of References
United Nations Development Programme
Final Report Preparation of Guidelines for Energy Performance Contracting for ESCOs and
Case Study Development Turkish Ministry Of Energy and Natural Resources
SME Energy Efficiency Project
Project No. 6008 iii
TABLE OF CONTENTS
INTRODUCTION ............................................................................................................................... 1
1 INCEPTION MISSION .............................................................................................................. 2
1.1 Meeting with the General Directorate of Renewable Energy ....................................... 2
1.2 Meeting with the Energy Efficiency and Management Association ............................ 2
2 COMPONENT I: PREPARATION OF GUIDELINES FOR ENERGY PERFORMANCE
CONTRACTING FOR ESCOS AND CASE STUDY DEVELOPMENT .................................... 3
2.1 Task 1: Assessment of the Energy Services Market and Identification of Successful Models and Prevailing Barriers ................................................................... 3
2.1.1 Sub-Task 1.1: Conducting a Fact-Finding Mission ....................................................... 3
2.1.2 Sub-Task 1.2: Gathering Complementary Data ............................................................ 4
2.1.3 Sub-Task 1.3: Carrying Out a Market Analysis ............................................................. 4
2.2 Task 2: Development of Case Studies ........................................................................... 6
2.3 Task 3: Development of Guidelines, Sample Documents and Contracts ................... 7
2.3.1 Sub-Task 3.1: Developing Adapted Contracts .............................................................. 7
2.3.2 Sub-Task 3.2: Identifying Key Legislative Changes to Be Made .................................. 8
2.3.3 Sub-Task 3.3: Development of Guidelines for the Use of EPC .................................... 9
3 COMPONENT II: MARKET ASSESSMENT FOR PUBLIC BUILDINGS IN TURKEY .......... 10
3.1 Task 4: Gathering Data about the Public Sector ......................................................... 11
3.2 Task 5: Market Assessment Process ........................................................................... 12
3.3 Task 6: Progress Reporting and the Final Dissemination Workshop ....................... 13
3.3.1 Sub-Task 6.1: Project Progress Reports .................................................................... 13
3.3.2 Sub-Task 6.2: Drafting the Final Report ..................................................................... 13
3.3.3 Sub-Task 6.3: Organizing and Delivering a Final Dissemination Workshop .............. 13
APPENDIX I ESCO PROJECT CASE STUDIES ............................................................................ 15
LIST OF TABLES
Table 1: Set of Recommendations to Address the Identified Gaps in the Market ............................. 5 Table 2: Total Potential Savings Based on Estimates ..................................................................... 10 Table 3: Estimates of CO2 Emissions to Be Avoided ....................................................................... 11
Final Report Preparation of Guidelines for Energy Performance Contracting for ESCOs and
Case Study Development Turkish Ministry Of Energy and Natural Resources
SME Energy Efficiency Project
Project No. 6008 1
INTRODUCTION
As part of the tasks in carrying out the Preparation of Guidelines for Energy Performance Contracting
(EPC) for Energy Service Companies (ESCOs) and Case Study Development assignment, this final
report presents the work completed by Econoler throughout the assignment (excluding the additional
work done through an amendment), starting with the Inception Mission in June 2015 up to the
submission of this Final Report in November 2016.
This report summarizes the results of Tasks 1, 2 and 3 of Component I, the data gathering and public
building market assessment methodology related to Tasks 4 and 5 of Component II, as well as the
progress reports and final dissemination workshop.
This Final Report describes and discusses the work carried out for each task according to the Terms
of Reference (TOR) and accepted methodology, as well as difficulties encountered and potential
solutions thereof.
Final Report Preparation of Guidelines for Energy Performance Contracting for ESCOs and
Case Study Development Turkish Ministry Of Energy and Natural Resources
SME Energy Efficiency Project
Project No. 6008 2
1 INCEPTION MISSION
In the context of the launch of the Preparation of Guidelines for EPC for ESCOs and Case Study
Development assignment, an inception mission was conducted in the week of June 15, 2015 by
Mr. Pierre Langlois, designated project team leader from Econoler.
The objectives of the meetings were to:
› Initiate first contact with key stakeholders at the Ministry of Energy and Natural Resources
(MENR) and other key actors in the market;
› Review the proposed work plan and agree on a final version;
› Review the project schedule and agree on a final version;
› Gather relevant information related to the assignment;
› Plan the next steps of the assignment.
Based on the information gathered during the inception mission, project work plans and schedule
were reviewed and adapted accordingly. The Inception Report was submitted on October 26, 2015
and included initial findings, detailed plan, schedule and team structure to complete both
Components I and II.
Two meetings took place during the inception mission, notably with the General Directorate for
Renewable Energy (GDRE) and the Energy Efficiency and Management Association (EYODER).
