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ENERGY PERFORMANCE CONTRACTING PLUS (EPC+)SME Partnerships for Innovative Energy Services

through Standardisation

Training Module

WP3 3.2

Energy Performance Contracting Plus

ENERGY PERFORMANCE CONTRACTING PLUS (EPC+)SME Partnerships for Innovative Energy Services

through Standardisation

Training Module

WP3 3.2

1Energy Performance Contracting Plus

Training begins March 13th 2016

Ends: 30th September 2016

2

Module I: EPC concepts and EPC+ business model

Module II: Finance and Economics

Contents of the training



Module III: Project Selection and Tendering Procedures

Module IV: Measurement and verification of savings in EPC projects

EPC concepts and EPC+ business model

Finance and Economics

Contents of the training

Energy Performance Contracting Plus 3

Finance and Economics

Project Selection and Tendering Procedures

Measurement and verification of savings in EPC projects

CONTENTS OF THIS MODULE:

• Training Needs

• Results of Survey of Training Needs WP3.1

• Basic concept of EPC+

Module I EPC+ CONCEPTS AND

BUSINESS MODELS


• Basic concept of EPC+

• What is EPC

• Market niche for EPC+

• Definition of a SPIN

• Types of SPINs

• Toolboxes, Model Contracts

• Process of Implementation

• EPC Code of Conduct

EPC+ CONCEPTS AND

BUSINESS MODELS


Training Needs Analysis Report (W3.1) concluded that:

Topics that require most training:

EPC Training Needs Survey


• Risk

• M&V

• Contracting & Public Sector Contracts


Training Needs Analysis Report (W3.1) concluded that:


EPC Training Needs Survey


Contracting & Public Sector Contracts


What is EPC?

EPC at a glance


What is EPC?


The Gap in the Market for EPC +p

roje

ctsi

ze

standard

inst

all

ati

on

option EPC+: new business model

pro

ject

EPC +

pay as you

save

pu

re i

nst

all

ati

on

ESC


The Gap in the Market for EPC +

standard EPC

EPC+ services target an

uncovered niche at the

market. Broadly speaking,

the competitor’s range

starts at pure installation of

service/guarantee

level EE

starts at pure installation of

equipment without

performance measurement

and ends with standard EPC.

In between, there is a lack

of available services that

reduce the performance risk

of the potential customers

with affordable transaction

costs.


“SME Partnerships for Innovative Energy Services (SPINs)”

Definition of a SPIN

SPINs are organized clusters of companies, mainly SME’s, which

jointly supply energy services and have a structured long

collaboration with commonly agreed objectives.


“SME Partnerships for Innovative Energy Services (SPINs)”

Definition of a SPIN

SPINs are organized clusters of companies, mainly SME’s, which

jointly supply energy services and have a structured long-term

collaboration with commonly agreed objectives.


• The aim of the project is to establish a

within the project duration of the project,

SPIN per partner country.

• Each SPIN should comprise of at least

SPIN Partnerships

establishment process is considered finalized

of a SPIN partnership contract.

• These organizational SPIN-model partnership

were specifically developed by the EPC+

on the EPC+ webpage. Two types of framework

at hand. One for a Simple SPIN and the other

Spin.Energy Performance Contracting Plus

a minimum of 12 SPINs

project, with at least one

least 3 members. The

SPIN Partnerships

finalized with the signing

partnership model contracts

EPC+ team and are available

framework agreements are

other for a Complicated


Simple SPIN

A Simple SPIN organisation is appropriate

circumstances:

• A market for EPC services or a market uptake

expected in the short term (6 months to one

• The principal (with its associates) should already

share or be able to acquire a market in the shortshare or be able to acquire a market in the short

• The associates should accept the central role

• The associates should not have the ambition

become competitors of the principal.

The reason for the appropriateness of a Simple

market situation is that without business (in

obvious that associates will not be interested to

or that they will lose their interest after some time

under the following

uptake of the EPC concept

one year).

already have a market

short term.

10

short term.

role of the principal.

ambition and capabilities to

Simple SPIN in a mature

the short term) it is

to join a Simple SPIN

time.

