energy performance contracting (espc)- business model for energy transition of building stock...
TRANSCRIPT
Energy Performance Contracting (ESPC)- business model for energy
transition of building stock
Beograd, October 2014
Rüdiger Lohse
(Head of Section)
www.kea-bw.de
Introduction
1- Energy Performance of Buildings in EU 2- KEA- climate protection and energy agency 3- Energy Service Market 4- Comparison of business models for the energy conversion in
buildings 5. Strategy to Achieve Deep Energy Reductions
www.kea-bw.de
1- Energy Performance of Buildings in EU
Energy conservation refurbishments have to be significantly increased in short time periods (EU: 3% p.a., USA: 3% p.a. site energy reduction compared to CBECS 2003)
At least two hurdles in the public sector to increase the number and pace of energy retrofit projects: – Absence of public funding – Lack of knowledge about separated and bundled (integrative)
energy saving measures and the resulting synergies One important issue in KEAs strategy is to adapt existing Energy
Service business models to regional framework conditions and to develop it to an INTEGRATIVE BUSINESS MODEL
KEA= semi- statal energy agency, 30 employees in five sections: energy benefit programmes, energy concepts, biomass development, energy management programme, energy services project development
www.kea-bw.de
1- Energy Performance of Buildings in EU: EBPD
Member States shall develop policies and take measures to stimulate the transformation of buildings to be refurbished to a nearly zero-energy (NZE) condition. Cost- effective minimum energy performance requirements over a building’s estimated economic lifecycle.The term “high performance building” (as used in Austria, Germany, the Czech Republic, and Denmark) was developed by the Passivhaus Institute (PHI) for the German building market, and equals “nearly zero-energy.”
www.kea-bw.de
1- Energy Performance of Buildings in EU
Energy and building costs of aging building stock: EU: buildings take 40% share of final energy consumption- 1/3 is focused in non- residential buildingsExisting buildings´ sector has been identified as the largest long- term cost- effective saving potential with ( Enerdata 2012; UNEP Emission Gap Report 2013)
75% of buildings was build in periods with minimal energy regulations in building codes and is expected to be in use 2050 Development (by area): demolition rate: 0,1%, low refurbishment rates (1,2% p.a.), deep energy refurbishment (1% p.a)
www.kea-bw.de
1- Energy Performance of Buildings in EU
Energy securitation 66% of natural gas consumed in EU is imported EU energy security strategy 28. May 2014:Among immediate actions to be foreseen towards winter 2014/15 the “moderating energy demand” is third on the 8 point action plan:Energy Efficiency Directive and Energy Performance of Buildings Directive will have to be “implemented more rigorously and without delays” with a focus on speeding up the renovation of buildings, especially heating and isolation, district heating and energy servicesEED will be reviewed and is expected to be tightened
( Ristori, JRC March 2013; COM 2008/2012-; EuroACE )
www.kea-bw.de
1- Energy Performance of Buildings in EU- need for funding the energy transition in buildings
EU 2020 targets (20% PE savings) will be missed by 11% in case of business as usual Energy Efficiency Directive (2012/27/EU) was adopted (DIW 2013)
The program period 2014- 2020 is pivotal to get back on track Financial needs: to comply with EU 2020 targets the financial
demand is € 60- 100 bn/a – current situation < € 30 bn/a EU 2050 Decarbonisation Targets: requires cumulated 2010-2050 €
4,25 tn € above the “business as usual” level Investment needs will not be attained by “the market” but by
combined public funds an other drivers
www.kea-bw.de
1- Energy Performance of Buildings in EU
Key drivers in EU building refurbishment (EEFIG 2014):
– Availability of Data/ Investor Confidence: key aspects on energy efficiency investments, observed performance, risk- perception, de- risiking strategies to be made available to prospective (non technology focused) investors and fund managers ;
– Standardized regulative framework: strong regulations for existing buildings, energy performance certificate (EBPD 2010) mandatory
– M&V and Quality assurance mechanisms to be implemented – Effective enforcement of regulation – Tailored high- efficient business concepts and financial
products
www.kea-bw.de
1- Energy Performance of Buildings in EU: need for deep retrofit of building stock
Refurbishment strategies for EU building stock to achieve 2050 targets and intermediate results 2020 (ECORYS 2012, BPIE 2011):
–Distinguishing 4 types of refurbishment, 3 accelerated refurbishment rates and assuming that “business as usual” will contribute annual savings of at least 2% of today´s baseline at any scenario. The deep refurbishment strategy will be necessary to follow EU 2020 targets
