1. The ESCO Retrofit Model Financing energy efficient HVAC improvements through ESCOs Stephane le Gentil - November 2017

2. Energy use in the GCC
GCC energy consumption continues to grow significantly
Due to climate conditions, a large part of the electricity is consumed by HVAC

3. The Retrofit Opportunity
60 to 70% of the end-user electricity is consumed for space cooling
Existing building stocks generally not energy efficient (recent buildings codes, lack of insulation, etc.)
Oversized or low efficiency equipment installations are frequent
Poorly installed or non existing building controls
Building maintenance deficiencies
Raising electricity costs due to reduction of subsidies

4. GCC Electricity Tariffs
Higher tariffs produce shorter paybacks and stimulate energy efficiency
Sweet spot for KSA, UAE (except Abu Dhabi) and now Oman Industrials & Kuwait Government
Kuwait
Kuwait
Gov..
Sweet spot
Oman
Indus.
Kuwait
Source:

5. “ESCO” = Energy Service Company
What is an ESCO
“ESCO” = Energy Service Company
An ESCO is a company specialized intro retrofitting existing buildings to make them more energy efficient
ESCO provides a comprehensive bundle of energy efficiency, water efficiency, operational efficiency solutions
ESCO provides turn-key responsibility including: site audits, detailed design and engineering, installation, commissioning, and measurement & verification (M&V) in accordance with international standards
ESCO assumes performance risk for project in form of a long-term performance guarantee to ensure savings materialize and sustain over time

6. Guarantee & Maintenance
ESCO Methodology
Building Audit
Retrofit Work
Guarantee & Maintenance
-Analysis of the building
-Energy measurements
-Identification of the conservation measures
-Costs & payback
-Replacement of equipment
-Re-tuning of controls
-Addition of sensors, meters & monitoring system
-Monitoring of performance
-Measurement & verification of the savings
-Maintenance of the installed equipment
1 week to 3 months
3 to 18 months
2 to 10 years

7. Two contracting models
Guaranteed Savings
Shared Savings
Loan
Lender
Building Owner
Lender
Building Owner
Repayment
Loan
Work
Work
ESCO
ESCO
Share of savings
Fee
Repayment
Using an ESCO, the Building Owners do not necessarily have to finance the project. It is financed through the savings that are generated and committed by the ESCO.

8. How does it work 1000 Investment Before ESCO
ESCO Contract Duration (e.g. 4 years)
AFTER
ESCO
1000
Electricity costs
300
700
Investor
700
Investor
300
Investor
Investor
SAVINGS
Investment
700
700
700
Year 0
Year 1
Year 2
Year 3
Year 4
Year 5

9. What can be improved Lighting replacement, control systems & LEDs
On-Site Technical Resource Management
Chiller upgrade/replacement & absorption cooling
Building
Management Systems
Zone
temperature
control
Boiler upgrades, controls
Combined Heat & Power
VSD motor control
Ventilation fans
High efficiency motors
Voltage reduction
Damper control
Plug load
management
Solar gain
minimization
Roof Insulation
Wall Insulation

10. Project Example in Dubai
157 staff accommodation buildings
Replaced 5,000 ACs, 84,000 lights and 33,000 water fixtures
Contract duration: 7 year (1 year construction + 6 year guarantee)
Investment value: AED 64 million
Energy savings for Jafza: AED 22 million/year. Simple payback < 3 years
28% savings on electricity

11. Energy retrofits in the UAE
Dubai -Etihad ESCO was created by Dubai Electricity & Water Authority (DEWA) as a “Super ESCO” to retrofit 30,000 buildings with an initial focus on government facilities -20 ESCOs are accredited by the Dubai Regulatory & Supervisory Bureau for Electricity and Water -Many projects are also being executed in the private sector (hotels, schools, clinics, etc.) Abu Dhabi -Abu Dhabi Water & Electricity Authority (ADWEA), launched a building retrofit program named Kafa’ati targeting 3,000 buildings & 5 million square meters -12 ESCOs are licensed by ADWEA to operate in Abu Dhabi

12. Conclusion
The ESCO model is an ideal way to retrofit existing buildings with the cost of the retrofit being financed through the ESCO or a third party
Perfect model to finance energy efficient space cooling improvements
ESCOs are very developed in the UAE thanks to the government programs that have been launched in Dubai and Abu Dhabi
UAE ESCOs are starting to expand their work in the GCC as energy prices are raising making retrofit interesting for buildings owners wishing to save costs
Stephane le Gentil