1.1 Meeting with the General Directorate of Renewable Energy
A meeting was held on June 17, 2015 at GDRE offices with 17 participants. A complete review of
the TORs and the methodology was conducted during the meeting. The following key points were
discussed:
› The market of focus, which was clarified as the ESCO market with a focus on private sector
industry and Small and Medium Enterprises (SMEs);
› Potential challenges of completing Components 1 and 2 of the TOR;
› Work organization and schedule;
› Contact list for exchanges during assignment execution.
1.2 Meeting with the Energy Efficiency and Management Association
Two representatives of the EYODER were met the same week as the meeting with GDRE to gather
their points of view about EPC market barriers in the private and public sectors. Information was
collected to obtain a more complete view of the current situation of the EPC sector in the country.
Final Report Preparation of Guidelines for Energy Performance Contracting for ESCOs and
Case Study Development Turkish Ministry Of Energy and Natural Resources
SME Energy Efficiency Project
Project No. 6008 3
2 COMPONENT I: PREPARATION OF GUIDELINES FOR ENERGY PERFORMANCE CONTRACTING FOR ESCOS AND CASE STUDY DEVELOPMENT
The final version of the report entitled Market Assessment Report for ESCO Market and Case
Studies was submitted by Econoler on April 20, 2016, which addressed Tasks 1 and 2 of Component
I. Task 3 assignments were presented separately and are discussed in Section 2.3 below.
Overall, in addition to a market assessment (Task 1), the expected outputs of Component 1 were
met and consisted of:
› Three case studies of successful ESCO transactions in Turkey (Task 2);
› Simplified standard ESCO contracts (Task 3);
› Draft key changes to legislation (e.g., public procurement, taxation, etc.) (Task 3);
› Guidelines for industrial customers to select and work with ESCOs (Task 3).
To disseminate Component I outputs, a presentation was held by Pierre Langlois at MENR office in
Ankara on February 16, 2016 where main findings of the market assessment were shared.
2.1 Task 1: Assessment of the Energy Services Market and Identification of Successful Models and Prevailing Barriers
2.1.1 Sub-Task 1.1: Conducting a Fact-Finding Mission
Over a six-month period ending December 2015, Econoler conducted a fact-finding mission to gather
information, opinions and facts about the current state of energy services in all sectors in Turkey.
Thus, 14 interviews were conducted with people from organizations considered relevant
stakeholders in the ESCO market. The interviews included a government institution representative
(MENR-GDRE), two non-governmental organizations (NGOs), three local banks, one International
Financial Institution (IFI) namely the UNDP, and seven Accredited Energy Efficiency Consultancy
Companies (EVDs).
Quality information from participants was collected. Interviewee experience in energy efficiency (EE)
and EPC and opinions regarding the barriers to EPC market development in Turkey, as well as
general issues related to EE were explored. Some interviewees suggested potential solutions to help
foster a real EPC market.
The overall results and detailed conclusions of interviews were presented to MENR in the draft report
Market Assessment Report for ESCO Market and Case Studies submitted on February 8, 2016.
Final Report Preparation of Guidelines for Energy Performance Contracting for ESCOs and
Case Study Development Turkish Ministry Of Energy and Natural Resources
SME Energy Efficiency Project
Project No. 6008 4
2.1.2 Sub-Task 1.2: Gathering Complementary Data
Additional tools were used to gather data and assess EPC development and related issues in the
market. A web-based survey was developed to target financial experts and EE specialists working
in an EVD or ESCO. In total, nine participants completed the web-based survey, including a
representative from the EYODER to share their viewpoints on EPC market barriers in the private
and public sectors. This enabled Econoler to establish a more a comprehensive picture of the current
state of the EPC sector in the country.
Convincing stakeholders to share information proved to be generally difficult for the following
reasons:
› Many preferred to talk over the phone or in person, rather than disclose information in a survey;
› Many wanted to remain anonymous because they were afraid that if the name of their company
were disclosed, negative impacts could result;
› There is a feeling of hopelessness in the market. Some people stated they had spent many
years addressing these issues, but felt that their efforts had not helped at all.
Furthermore, existing and future legislation awaiting parliamentary approval was also reviewed by
Econoler, along with the current ESCO accreditation scheme.
The survey questionnaire, list of survey participants and reviewed documentation were included in
the draft report Market Assessment Report for ESCO Market and Case Studies, which was submitted
on February 8, 2016.
2.1.3 Sub-Task 1.3: Carrying Out a Market Analysis
Based on information gathered from interviews and complementary data, the ESCO and EPC
context was assessed and key market barriers were identified. Econoler noted a lack of
understanding of the EPC concept and role of ESCOs in the market. To fully understand the
recommendations on the development of a sustainable EPC market in Turkey, EPC and ESCO
concepts, activities and models were defined as it was considered important to agree on such
definitions.
