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Published byBertha Betty Hopkins Modified over 7 years ago
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International ESCO experiences: Contracting in Germany
TUEWAS Energy Efficiency Working Group Workshop Chongqing December 17th – 20th 2012 Dr. Wolfram Herppich
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Due to the different market structures, the European ESCO-markets are highly different
On the one side: great political emphasis on Contracting On the other side: very different market structures in the EU The recently amended and extend Energy Efficiency Directive focusses on several Instruments to promote energy efficiency, EU sees contracting as one main approach to improve energy efficiency Aim of the directive is to support the development on an energy service market Remove regulatory and non-regulatory barriers in the member states Encourage utilities and ESCOs to offer contracting products Support the public sector taking advantage of the opportunities of contracting (=overcoming emotional barriers) EU support the implementation in member stares by a variety of helpful materials, e.g. pattern contracts But: different market structures lead to different developed energy service markets Extend of market liberalization Number of Players Existing energy efficiency potentials Energy efficiency policy, in particular energy efficiency support regime Level of Energy prices
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The German contracting market in brief
Approx. 250 to 500 ESC-providers About half of the companies are very active Utilities are the main group of ESC-providers Most utilities found subsidiaries (some are listed as ESCO) Only the minority of utilities offers Energy Performance Contracting Major differences between ESCOs Number of current contracts (range from less than five contracts to several hundred per ESCO). Offerd contract period Preferred type of contracting Main customer segments (business customers, public sector, residential) Key energy usage (heating/cooling, building equipment industrial usage, compressed air, lighting)
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German energy efficiency policy leads to demand for Contracting – and places no obligation on the utilities Energy efficiency policy Information Free and general information Individual energy analysis as a consulting service Financial support German state owned development bank (KfW) is offering programs for residential, public and commercial customers to improve energy efficiency Financial support basically by direct subsidies, above all for energy efficiency consulting subsidized loans, for implementing of measures in particular Public customers: low-interest loans for public entities Regulation Energy efficiency standards Mainly building sector Energy Management Systems (commercial customers) Tax benefits in 2013 only with the introduction of an EMS Leads to demand for energy efficiency investments ESCOs are one essential player to meet demand Example: KfW Energy Efficiency Program For small and medium enterprises (> 250 employees) Investments must achieve at least 20% energy-savings compared to the average consumption of the previous 3 years, new investments must at lead be 15% better than industry average. Interest from 1% (present conditions), maximum loan EUR 25 million per project Contracting explicitly mentioned Conditions: Up to 3 repayment-free start-up years, disbursement 100%
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Financing of contracting projects is dependent on customers individual situation
Internal financing Most German utilities that offering Contracting models traditionally rely on cash flow financing The logic of this type of financing can be compared with the BCG portfolio: cash flow is from old, well-run businesses to invest in new, future-oriented businesses But: this type of financing is more expensive than a full debt financing, especially if the customer has access to low interest-loans Because many customers often can get subsidized low-interest loans, project financing today considered these individual benefits, and proceeds to a mixed financing Poor dogs Cash cow ? Star Market share Market growth BCG-Portfolio External financing Bank loan (including subsidized interests like KfW-loans) Third Party Financing
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Energy Performance Contracting is not very common at German utilities, because of …
many providers, especially utilities, are not willing to take the risks associated with performance contracting projects These are Definition of baseline of energy consumption and energy costs Low impact on active customer behavior that influences the energy consumption Change of use of buildings by customer Change in the energy consumption based on amount and structure (e.g. increase temperature, longer working hours) consideration of inflation and not foreseeable events Transferring the technical and economic facts in an unequivocal agreement Definition of maintenance measures But German policy sees performance contracting an important tool for achieving the energy efficiency goals Therefore, many pilot projects promoted and developed guidance for other customers Nevertheless, many utilities focus on the energy supply contracting
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Utility as an ESCo – a perfect match!
Utilities Engineers Hardware supplier Operating companies Long term customer orientation ? ? ? Existing customer relationships ? ? ? Planning and engineering expertise Neutrality in technology choice not applicable Financing of Investment / Access to capital ? Maintenance and operating ? Comprehensive customer oriented solution inclusive energy supply non -liberalized market non -liberalized market non -liberalized market risk tolerance ? ?
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One Example out of the RWE-Group that shows optional future development strategies
From Energy contracting to facility management Example: Ford Industrial Supplier Park Offered by “famis services”, a small and flexible service-company within the RWE-Group Contractual services: management and coordination of the entire property for the customer Main data: Approximately 100,000 m² of hall space currently 10 suppliers Facility Management is available around the clock Activities: technical management repair maintenance Coordination of all trades 24 h monitoring Reception and reception service Cleaning Services Winter Service settlement of charges Integrated Facility Management for the following customers: Johnson Controls Schwalbach GmbH Benteler Automobiltechnik GmbH Tenneco Automotive Deutschland GmbH LMS Logistik Magazin Saarlouis GmbH SAS Autosystemtechnik Saarlouis GmbH & Co. KG LEAR Corporation GmbH STADCO Saarlouis Ltd. & Co. KG iSL Automotive GmbH Grupo Antolin Logistik Deutschland GmbH Losito GmbH
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Thank you very much for your attention and feel free for Questions!
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