Renovation type
Indicative Saving
Average total project cost € /m²
minor 0-30% 60moderate 30-60% 140deep 60-90% 330nZEB 90-95% 580
Scenario: Business as usual
Slow &minor
fast& minor medium deep
Annual energy saving in 2020 TWh/a 94 169 271 283 5272020 saving as % of today % 2% 4% 7% 7% 13%Investment costs (present value from 2010-2020) €bn 107 161 255 252 477
www.kea-bw.de
1- Energy Performance of Buildings in EU
Resume: To achieve EU 2020 /2050 targets the energy transition in EU
building stock is a major issue A deep refurbishment strategy with energy savings > 70% will
have to be in the focus in the next 6 years (instead of minor saving approaches)
The need for funding will be humongous and innovative business, financing and technical models will be needed to direct the capital in EE projects
www.kea-bw.de
2- KEA- climate protection and energy agency of Baden- Württemberg since 1994
KEA: 50% public owned energy agency 30 employees in five sections providing a consultancy portfolio
arranged in a work bench: energy benefit programs, Energy research (financing instruments, business model, high
efficient energy conservation measure bundles, modeling) in EU and International Energy Agency context
Advanced local energy planning in regions and municipalities (ALEP)
biomass development, energy commissioning programme, energy services project development and facilitation
for the public sector, industry/trade/commerce and private sector
www.kea-bw.de Portfolio KEA 12
KEA- climate protection and energy agency of Baden- Württemberg since 1994
www.kea-bw.de
2- KEA- climate protection and energy agency of Baden- Württemberg since 1994
Section Energy service development Head: Rüdiger Lohse Staff: 4 junior and senior experts Expertise:
– development of more than 50 energy service projects, 20 energy performance contracting projects
– Energy research (financing instruments, business model, high efficient energy conservation measure bundles, modeling) in EU and International Energy Agency (IEA) context
– Managing director of Energy Service Initiative – European Energy Service Award 2009: excellence in ESPC
promotion
www.kea-bw.de
2- KEA- climate protection and energy agency of Baden- Württemberg since 1994
KEA´s target group: municipalities, larger cities, counties Baden- Württemberg statal buildings Statal Ministry of Finance
1110 municipalities, 35 counties in Baden- Württemberg 38% of statal area: woods Average number of inhabitants: 10.000 / municipality Number of municipalities > 30.000 inh.: 45 Framework conditions require „sustainable“ projects
„contractable“ buildings : 80.000 Average age of building fabric and infrastructure: 35 years Average age of HVAC: 25 years Integrative potential for refurbishment: 25- 30 Mrd. €
www.kea-bw.de
2- KEA- climate protection and energy agency of Baden- Württemberg since 1994
www.kea-bw.de
2- KEA- climate protection and energy agency of Baden- Württemberg since 1994
Resume: KEA´s scope of consultancy is designed as a working bench starting
from strategy consultancy, research to the implementation of non- investive and investive programs
KEA takes the role of a neutral market player mostly supporting the costumer
KEA is the major facilitator in the municipal sector in Baden- Württemberg
www.kea-bw.de
3- Energy service market in Serbia and Germany (JRC ESCO Report 2014)
Serbia Germany
Market situation Moderate development of immature market
Mature, stagnant
ESPC companies < 5 10
Total energy service market
Not known € 5 bn. / 8% ESPC
challenges High political stimulation but lack of best practice
Inhouse business models, split incentives, lack of pro ESCO legislations
www.kea-bw.de
3- Energy service market in Germany: ESPC Energy Performance Contracting
Annual turnover ESPC: about 100- 150 Mio. €/a in Germany (1)
ESCOs: mainly large HVAC scale companies+ a growing number of SME
Potential: > 200.000 buildings with energy costs > 50.000 €/a
Scope: HVAC, biomass heating plants, CHP, 60-80% energy retrofitting measures+ 20-40% infrastructure measures
ESPC- Pay back period < 15 years
ESPC- investment per project: 0.5 – 10 Mio. €
ESPC: Energy savings: 30-45%, energy cost savings/GHG reduction: 30-78%
First experience with the integration of parts of the thermal envelope (on- site visits tomorrow)
(1: 2. NEEP 2011)
www.kea-bw.de
3- Energy service market in Germany ESC- energy supply contracting- utility services Annual turnover ESC: about 600- 900 Mio. €/a in Germany
ESCOs: mainly large HVAC scale companies, municipal utilities, SME
Potential: > 1.000.000 buildings with energy costs > 10.000 €/a
Scope: supply solutions: biomass heating plants, CHP, no demand side measures
ESC- contract period 15- 20 years
ESC- investment per project: 0.1 – 10 Mio. €
ESC: Energy savings: 10-25%
