BOOSTING LOW CARBON INNOVATIVE BUILDING REHABILITATION IN EUROPEAN

REGIONS

Seville, November 10th, 2017

ESCOs: key partners to achieve an energy transition

(Spanish ESCO market)

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Growth of world economy requires an increase of energy consumption. In the next two decades this consumption is

foreseen to increase 30%

Energy Efficiency is the main driving force for decoupling economic growth and energy consumption

� Between 1995 and 2015 the global GDP growth was 73% and

the energy consumption 50%. This consumption would have

been 14% higher without energy efficiency measurements

implemented

� Energy Efficiency investments in 2015 increased in $221.000

millions (6% more than in 2014), 2/3 higher than in power

generation (IEA 2016)

� Energy Services Market has become a reality of $24.000

millions of business volume world wide

1. ESCO Model

2. ESCO Market in Spain

3. Anese Contribution

4. ESCO Best Practices

1. ESCO Model

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Energy ServiceEuropean Directive of Energy Efficiency 2012/27/UE. Art. 2 Definitions

• the physical benefit, utility or good derived from the combination of an energy with an energy-efficient technology or with action,

• which may include the operations, maintenance and control necessary to deliver the service,

• which is delivered on the basis of a contract and

• which, under normal conditions, has been shown to achieve a verifiable and measurable or estimable improvement in energy efficiency or primary energy savings

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� Companies providing energy efficiency improvement services ......

� facing some risk in doing so,

� and basing the payment of their services provided in obtaining energy savings

What are the Energy Service Companies, ESCOs ?

Definition of ESE or ESCO, according to Directive 2006/32 / EC and article 19 of RD 6/2010:

A natural or legal person who provides energy services or improves energy efficiency in a user's premises and faces some degree of economic risk in doing so.The payment for the services provided will be based (either wholly or in part) on the achievement of improvements in energy efficiency and compliance with other agreed performance requirements.

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ESCO Model: energy saving guarantees

Costs

and

savings[

€]

a0 a1 an an+1/ � / Years

ESCO

Contract

INICIAL

COST FOR

CUSTOMER

Final

Cost for

Customer

INVESTMENTS

Energy

Costs Costes

energéticosEnergy

Costs

Investment

payment

ESCO fee

Savings for

Customer

Energy

Costs

Savings

for Customer

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ESCOs: Value proposition

Energy

Services

Savings

Guarantees

TecnologyFinancing

• The ESCO

identifies,

designs and

implements the

Energy

Efficiency

Measurements

• The ESCO guarantees the energy

savings of the project

•The ESCO

provides the

financing of the

investment

PMO Skills Financing Skills

Technical Skills

Legal Skills

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FIRST ADDED VALUE: ESCOs use mature technologiesthat provide energy efficiency

Condensing boilers and micro-cogeneration

Heat-pumps and chillers with heat-recovering

Photovoltaic and thermal solar systems

Efficient electric motorsVariable Speed Drives Solar films

in windows

Roof and facade isolation

DaylightingLow-consumption, T8 and LED lights

Presence detecion and efficient lighting control systems in parking lots

Charging stations for PHEV & EV

Building Energy Management Systems (BEMS)

Outdoor LED lighting

Energy Savings

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SECOND ADDED VALUE: ESCOs incorporate financingto the project, based on savings

Client

ESCO

Project financing

out of balanceTechnologies

and

Professional

ServicesManagement fee

12

3

Guaranteed savings

4

The client doesn´t use his

financing resources

Economic Savings

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THIRD ADDED VALUE: The technical and financial proposal is presented on a contract where the savings are guaranteed

CONTRATO DE AHORROS GARANTIZADOS

CONTRATO DE AHORROS COMPARTIDOS

1. Energy Performance Contract (EPC): savings in kWh

2. Energy Supply Contract (ESC): savings in €/kWh supplied

2. ESCO Market in Spain

The ESCO market is a fact with a world wide revenue of $24,000 millions

link Observatorio

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Drive the energy efficiency goals through the ESCO model guarantees the energy savings and the employment during 8 years

ESCO achievements in Spanish market

Energy Savings

Emissions Savings

Economic Savings

Types of contracts (No. ESCOs)Implemented technologies

Average amount of an ESCO contract

Average duration of an ESCO contract: 7,6 years

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ESCOs provide 20,000 direct employment with high qualification and contribute with a 0.11% to the GDP

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Size and location of the ESCOs