Complex SPIN

A Complex SPIN organisation is appropriate

circumstances:

• Pre-market situation where the EPC concept

used.

• An expectation that the EPC-concept will be taken

in the medium term (2 to 3 years).in the medium term (2 to 3 years).

• The expectation that the Complex SPIN can have

market growth (via lobbying and/or marketing)

competitive position of the SPIN partners in this

The reason for the appropriateness of a Complex

situation is that members in a Complex SPIN are

and experiment such a partnership with the

becoming a principal or associate in a Simple SPIN

in a Complicated SPIN once the market matures enough

under the following

concept is not well known or

taken up by the market

11

have an impact on the

marketing) and/or on the future

this market.

Complex SPIN in a pre-market

are willing to participate

ultimate objective of

SPIN or a leading partner

enough.

Complicated SPIN

A Complicated SPIN organisation is appropriate

circumstances:

• A market for EPC services or uptake of the EPC

short term (6 months to one year).

• Competitors (other SME ESCOs and/or large ESCOs)

market.

• Partners in the Complicated SPIN see a need• Partners in the Complicated SPIN see a need

competitive position by working together.

• Partners are complementary in terms of knowledge,

market focus.

• Partners in the Complicated SPIN are willing to

benefits.

The reason for the appropriateness of a Complicated

situation where other SME ESCOs and/or large ESCOs

due to the strengthening of the competitive position

through their partnership.

Complicated SPIN

appropriate under the following

concept expected in the

ESCOs) are present in the

need to strengthen their

12

need to strengthen their

knowledge, resources and/or

to share costs, risks and

Complicated SPIN in a market

ESCOs are present is mainly

position of the SPIN members

Preconditions for a wellhttp://epcplus.org/upload/ue/wp2/D2_1_Analysis_Report_150715_FINAL.pdf

Market approach

– SPIN needs to develop a clear strategy

– Commitment by all SPIN members is required

– Selection of suitable customer segments => cross– Selection of suitable customer segments => cross

– partners need to be willing to resume tasks and duties on

a long-term basis. Otherwise it is sub-contracting

Preconditions for a well-functioning SPINhttp://epcplus.org/upload/ue/wp2/D2_1_Analysis_Report_150715_FINAL.pdf

Commitment by all SPIN members is required

Selection of suitable customer segments => cross-selling

13

Selection of suitable customer segments => cross-selling

partners need to be willing to resume tasks and duties on

contracting.

Preconditions for a wellhttp://epcplus.org/upload/ue/wp2/D2_1_Analysis_Report_150715_FINAL.pdf

• Internal organization and management

– Definition of roles, responsibilities and duties

• who is the coordinator

• who is the face to the customer

• etc. • etc.

– Continuous exchange of information

• regular workshops

• fixed dates for web-based communication on a

weekly/monthly basis

– Clear and transparent contract

• no doubts on rules, duties, etc. should remain

• Everything should be clear and explicit

Preconditions for a well-functioning SPINhttp://epcplus.org/upload/ue/wp2/D2_1_Analysis_Report_150715_FINAL.pdf

Internal organization and management

Definition of roles, responsibilities and duties

who is the face to the customer

14

Continuous exchange of information

based communication on a

Clear and transparent contract

no doubts on rules, duties, etc. should remain

Everything should be clear and explicit

Business Plan for EPC+ Services

EPC+ Business Plan

An EPC+ Business Plan will provide SPINs with a information relating to the

EPC+ process from the product idea up to project realization. The Business Plan

will cover such areas as:

• Product Idea

• Targeted Markets & Clients Needs

• Providers of the Service

• Competitors, Threats & Risk

• Realisation Schedule



An EPC+ Business Plan will provide SPINs with a information relating to the

EPC+ process from the product idea up to project realization. The Business Plan

Energy Performance Contracting PlusSlide N


EPC+ Business Plan – Product Idea

The Business plan will provide an overview of the EPC+ product idea while also

outlining the main barriers associated with implementation of EPC in SME’s.

