king’s strategic energy partners

King’s Strategic Energy Partners

KCH Strategic Energy Partners

Presentation to:

14th January 2014

Iain [email protected]

mailto:[email protected]


Questions

What’s the difference between and EPC and an ESCo? In an energy-performance contract, does the supplier have to provide the finance? We’ve been advised that ‘off-balance sheet’ transactions will no longer be allowed, and all transactions will have to be shown on the balance sheet. How do we get around this? In an energy-performance contract (EPC), does the supplier have to take over the operation and maintenance of the estate, or of the equipment supplied?



Mission: enable public-sector to undertake successful strategic estate-development projects, backed by guaranteed revenue savings

Method: lifecycle support - feasibility study, procurement, contracts, financial-modelling, funding, project-management, guarantee M&V

Experience: initiated over 2 dozen projects, capital value >£100m; ten years’ public-sector procurement

Structure: procurement framework owned by King’s; services delivered by Ecovate Group in collaboration with King’s


Principles and Methods

DEMAND SUPPLYTHEN

ROI (years)

Cost

XX

XX

XX

XX X

Strategic Approach:•Energy consumption•Energy supply•Student comfort•Backlog maintenance•Risk & resilience•Maintenance•Energy-security•Money


Holistic Approach to…

Cost

Time

PPM

Reactive maintenance

Energy

All revenue costs

Lighting Controls Heating

IT Fabric Cooling

TechnologiesThe Estate

-15%

-25%

-20%

-2%

+15%-10%

-20%

-18%

IGA 1


Process

Investment-Grade Audit

Project-Installation

Guarantee + Continuous Improvement

ProcurementFeasibility Study

6 months 6-18 months 1-20 years1-2 months1 month

Phased approach to manage changing estates:

Project 1 Guarantee 1

IGA 2 Project 2 Re-baseline

Etc.IGA 3


Case Study: University of SheffieldRequirement:•A more sustainable University / reduction in carbon footprint •Improved, long term quality, indoor climate and fitness for purpose •Reduction of operational / utility costs •Reduce corporate risk (legionella, risk of mechanical failures etc.)•Development of competency within estates team & University’s staff (“good housekeeping” etc.)

Project ResultsContract sum £3.8m

Summary of measures District heating optimisation, air-handling units, BMS, lighting, staff competency, behaviour-change

Backlog maintenance addressed £1.3m

Annual energy savings £480k

Annual reactive maintenance savings £250k p.a. (recycled)

Simple return on investment 5 years (inc. backlog)8 years (excl. backlog)


Case Study: Taunton NHSSituation:● Estate condition deteriorating due to long-term under-investment: backlog £6m● Corporate risk “significant”● Mandatory CO2 targets (34% by 2020; 80% by 2050)● Rising energy costs (£1.8m p.a.)● Carbon taxes (£108,000 p.a.)● New Surgical Wing

Project ResultsContract sum £7.2m

Number of measures 200

Backlog maintenance addressed £2.5m

Annual energy & CRC savings

£756k, rising with energy inflation43% carbon saving

Annual savings on reactive maintenance £74k p.a. (recycled)

Simple return on investment

6 years (inc. backlog)10 years (excl. backlog)

Net cash surplus 20 yrs £17m


Case Study: King’s NHSSituation:● Concerns re. patient comfort ● £4m energy consumption and rising● Backlog £10m, rising towards £25m over next 5 years● Planned building projects £90m

Project Results

Contract sum £7.9m

Immediate financial saving £3.1m (backlog)

Annual financial savings £427k - energy inflation 7%

Carbon savings 1,892 tCO2 = 9% (taking Trust to 24%)

Net cash surplus 20 yrs £7.0m

Measures including

CHP heat utilisation (improved CHP QA)BMS (Trend)Drives, pumpsHeat distributionPlate heat exchangers


Financial Illustration (borrowing)