85% of ESCOs are SMEs, 21% have a revenue over 10 Mill€Most of them are in Madrid, 29% operate across Spain. 34,5% work abroad and most of the, el 78%, are SMEs

Revenue volume(Mill. €)

ESCO size(No. workers)

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Market: Industries

There is no clear specialization by industry. Public issues influence seriously on the development of ESCO projects

Street Lighting

44%

Industrial65%

272

278

159

Ppto. Medio (Mill €) 2014 2015 2016

Street Lighting 3,4 1,5 1,3

HVAC 1,6 0,5 1

Others 1,8 2,7 1,4

Public tenders of ESCO model

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Most of ESCOs use the EPC contract in the private sector and a specific one (5Ps) in the public sector. Half of the uses IMPVP for M&V protocol

M&V

Contracts

Average time to sign a contract (months)

Average duration of an ESCO

contract: 7,6 years

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Size and revenue level, technology and Social Corporate Responsibility are key to increase the success rate

Success rate

Key factors Success rate

Big size 31,17%

Revenues > 10 Mill€ 37,17%

Technology: industrial applic. 40,60%

SCR report 34,53%

1,355 Mill €

0,236 Mill €0,349 Mill €

Average amount of an ESCO contract

Success rate

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Opportunities for customers

1º Savings in energy bills

2º Renew installations

3ºTrust in energy efficiency

technologies

4ºAwareness on sustainability and

environmental issues

5º Improve industrial safety

Opportunities for ESCOs

1º Customers loyalty

2ºImprove margins taking advantage

of the technology knowledge

3º

Access to public administration support

through specific programs promoting

ESCO market

4º Trust transmitted by ESCO Associations

5º Potential international markets

To stablish a link between customer and ESCO is basic to create and develop the ESCO market

Opportunities

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Barriers

1º Distrust on the ESCO model (ESCO credibility)

2º Lack of financing

3º Contracts too complicated

4º Outsourcing of energy management is not perceived as a benefit

5º Lack of knowledge of the ESCO model

6º Lack of information of financial an technical details of EPC model

7º Lack of governmental support

8º Lack of fiscal aids

9º Lack of best practices

10º Lack of benchmark companies

There is a change in the ESCO market: few years ago, financing was the first barrier, nowadays confidence is the first one

Barriers

4. Anese Contribution

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Key areas of ANESE

ESCO

Energy

Saving

Contracts

TecnologyFinancing

CO2

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ESCO certified classification

IPMVP®

LEED

Measurement

and

verification

protocol

Energy

Manager

Sustainable

buildings

ESCO

certification

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ANESE has established a classification defined in 2014 and lunched in February 2015 that:

� It is addressed to ALL ESCOs that wish to be classified

� Provides clarity in the market

� Distinguishes specialized and professional companies

� Indicates the business horizon

Certified Classification of ESCOs: trust is the key point to improve the ESCO model

Specialities:

• Lighting

• Engines

• HVAC Systems

• Regulation and control

• Isolation

• Industrial applications

16 certified companies

22 in-progress

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Energy services integrate technology, financing and professional services for a wide period of time, this incorporates a complexity in the common public tenders

Lawyers

ESCOs

Politicians

Secretaries of Secretaries of the

municipality

¿Others?

PRECEDURE

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GUIDE TO DEFINE THE TECHNICAL CLAUSES IN A ENERGY PERFORMANCE CONTRACT TENDER

Based in our experience, we have written a set of clauses to improve the public tenders, covering:

8. Billing, price revision and penalties

9. Measurement and Verification protocol

10. Certification of the ESCO

11. Ownership of the equipment and systems

12. Exclusions

13. Cancellation of the service. Resolution of the contract

14. Settlement

1. Type of contract

2. Object of the contract

3. Benefits and SLAs

4. Savings guarantee

5. Time of execution

6. Preventive and corrective maintenance

7. Financing

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GT Tecnología• ESCO model • Methodology• Contracts• Energy audits• Financing and insurance• Measurement and verification• ESCO classification

• 22 technologies• Description• Energy saving• Regulation• Advice of use• Sectors of application

• Best practices

Technology guide (download www.anese.es)

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Financing Program

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ANESE Financing Program

Specialized Private Funds

• SI Capital• Suma Capital• SUSI

Projects Clients

ESCOs members of ANESEESCOs members of ANESE

• Classify the projects • Aggregate the projects in

portfolios of so that they meet the requirements of each investment fund

4. ESCO Projects:

Best Practices

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Residential242 apartments building