ESC: growing number of projects integrating demand side measures DSM
www.kea-bw.de
4- Comparsion of business models for the energy conversion in buildings a) in- house business model
Splitted responsibilities :– Architects/planners: Planning of technical solution,
tendering, quality assurance for construction, is not involved in the operational phase
– Financing: building owner based own appropriate or bank loan funding
– The building owner is in charge for the building operation. – Handcraftsmen and planners do not have a feedback from
the operating phase– No incentives for high EE and minimized investment and
life cycle costs– Benefits (energy savings) are not bankable
www.kea-bw.de
Financing
construction
Operation
Energymanagement
maintenance
Risks
Planning
4- Comparsion of business models for the energy conversion in buildings a) in- house business model
www.kea-bw.de
4- Comparsion of business models for the energy conversion in buildings b) Energy Saving Performance ESP business model
Merged responsibilities :– ESCO is in charge of technical solution, tendering of
construction, quality assurance for construction, is involved and responsible in the operational phase
– Financing: the benefits are guaranteed and are fixed for the funding
– The building owner is NOT in charge for the building operation.
– High incentives for high EE and minimized investment and life cycle costs
Financing of investments is funded by the bankable benefits high potential non- debt funding of the energy transition of buildings
www.kea-bw.de
Financing (?)
construction
operation
Energymanagement
maintenance
De-Risking
Planning
4- Comparsion of business models for the energy conversion in buildings b) Energy Saving Performance ESP business model
www.kea-bw.de
4- Comparsion of business models for the energy conversion in buildings b) Energy Saving Performance ESP business model
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EPC contract…Before EPC
Energy cost savings guarantee
years
Energy-costs
Baseline
www.kea-bw.de
5. Strategy to Achieve Deep Energy Reductions 3 lessons learnt
Regional Framework Conditions require individual Energy Performance Contracting and Energy Supply Contracting Solutions
Project Action plan: a simple feasibility study is a necessary prerequesite to identify + set up individual contracting project objectives and to achieve deep energy conservation
Terms of rating: to attract ESCOs to create solutions for individual project targets it is necessary to design corresponding terms of rating
www.kea-bw.de
5. Strategy to Achieve Deep Energy Reductions 3 lessons learnt
Local framework conditions requires individual ESPC models
“KEAs contracting roadshow”: >400 meetings with public decision makers, majors exploring: “Which are the basic requirements to attract decision makers to go the “ESPC- way” 24 energy performance contracting pools
-financing tool – since end of 90ies funding programmes for refurbishment have disappeared in public administrative funding planning leading to severe value losses 80% of administrations consider C. to be a financing model ()
-integrative energy service providing cost security and energy efficiency
-providing high efficient energy saving AND refurbishment measure bundles the strategy of low- fruit- picking has been constantly identified as a “kick- out- criteria” for project development
-Renewable Heating: since 2006 Baden- Württemberg´s government requires 10-20% renewables in the heating balance of refurbished buildings
www.kea-bw.de
5. Strategy to Achieve Deep Energy Reductions 3 lessons learnt
To identify basic requirements and measures of the public costumer a feasibility study is a basic requisite
“KEAs contracting roadshow”: questionnaire to 1.110 administrations exploring “the available data on which a decision making on public building refurbishment is made”
-< 15% of the public administrations do run an energy management system with at least monthly controlling of consumption and installations + providing significant data on the energy consumption, -cost, -benchmark
-< 5% run strategic instruments like municipal energy concepts , European Energy Award
-> 50% of the ESPC projects are initiated by emergency cases
a simple feasibility study is a basic requisite to generate a “municipal building refurbishment schedule” and to define the scope of action for a valuable contracting project
www.kea-bw.de
5. Strategy to Achieve Deep Energy ReductionsKEA´s step by step project development for decision making process
Owner directed retrofit projects (ODP)
Energy Performance Contract Projects EPC
Energy Supply Contract Projects ESC
Decision making process: EPC, ESC, ODP
Energy- Audits on Buildings /Building poolsComprehensive energy retrofitting schemeon HVAC, biomass, buildings envelopeCost saving potential: 80%