Overall, the existence and/or availability of ESCOs, existing and/or perceived technical, financial,
social and regulatory barriers and risks in the Turkish market were analyzed. Plausible support
measures to overcome these barriers based on international expertise and experience were
presented. Private-sector success factors in the development of such markets were also highlighted
based on lessons learned from 30 years of experience in numerous countries.
Developing an EPC market in the Turkish private sector presents challenges. In the context of this
assignment, Econoler formulated 14 recommendations based on identified barriers in the market -
some of which are based on initiatives successfully introduced by other countries, while others were
developed specially for Turkey.
Final Report Preparation of Guidelines for Energy Performance Contracting for ESCOs and
Case Study Development Turkish Ministry Of Energy and Natural Resources
SME Energy Efficiency Project
Project No. 6008 5
A detailed market analysis and complete recommendations were presented in the final version of
the Market Assessment Report for ESCO Market and Case Studies report submitted on April 20,
2016. This report also included several appendices to explain in greater detail certain main concepts:
ESCO capacity-building; certification process; Super ESCO; and facilitators.
It was found that, in general, the ESCO industry in Turkey is deficient in certain respects. Among
others, most accredited EVDs do not possess the expertise to act as an ESCO. Investment-grade
Audits (IGAs), risk mitigation, contractual development, project financing and M&V are critical areas
that most EVD staff fail to understand. Lack of adapted financing for the implementation of EPC
projects is also a good example of these deficiencies in the market.
This situation could change by taking several actions to accelerate market development and provide
a favourable context for ESCOs to thrive. Based on recommendations, Econoler proposed an
implementation road map such that it would have the most rapid impact for developing EPC in the
Turkish private sector. Some actions should be implemented as priorities to establish a sound basis
for ESCO market development without creating distortions or negative experiences which would
stunt or bring the market in Turkey to a halt. A sequence of events that could be followed by the
MENR was presented by Econoler as short, medium and long-term priorities to further support the
growth of the market. The recommendations are summarized in Table 1 below.
Table 1: Set of Recommendations to Address the Identified Gaps in the Market
Prioritization No. Name Description
Top priority - (short term)
1 3 Developing Recognized Documents for Market Usage
Develop an accepted set of documents: contracts, investment-grade audits, M&V protocols, etc. that can be recognized as legitimate on the market
2 5 Supporting Early Demonstration Projects
The MENR should support the implementation of EPC-based projects for demonstration and information dissemination purposes.
3 7 Favouring Small and Simpler Transactions
Favour the development of smaller and simpler projects that could use only a single technology to facilitate the adoption of the concept by potential ESCO clients.
4 11 Creating an Independent Arbitration Mechanism
Support the creation of an independent arbitration mechanism that could be used to facilitate the resolution of disputes in EPC projects.
Actions that would prove efficient - (medium term)
5 1 Building the Capacity of ESCOs
Offer training to ESCOs on audits, contracts, project financing, M&V, among other topics, to develop the needed offering on the market.
6 2 Raising Awareness of End-Users
Raise awareness of potential project beneficiaries to the needed level so the concept can be well received when presented by ESCOs.
Final Report Preparation of Guidelines for Energy Performance Contracting for ESCOs and
Case Study Development Turkish Ministry Of Energy and Natural Resources
SME Energy Efficiency Project
Project No. 6008 6
Prioritization No. Name Description
7 9
Promoting an Internationally Recognized M&V Protocol
M&V is a process which should be recognized by the ESCOs and their clients. The use of a recognized M&V protocol will mitigate the various risks that can arise after project completion.
8 4 Making Changes to Current Certification Process
Adapt the current EVD certification to the ESCO market requirements with the following elements as basis: ›Internal knowledge and capacity to operate as an ESCO ›Level of financial capacity to back guarantees or sustain defaults in the case of projects under a shared savings scheme
To be considered - (long term)
9 10 Training Independent M&V Specialists
Support the creation of independent certified M&V specialists that could be mandated by both parties in an EPC to design and implement M&V plans used during the EPC to determine the energy and financial savings.
10 8 Introducing and Supporting the Role of Facilitators
Support the role of facilitators who can play a major and enabling role in ESCO market development. The role of facilitators is to serve as an intermediary between clients and the corporate cultures, interests and expectations of ESCOs during the various phases of the project cycle.
11 6 Supporting the Development of an Adapted Financing Offer
Support the development of lending products within the banking sector.
Develop mechanisms that could favour the interest of EPC within banks for the implementation of EE financing.
Consider the creation and operation of a dedicated public financing facility that would address the financing needs of EPC agreements.