ACCOUNTING AND ENEGY MANAGEMENT

• Energy contract optimization

• Energy supply

• Energy management system 24/365

service

FUEL SAVING

• High performance boilers

• Thermal balancing of the installation

• Individual consumption control

ELECTRICITY SAVING

• Inside/outside lighting

MAINTENANCE AND DAMAGE SAVING

• Preventive maintenance

• Total guarantee

• Tele-management

ECONOMIC SAVINGS

ENERGY SAVINGS

Savings

Future cost

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Eficiencia energética en comunidades de vecinos: PresupuestoResidential242 apartments building

Interes rate

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Residential242 apartments building

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Residential242 apartments building

Guaranteed Savings

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Energy savings measures

1. Replacement of Blowdown Heat Recovery Equipment

2. Energy management system

3. Replacement pneumatic by electrical consumption

4. Control and LED lighting

5. Improvement of steam generation system

6. Improvement of air compression generation system

Investment: 745.000 €

Results per year

Electricity savings: 527 MWh

Natural gas savings: 1.216 MWh PCS

Emissions reductions: 447 Tn CO2

Economic savings: 240.000 €

Simple payback: 3,1 years

IndustryMilk factory

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TertiaryShopping mall

Energy savings measures

1. New Roof-Top system to heat/air

conditioning

2. New high-efficiency water coolers

3. Energy management system

4. LED lighting

Results per year

Electricity savings: 766 MWh

Emissions reductions: 412 Tn CO2

Contract period: 10 years

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ESCO projects in municipalities

Municipality TechnologyEnergy

Savings

Economic

Savings

CO2

savings

Nules Public Lighting 66,10% -297 Tn

CO2/año

Mazagón Public Lighting 82,47% 76,74% -

Altea Public Lighting 51,70% 27%461,25 Tn

CO2/año

Residencia

Municipal en

Ciudad Real

HVAC - 69,45% -

Hospital La Paz Global - 33% -

Polideportivo en

Alcañiz (Teruel)HVAC

44.752 kWh

(10,22 %)

2.473 €

(6,72 %)

29,04

(10,22 %)

Fuente: ANESE

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ESCO projects in public administration

Fuente: ANESE

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PUBLIC TENDERS: Classification by technologies

2014 2015

Publiclighting

No. Tenders 122 (45%)Publiclighting

No. Tenders 140 (50%)

Average Budget 3.410.650 €AverageBudget 1.488.983 €

HVACNo. Tenders 46 (17%)

HVACNo. Tenders 67 (24%)

Average Budget 1.549.186 €AverageBudget 532.080 €

Others(Solutions

and services for

improving Energy

Efficiency)

No. Tenders 104 (38%)

Others(Solutions

and services for improving

Energy Efficiency)

No. Tenders 70 (25%)

Average Budget1.790.187 €

AverageBudget 2.662.233 €

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References• 10 Public Street Lighting contracts with more than 10,000 points. (10-12 years)• 3 Hotels• 2 Shopping Malls• 2 Private Office Buildings• 8 Residential Buildings

The ESCO Company

� Energy Services Company (ESCO) based in Seville� It covers the complete cycle of energy services: design, supply, installation, maintenance, guarantee and financing

� 100% private property, 100% Andalusian capital� Fully independent of energy marketers, equipment manufacturers and distributors or comprehensive maintenance companies

� Betting on technology and innovative own solutions�Model based on a network of collaborators for business development and local employment

�Collaborating Entity of “Andalucía es más” program

www.cactus2e.com info@cactus2e.com

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•The collaborating entity is assuming new duties and serious responsibilities with the customer and the Agency

• Some difficulties for EPC model: only the expenses of the first year of contract are eligible for grants

• Potential cash-flow problem: delay between the advance payment of the grant (collaborating entity) and the actual payment by the Agency

Collaborating Entity

� The goal: facilitate de process for incentive application of citizens and companies

� Good example of public-private collaboration. The private company become a important piece for the development and success of the program

� It simplifies dramatically the process to the end user

� It gives dynamism to the market and bring new opportunities to the collaborating entities

www.cactus2e.com info@cactus2e.com

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Add an ESCO to your team as expert in energy management

www.anese.esCalle Goya, 47 -791 737 38 38anese@anese.es

link Observatorio

ESCO achievements in Spanish market

Energy Savings

Emissions Savings

Economic Savings

Francisco Cácereswww.cactus2e.cominfo@cactus2e.com