Energy Management in Public Authorities+ frequent Energy Controlling and Monitoring-non- investive Optimization of HVAC and control systems + Electricity, Natural Gas purchase+ Optimization of the buildings users= 15% E- Cost Savings + pay back < 1 a
Bench-
marking
kWh/m²
www.kea-bw.de
5. Strategy to Achieve Deep Energy Reductions Terms of Rating
www.kea-bw.de
5. Strategy to Achieve Deep Energy Reductions Terms of rating
ESPC classic KEA´s ESPC integrative
Terms of rating
Net Present Value of savings in total and remaining with adminstration 70- 80%
Net present value of savings in total and remaining with adminstration 40- 50%
Contract period 10- 20% Measures (Quality) 40 %
Carbon Footprint 10-20%
Carbon Footprint 10-20%
Additional Terms
- Avoided maintenance costs for existing installations are part of the saving
Measures Achieved
HVAC, mainly not integrative with short pay back
Integrative measure bundles with demand and supply side measures, Green ESPC, refurbishment measures without e- saving effects
www.kea-bw.de
5. Strategy to Achieve Deep Energy Reductions Terms of rating
To conduct ESPC /ESC projects to specific solutions the terms of rating have to be defined individually and transparently
“KEAs + ESCOs achievements to enhance deep energy conservation”2000- ….: measure bundles combining demand side measures DSM and CHP or other efficient supply solutions are rated with an additional term: “measure quality” ESCOs started to evaluate significantly interference and synergies between DSM and supply solutions in their bids and proposals2000- …: refurbishment measures with 20-40% of total project investment: “avoided maintenance cost” and rating of the “measure quality” were taken into the ToR2005-…. Green ESPC- “biomass boiler systems” have been provided with higher ratings of the “measure quality” and carbon footprint non of the ESCOs has the idea to introduce “Green ESPC” with terms of rating emphasizing the NPV
www.kea-bw.de
Business model integrating biomass and non- energy related deep refurbishment
ESPC based on biomass and micro grid co- funds the refurbishment of a wrecked swimming pool building
Bilder: IB Kurzmann, St. Leon- Rot, links vor Sanierung, rechts nach Sanierung. Inv. 870 T€ wird zu 15% aus ESC mitfinanziert,
5. Strategy to Achieve Deep Energy Reductions Biomass- ESPC
www.kea-bw.de
Savings-costs > 50 %-energy > 40 %
5. Strategy to Achieve Deep Energy Reductions
www.kea-bw.de
Ziele der KEA beim Contracting
-30%
-50%-40% -70%
Entwicklung neuer Ansätze für Contracting und deren projektbezogene Einsparpotentiale
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5. Strategy to Achieve Deep Energy Reductions- Future Strategies
3. Future Strategies
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5. Strategy to Achieve Deep Energy Reductions Increasing Market Strategy
< 5% of energetic retrofits are realized with Energy Services
“Contracting- Offensive Baden- Württemberg”Targets: identification and remediation of market hurdles, dialogue between market participants“Roadmap Contracting” July 9 2013
Only some of the issues: Funding and beneficiary programmes, derisiking strategiesInformation, training and dissemination of existing knowledgeFacilitation of contract and tendering structuresSolutions for small and medium sized projectsMethodology
www.kea-bw.de
5. Strategy to Achieve Deep Energy Reductions Deep Retrofit Strategy- Integration of the Thermal Envelope
Public Administrations express their need for integrative energetic solutions including the thermal envelope Next step is to implement the thermal envelope in ESPC or related business models
“KEAs + ESCOs experience with small scale approaches including the thermal envelope”: Thermal envelope is not the core competence of the ESCOs Complexity of the projects will be significantly increasing also cost, contract period and risk few experience with “design/performance” available on EU level Long contract periods (>>15 a) new funding models ESPC- contracts and existing tendering process is not viable for thermal envelope IEA- EBC- Annex 61 “Business Models for Deep Retrofit…”
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4. Answers to the Questionnaire
1.) Cooperation between State and ESCO: Contracting Offensive, business relations (Ministry of Finance to respond on that)2.) Legal framework: promotion is not the case, discrimination in some beneficiary programmes, small legislative support for public buildings. Guidelines: dena and 3 others. Ensurance of transpirancy: energy agencies and other project development consultancies (market).3.) statal controlled audits during the contract phase: no4.) Applied financial mechanisms: leasing, energy supply contracting and ESPC5.) Procurement: see slides “terms of rating”6.) see slides “business model”7.) Contracting- Offensive, dena- working group, small legislative support8.) see slides “strategy”9.) to be explained 10.) energy performance