12 14 Creating a Public Sector Program
Consider the creation of a public EPC program to reduce energy consumption in public buildings. These programs, besides their main interest in reducing energy costs for public sector facilities, would create a sustainable market for private sector ESCOs and contribute to the recognition of the EPC concept in the private sector.
2.2 Task 2: Development of Case Studies
During the interviews conducted for Task 1, participants were asked to share detailed information
and data about their EPC projects. It was found that there was no significant ESCO market in Turkey
with a very limited number of projects implemented using an EPC scheme. Information on a small
number of projects was limited since ESCOs claiming they had implemented projects were reluctant
to share information, either because projects were unsuccessful, or to prevent informing competitors
of the model they used. In the public sector, no project using an EPC scheme has so far
been reported.
Final Report Preparation of Guidelines for Energy Performance Contracting for ESCOs and
Case Study Development Turkish Ministry Of Energy and Natural Resources
SME Energy Efficiency Project
Project No. 6008 7
Task 2 was completed in December 2015 when Econoler managed to gather enough information for
the following three private-sector case studies:
› Hospital in Ankara: Project developed by ESCON for the cooling system;
› Dairy Plant in Lüleburgaz: Project developed by ESCON focusing on the heating system;
› Carousel Mall in Istanbul: Project developed by Johnson Controls.
The detailed case studies were included in the final version of the Market Assessment Report for
ESCO Market and Case Studies submitted on April 20, 2016 and are included in Appendix I.
2.3 Task 3: Development of Guidelines, Sample Documents and Contracts
All documentation produced under Task 3 was submitted to MENR on September 14, 2016, which
addressed the following expected Task 3 outputs outlined in the project contract:
› Development of simplified standard ESCO contracts based on verified energy savings, leasing
and other simple models;
› Identification of key changes to legislation (e.g. public procurement, taxation, etc.) along with
drafting of specific language to be used in the revision;
› Development of guidelines for industrial customers to select and work with ESCOs.
2.3.1 Sub-Task 3.1: Developing Adapted Contracts
The three following contract models were developed and provided to MENR in the document entitled
Simplified Standard ESCO Contracts:
› Guaranteed-savings EPC;
› Verified-savings EPC;
› Lease contract.
Thus, Econoler first conducted extensive research on the contracts developed in Turkey, where no
EPC model was available. The two EPC templates were developed based on EPC best practices
for guaranteed-savings and verified savings contracts. As for the contract lease, since it is not a
specific EPC, a Turkish model was adapted by incorporating the elements of a performance-based
contract.
Final Report Preparation of Guidelines for Energy Performance Contracting for ESCOs and
Case Study Development Turkish Ministry Of Energy and Natural Resources
SME Energy Efficiency Project
Project No. 6008 8
2.3.2 Sub-Task 3.2: Identifying Key Legislative Changes to Be Made
There were no apparent legislation issues that would prevent the use of EPC or ESCO activities in
the private sector. The following laws in Turkey were identified as related to the use of EPC and
reviewed:
› Law 5627, Energy Efficiency Law, adopted on April 18, 2007;
› Draft Law on the amendment to organization and duties of the Ministry of Energy and Natural
Resources, and the Energy Efficiency Law (June 30, 2014).1
The review of the current legislation in Turkey revealed that the following changes are required to
facilitate the use of EPC in Turkey:
Private Sector
› Improve the accreditation scheme to eliminate confusion about EVDs and increase the
recognition of EPC as a valid EE project implementation mechanism;
› Develop an adapted arbitration scheme to be used in case of disputes related to the
implementation of projects using EPC;
Public Sector
› Draft the necessary amendment to the legislation so EPC related costs can be considered as
ongoing energy costs and be accounted for in the energy budget of public sector entities;
› Make the necessary adjustments to the specific legislation to (1) request the achievement of
energy efficiency targets and/or (ii) enable public sector entities to retain a part of the savings;
› Assess the possibility of using current Public Private Partnership (PPP) related legislation to
enable procurement that would allow the use of the EPC concept. If not successful,
- Make the necessary adjustments to the legislation to allow a different approach to
procurement that allows the use of the EPC concept, including the possibility of launching
a Request for Proposals (RFP) without providing fully developed goods or services;
- Develop new legislation to allow a different approach to evaluate bids received pursuant to
an RFP for the announcement of EPC proposals;
› Adjust the proposed law amendment to replace the 25% energy efficiency gains in projects to
enable the use of EPC by a threshold of 10%, but add a lower savings limit of 100,000 Turkish
liras;
› Make the necessary adjustments to the proposed amendment to eliminate instructions on how
to develop baselines and replace by a reference to an accepted M&V protocol (potentially the
International Performance Measurement and Verification Protocol [IPMVP] Core 2016).