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

-600

-400

-200

0

200

400

600

800

1,000

1,200

Yearly Cash Costs

Yearly Costs

Time (years)

Cos

t / S

avin

g V

alue

(£00

0's)

Project capital cost £3.52mFunded via 12-year on-balance sheet capital borrowing @ 5.5% interest



1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

-600

-400

-200

0

200

400

600

800

1,000

1,200

Yearly Cash Costs and Savings

Yearly Costs

Yearly Savings

Time (years)

Cos

t / S

avin

g V

alue

(£00

0's)

Energy savings: 20% of £2.2m energy bill Year 1: £400k; rising to >£1m with 6% energy inflationCumulative energy saving £11m over 15 years



1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

-600

-400

-200

0

200

400

600

800

1,000

1,200

Yearly Costs, Savings and Net Savings

Yearly CostsYearly SavingsNet Savings

Time (years)

Cos

t / S

avin

g V

alue

(£00

0's)

Once capital borrowing repaid, most of the energy saving hits the bottom line



1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

-1,000

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

Yearly Cash Costs and Savings and Cumulative Net Savings

Yearly Costs

Yearly Savings

Cumulative Net Savings

Time (years)

Cos

t / S

avin

g V

alue

(£00

0's)

Cumulative net cash saving after 15 years = £5.7m


Financial Illustration (Sheffield)

£3.8m capital project£480k annual saving, rising by 7% energy inflation

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

-5,000

-4,000

-3,000

-2,000

-1,000

0

1,000

2,000


Yearly Costs Yearly Savings

Net Savings

Time (years)

Cost

/ Sa

ving

Val

ue (£

000'

s)



£3.8m capital project£480k annual saving, rising by 7% energy inflationIncluding saving of £1.3m backlog maintenance

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

-5,000

-4,000

-3,000

-2,000

-1,000

0

1,000

2,000



Net Savings

Time (years)

Cost

/ Sa

ving

Val

ue (£

000'

s)



£3.8m capital project£480k annual saving, rising by 7% energy inflationIncluding saving of £1.3m backlog maintenance

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

-6,000

-4,000

-2,000

0

2,000

4,000

6,000

8,000

10,000

Yearly Costs and Savings and Cumulative Net Savings


Cumulative Net Savings

Time (years)

Cost

/ Sa

ving

Val

ue (£

000'

s)


Contracts and Financial Structures


General Agreement of Co-operation between Contracting Authority ("CA") and ESCo

Project- Implementation Guarantee

Multiple options may be combined:•Government grants [e.g. SALIX, HEFCE]•Capital purchase•Capital borrowing [own bank / Ecovate source]•Shared-Savings Agreement•Operating Lease [off-balance sheet]•Operation & Maintenance Agreement [off-balance sheet]•Power-Purchase Agreement [off-balance sheet]•Special-Purpose Vehicle / Joint Venture •Government incentives [e.g. RHI, FIT]


Services Offered from King’s / Ecovate


Project-Installation

Guarantee + Continuous Improvement

ProcurementFeasibility Study

StrategicTechnicalCommercialFinancialPresent to Board

Framework or OJEUSelect Preferred Bidder

based on capabilityContracts

Project-ManagementFinancial-ModellingFunding if requiredContracts

Project-Management

Monitoring & VerificationManage Continuous

Improvement


Have I Answered your Questions?

What’s the difference between and EPC and an ESCo? In an energy-performance contract, does the supplier have to provide the finance? We’ve been advised that ‘off-balance sheet’ transactions will no longer be allowed, and all transactions will have to be shown on the balance sheet. How do we get around this? In an energy-performance contract (EPC), does the supplier have to take over the operation and maintenance of the estate, or of the equipment supplied?



Iain France07854 540325

[email protected]

mailto:[email protected]

king’s strategic energy partners

Documents

energy inflation43

rising energy costs

mannual energy crc savings756k

kings services

backlog10 years

backlog8 years

estate condition

project resultscontract