1 At time of legislation review, the law was being considered by the Parliament and had not yet been approved.
Final Report Preparation of Guidelines for Energy Performance Contracting for ESCOs and
Case Study Development Turkish Ministry Of Energy and Natural Resources
SME Energy Efficiency Project
Project No. 6008 9
Banking Regulations
› Define EE savings as an asset class equivalent to tangible assets for the purposes of
provisioning loans and risk categorization.
› Revise regulations on both banking information systems and processes by allowing the
integration of EE in the regulations that govern the information systems of Turkish banks.
The detailed legislation review and findings for both the private and public sectors were presented
in the report entitled Energy Efficiency Legislation Review, which included recommendations about
issues that should be further investigated to facilitate the use of the EPC concept. The accreditation
schemes of five countries were presented along with the concept of arbitration. Banking regulations
and options to improve the regulatory framework impacting EPC cash flow lending were also
reviewed.
2.3.3 Sub-Task 3.3: Development of Guidelines for the Use of EPC
The developed guidelines were presented in the report entitled Energy Performance Contracting
Guideline for SMEs, which was submitted on September 14, 2016 to provide guidance to SMEs on
EPC in the specific context of Turkey. EPC procurement mechanisms and implementation steps,
financing mechanisms, M&V of savings, operation and maintenance, as well as capacity building
were detailed. The report included the following key elements:
› Introduction to the EPC model, ESCO services and the benefits of doing business with an
ESCO;
› Four types of contracts (shared savings, verified savings, guaranteed savings, and lease
contract) and the advantages offered by the EPC business model;
› Implementation steps for EPC project development and implementation by detailing the main
stages to be completed before the signing of an EPC;
› Main features of the three major types of EPCs;
› Main characteristics and components of an effective measurement and verification (M&V) plan,
which should be prepared in the EPC development phase.
Final Report Preparation of Guidelines for Energy Performance Contracting for ESCOs and
Case Study Development Turkish Ministry Of Energy and Natural Resources
SME Energy Efficiency Project
Project No. 6008 10
3 COMPONENT II: MARKET ASSESSMENT FOR PUBLIC BUILDINGS IN TURKEY
This assignment was to study the EE potential in public sector buildings in Turkey. The objective
was to survey the sector by identifying and categorizing existing building stock (central government
and municipal buildings), thus creating an inventory of buildings. This inventory included not only
information about the quantity, ownership, typology and sizes of buildings, but also their energy
characteristics (fuel used, total energy consumption, specific energy consumption and annual costs).
The implementation of Component II consisted of the following two tasks:
› Data gathering (Task 4);
› Market assessment process (Task 5).
Furthermore, following data gathering and the market assessment process, Econoler estimated
building stock EE potential by establishing three kinds of potential, namely: (1) theoretical;
(2) economically viable; and (3) EPC viable. The assessment for each kind estimated investment
requirements, the level of energy and CO2 savings, primary energy savings and contribution to
avoided costs of natural gas imports. The main findings are presented below.
The current consumption of public building stock was estimated at 25,109 GWh/year. The
theoretical, economical and EPC feasible potential was estimated in the forms of energy savings
and cost savings, as listed in Table 2 below.
Table 2: Total Potential Savings Based on Estimates
Market Assessment Energy Savings (%) Annual Energy Savings (GWh)
Annual Savings (MTRY)
Annual Savings (MUSD)
Theoretical Technical Total Potential Energy Savings
30% - 40% 7,532 - 10,043 2,417 - 3,222 806 - 1,074
Economically Feasible Total Potential Energy Savings
50% of the theoretical technical
3,766 - 5,022 1,208 - 1,611 403 - 537
Total Potential Energy Savings Feasible for EPC Market
15% of the theoretical technical
1,130 - 1,506 363 - 483 121 -161
The analysis of investments required to reduce Turkey’s public building sector energy consumption
according to the Economically Feasible Potential was estimated at between 4,028 and 5,370 MUSD.
The theoretical technical savings potential in the public sector would allow a reduction in the volume
of natural gas imported by Turkey by more than 3%. Furthermore, possible reductions of CO2
emissions were quantified in Table 3 below.
Final Report Preparation of Guidelines for Energy Performance Contracting for ESCOs and
Case Study Development Turkish Ministry Of Energy and Natural Resources
SME Energy Efficiency Project
Project No. 6008 11
Table 3: Estimates of CO2 Emissions to Be Avoided
Total Primary Energy Savings CO2 Emissions (kTCO2)
Theoretical Technical Potential 3,973 - 5,297
Economically Feasible Potential 1,986 - 2,648
EPC Potential 596 - 795
The complete data collection process, market analysis, estimation of energy savings potential,
analysis and process recommendations included as part of Component II were detailed in the final
Market Assessment Report for Energy Efficiency in Public Buildings submitted on
September 16, 2016.
3.1 Task 4: Gathering Data about the Public Sector
Econoler proposed an initial well-tested data collection process, presented in the Component II Data
Collection Report delivered on February 13, 2016. As part of Task 4, three main types of information
were collected to conduct a reliable assessment of public sector buildings:
› Structural information, including location, building type, operational characteristics and
area (m2);
› Energy related information, including type of fuels, total energy consumption and cost of fuel;
› Information about building usage.
GDRE had sent a questionnaire to all the 81 Turkish provinces before this consultancy project
started. Based on data from the 64 provinces that responded, as well as other references from the
GDRE web portal and two sets of public-building audit reports, the following information was
received:
› Information about 646 public buildings from the GDRE web portal;
› Energy consumption of 166 public buildings for which energy audits had been completed;
› A summary of 26 public-building energy audits in the Summary of Energy Audits spreadsheet;
› The number of public buildings by size and type provided by the 64 provinces:
150,677 buildings;
› The number of hospitals and educational buildings as of 2014 and the number of buildings of
all building types as of 2000;
› The number and construction areas of all building types completed before and after 2000;
› The Draft National Energy Efficiency Action Plan (NEEAP) of the Republic of Turkey in full and
summarized versions.
Final Report Preparation of Guidelines for Energy Performance Contracting for ESCOs and
Case Study Development Turkish Ministry Of Energy and Natural Resources
SME Energy Efficiency Project
Project No. 6008 12
Given the lack of other required reliable and accurate information on the public building sector,
Econoler analyzed the public sector using information already available from GDRE and references
from other international organizations. The data and information collected were presented in the
Market Assessment Appendices in April 2016.
3.2 Task 5: Market Assessment Process
Econoler developed a methodology for assessing the energy savings potential of public buildings
based on the estimation of the energy savings potential in every segment of the sector.
The methodology, assumption, initial results and recommendations to overcome data gaps were
presented by Pierre Langlois during a workshop held with a number of stakeholders in Ankara on
February 16, 2016. 42 participants attended this workshop on public sector buildings.
The detailed process, market analysis and process recommendations were presented in the final
version of the Market Assessment Report for Energy Efficiency in Public Buildings which included
the formula used to measure the energy cost per fuel type, as well as the approaches used by
Econoler to determine the building parameters used in the EE potential assessment.
Recommendations aiming to improve the level of accuracy of the public-building energy savings
potential estimates include three steps to achieve the highest possible level of accuracy:
› Create a database of public buildings with a limited range of information. This database should
include all types of public buildings in all provinces and a summary of all completed public-
building energy audits;
› Recalculate the following building parameters used to evaluate EE potential once more
detailed data will be made available to replace the assumptions made to determine:
- Total consumption per building;
- Average total consumption (kWh/m2);
- Global energy consumption by end use (%);
- Type of fuel used by end use (%);
- Potential energy savings by end use (%).
› Adopt energy certification of public buildings with a clear methodology to gather energy
consumption data with requirements in terms of meter reading, supplier estimates and
measurement periods. This methodology should be included in a guidance document on how
to complete the template to fulfill the requirements of the energy certificate and transmit it to
the relevant institution, which could be GDRE. This guidance document should provide a step-
by-step guide to completing the energy certificate and responses to questions and comments
that may arise.
Final Report Preparation of Guidelines for Energy Performance Contracting for ESCOs and
Case Study Development Turkish Ministry Of Energy and Natural Resources
SME Energy Efficiency Project
Project No. 6008 13
3.3 Task 6: Progress Reporting and the Final Dissemination Workshop
3.3.1 Sub-Task 6.1: Project Progress Reports
The final version of the First Progress Report was submitted by Econoler on January 8, 2016 and
presented the progress in Econoler’s work from the inception mission until mid-November 2015. This
progress report described the work carried out for each task according to the TOR and accepted
methodology. The difficulties encountered and potential solutions thereof were also discussed.
The Second Progress Report was submitted to the MENR on March 3, 2016 and covered the work
done following the first quarterly work progress report and Mr. Pierre Langlois’ mission in Ankara on
February 16 and 17, 2016. This work progress report summarized the results of Tasks 1, 2 and 3 of
Component I, as well as data gathering and public-building market assessment methodology related
to Tasks 4 and 5 of Component II.
3.3.2 Sub-Task 6.2: Drafting the Final Report
This report constitutes the Final Report and was submitted in November 2016. It summarizes the
project outputs, main results and conclusions associated with each task and subtask completed as
part of Components I and II.
3.3.3 Sub-Task 6.3: Organizing and Delivering a Final Dissemination Workshop
The final dissemination workshop was held in Ankara on May 25 and 26, 2016.
The final workshop consisted of three sessions:
› ESCO market in the private sector (full day);
› M&V of energy savings (half a day);
› Energy efficiency in public buildings (half a day).
The workshops presented the methodology, results and recommendations associated with
Components I and II.
Furthermore, an additional session on Measurement and Verification of energy savings, based on
the use of the IPMVP protocol, was held for half a day in collaboration with EYODER.
Each workshop was followed by an exchange session for questions and discussion. The participants
provided good questions on the information presented and were very interested in the conclusions
and recommendations made. No negative comments were presented and no modifications to the
conclusions and recommendations were necessary by the end of the workshop. The final version of
the reports took into considerations all information gathered from the participants.
Final Report Preparation of Guidelines for Energy Performance Contracting for ESCOs and
Case Study Development Turkish Ministry Of Energy and Natural Resources
SME Energy Efficiency Project
Project No. 6008 14
It is to be noted that many stakeholders, essentially banks and EVDs which are members of
EYODER, did not attend the workshops. In the case of EVDs, the reason for their absence was due
to an overload of work not related to EPC projects, but rather to other tasks such as conducting
audits that needed to be finalized before a deadline the following week, whereby documents had to
be delivered to MENR.
Final Report Preparation of Guidelines for Energy Performance Contracting for ESCOs and
Case Study Development Turkish Ministry Of Energy and Natural Resources
SME Energy Efficiency Project
Project No. 6008 15
APPENDIX I ESCO PROJECT CASE STUDIES
Hospital in Ankara
Overall project
parameters
ESCON developed an energy efficiency project in a private hospital in Ankara. The contract was signed at the beginning of 2014 and lasted 24 months. The EPC focused on the cooling system to reduce the electricity consumption of the facility. The chiller room is located in a separate building than the main hospital facility. The contractor guaranteed to his client to reduce its natural gas bill by, at least, 131,860 USD annually.
Energy
Conservation
Measures
ESCON performed an initial energy audit to get all operational data and design the system. ESCON measured several parameters during two weeks: chilled water flow, inlet and outlet temperatures and electricity consumption to determine the energy conservation measures. The following meters were used during the detailed energy audit performed before the signature of the contract: Ultrasonic flowmeter, temperature transmitters, pressure transmitters, thermal imaging and electricity analyzers. Also, the energy consumption data of the chiller was taken from the client for the previous 3 years. Old and inefficient water-cooled screw chiller with capacity 900 kW was replaced by high efficiency water-cooled centrifugal chiller with the same capacity and Variable Frequency Drive. The old system had 20 years old
Performance-based
Mechanism
The EPC model is guarantee savings for a duration of two years. The contract guarantees USD 131.860 annual savings based on fixed electricity price (This data is confidential). If the guaranteed savings were not achieved then the contractor would have paid penalty, calculated by the following formula: Penalty = {Contract Price} x [ 1 – ({savings achieved}/{guaranteed savings})] The contract price is what the customer pays to ESCON in total during the whole contract period. ESCON was in charge of maintenance of the new installed chiller and performance guarantee. Customer is in charge of daily operation and daily controls.
Financing Source The project was financed by a bank. Hospital was the client of the bank. Name of the bank and size of the loan are all contract details which are confidential.
Procurement
Process
Step 1: A walkthrough energy audit is conducted by the contractor’s project engineer on the initial visit. The aim of the walkthrough audit is to find out the possible energy efficiency improvement areas. Recorded energy consumption data for the last years are collected for further office work. Step 2: Letter of Intent (LOI) is submitted to client along with draft project details. LOI explains the client that the contractor will conduct a detailed audit for creating an energy performance contracting offer and the cost of this study will not be charged to client unless the project is not procured from the contractor. Draft project details show the energy saving potential and what would be the rough cost of this project with simple payback analysis. Step 3: After both parties agree (sign) LOI, a detailed energy audit is conducted. This time for the audit depends on the type of the project (Heat Recovery, Chiller
Final Report Preparation of Guidelines for Energy Performance Contracting for ESCOs and
Case Study Development Turkish Ministry Of Energy and Natural Resources
SME Energy Efficiency Project
Project No. 6008 16
Replacement, Pump System Renovation, Lighting Retrofit etc.) and the nature of client business (24/7 operating factory, 12/7 operating mall etc.) Step 4: A detailed system design along with energy performance contract is prepared and presented to the client. Contract details (guaranteed or shared savings) can change depending on the project and the client. Step 5: If the contract is approved by the client, project procurement and application are prepared by the contractor. Step 6: After start-up and commissioning, the contractor project engineers and the client collect data from various measurement devices installed on site to check if the savings are achieved.
M&V methodology An M&V plan was provided to the client. The chiller system variation usually depends on weather changes which were considered. The M&V plan did not follow any recognised protocol. To evaluate the savings, ESCON measured several parameters thanks to the following meters: online chilled water flowmeter, chilled water inlet/outlet temperature transmitters and electricity meter. The data were recorder by a BMS (Building Management system) All savings were measured in energy unit and they were multiplied by fixed electricity price as agreed on the contract. All meters and measurement devices were calibrated based on legal requirements.
Savings achieved The annual savings were evaluated to USD 149,321, which is higher than the expected savings. This represent 61% energy savings of the separate chiller rooms, including pumps and evaporation system.
Dairy in Lüleburgaz
Overall project
parameters
ESCON developed an energy efficiency project in a dairy plant which produces white/kashkaval/spreadable and parmesan cheese types along with butter. The project client is one of the biggest cheese manufacturers in Turkey. The contract was signed at the end of 2012 and lasted 18 months. The EPC focused on the heating system to reduce the gas natural consumption of the facility. The contractor guaranteed to his client to reduce its natural gas bill by, at least, 110,000 USD each year.
Energy
Conservation
Measures
ESCON performed an initial energy audit to get all operational data and design the system. The contractor measured for three months before the retrofit the following points to define the done the following measurements:
› Exhaust flow, temperature of 3 steam boilers. The results were: 2.240 Nm3/h, 2.190 Nm3/h and 1.120 Nm3/h (average values) and 192°C, 204°C and 283°C (average values);
› Exhaust flow, temperature of gas engine. The results were: 5.810 Nm3/h (average values) and 216°C (average values);
› Feed water and inside boiler conductivity levels for 3 steam boilers; Blowdown flows for each boiler are 1.458 kg/h, 1.256 kg/h and 530 kg/h (average values)
Based on the results of this preliminary audit, ESCON designed three energy conservation measures focusing on the thermal systems whiwh were implemented during the course of the project:
› Waste heat recovery from 3 steam boilers exhaust gas
› Waste heat recovery from gas engine exhaust gas
Final Report Preparation of Guidelines for Energy Performance Contracting for ESCOs and
Case Study Development Turkish Ministry Of Energy and Natural Resources
SME Energy Efficiency Project
Project No. 6008 17
› Boiler Automatic Blowdown Control for 3 steam boilers
Performance-based
Mechanism
The EPC model is a mix of shared savings and guarantee savings. Escon guaranteed 110 kUSD annual savings. In the case this limit is not reached, the lack of lack of performance is shared between the contractor and the client, with a share of 75% for ESCON and 25% for the dairy manufacturer. So, any underperformance will be directly reflected to the contractor. If the yearly savings are above 110 kUSD, ESCON will get payment on 110 kUSD and the rest is received by customer.
Financing Source ESCON financed the project with its own resources. Bank or any financial institution was not involved in this project.
Procurement
Process
Step 1: A walkthrough energy audit is conducted by the contractor’s project engineer on the initial visit. The aim of the walkthrough audit is to find out the possible energy efficiency improvement areas. Recorded energy consumption data for the last years are collected for further office work. Step 2: Letter of Intent (LOI) is submitted to client along with draft project details. LOI explains the client that the contractor will conduct a detailed audit for creating an energy performance contracting offer and the cost of this study will not be charged to client unless the project is not procured from the contractor. Draft project details show the energy saving potential and what would be the rough cost of this project with simple payback analysis. Step 3: After both parties agree (sign) LOI, a detailed energy audit is conducted. This time for the audit depends on the type of the project (Heat Recovery, Chiller Replacement, Pump System Renovation, Lighting Retrofit etc.) and the nature of client business (24/7 operating factory, 12/7 operating mall etc.) Step 4: A detailed system design along with energy performance contract is prepared and presented to the client. Contract details (guaranteed or shared savings) can change depending on the project and the client. Step 5: If the contract is approved by the client, project procurement and application are prepared by the contractor. Step 6: After start-up and commissioning, the contractor project engineers and the client collect data from various measurement devices installed on site to check if the savings are achieved.
M&V methodology An M&V plan was provided to the client. This M&V considered productions fluctuations as the customer agreed to cover the risks if the production levels (ton of milk intake and ton of cheese produced everyday) were lower than what was estimated during the preliminary audit. The M&V plan did not follow any recognised protocol. To evaluate the savings, ESCON measured several parameters thanks to the following meters: online temperature transmitters, TDS transmitters and flowmeters. The data were recorder by an automation system. All meters and measurement devices were calibrated based on legal requirements.
Results The annual savings were evaluated to USD 136,750, which is higher than the expected savings.
Final Report Preparation of Guidelines for Energy Performance Contracting for ESCOs and
Case Study Development Turkish Ministry Of Energy and Natural Resources
SME Energy Efficiency Project
Project No. 6008 18
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