The Business Plan will also look closely at the following areas:

• Business Model Canvas, Principal of One

Contractual Relationships of EPC+ Services

• Performance Oriented Remuneration

• The Technical Offer: Establishing which EPC measures are to be

implemented

• The Financial Offer: Financing, Pricing and Cash Flows of EPC+ Services



Product Idea

The Business plan will provide an overview of the EPC+ product idea while also

outlining the main barriers associated with implementation of EPC in SME’s.

The Business Plan will also look closely at the following areas:

Business Model Canvas, Principal of One-Face-To-The-Customer &

Contractual Relationships of EPC+ Services

The Technical Offer: Establishing which EPC measures are to be

The Financial Offer: Financing, Pricing and Cash Flows of EPC+ Services



EPC+ Business Plan – Target Markets & Clients Needs

Although the markets targeted by EPC+ services are spread across several types

of clients, the needs of each separate market are similar. The main areas the

Business Plan will consider are the following:

• Small & Medium Sized Enterprises (SME)

• Public Sector

• Residential Sector

• Industry & Other Large Companies



Target Markets & Clients Needs

Although the markets targeted by EPC+ services are spread across several types

of clients, the needs of each separate market are similar. The main areas the

Business Plan will consider are the following:

Small & Medium Sized Enterprises (SME)



EPC+ Business Plan – Providers of the Service

The EPC+ Business Plan will also provide the requirements expected of SPINs

and outlining how a SPIN should be set up.

EPC+ Business Plan – Competitors, Threats & RisksEPC+ Business Plan – Competitors, Threats & Risks

EPC+ targets projects in niche markets, due to this the Business Plan will use

detailed analysis techniques to high the issues and outline what risk mitigation

may be required. An example of the type of analysis that is used is SWOT

analysis.



Providers of the Service

The EPC+ Business Plan will also provide the requirements expected of SPINs

Competitors, Threats & RisksCompetitors, Threats & Risks

EPC+ targets projects in niche markets, due to this the Business Plan will use

detailed analysis techniques to high the issues and outline what risk mitigation

may be required. An example of the type of analysis that is used is SWOT



EPC+ Business Plan – Realisation

Setting up an EPC+ service consumes resources, especially when collaborating

as a SPIN. The Business Plan developed will outline the how this can be

developed by through the implementation of numerous projects.

A detailed document covering the Business Plan can be found in the link below:A detailed document covering the Business Plan can be found in the link below:

http://ireland.epcplus.org/energy-service-packages/#



Schedule

Setting up an EPC+ service consumes resources, especially when collaborating

as a SPIN. The Business Plan developed will outline the how this can be

developed by through the implementation of numerous projects.

A detailed document covering the Business Plan can be found in the link below:A detailed document covering the Business Plan can be found in the link below:

packages/#


EPC+ Financial Toolbox

Financial Modules for All Types of EPC+ Contracts

A financial toolbox will be created and provide a framework of the financial

options available for the SPINs. It will look at the following financial options:

• Financing by Client• Financing by Client

• Financing by SPIN

– Loan/Credit on Accounts of the SPIN

– Sale of Claims

– Revolving Funds

– Crowd Investment

– National & Regional Subsidies

– Lease Finance, Special-Purpose-Vehicle-Solutions

A detailed document covering the Business Plan can be found in the link below:

http://ireland.epcplus.org/energy-service-packages/#


Financial Modules for All Types of EPC+ Contracts

A financial toolbox will be created and provide a framework of the financial

options available for the SPINs. It will look at the following financial options:

Solutions

A detailed document covering the Business Plan can be found in the link below:


A technical toolbox will be created and

measures with the following content:

• Technical description of the energy efficiency measure (design parameters

and calculation methods)

• A process flow for the implementation of the measure

Technical toolbox

• A process flow for the implementation of the measure

• The measurement & verification options.

This technical “toolbox” is a technical aid

simplified and standardized approach

monitoring and verification steps of the

toolbox will make reference to tools (both

available on the internet free of charge

national, EU and/or international projects)

by the project partners.

and compiled for a specific number of

Technical description of the energy efficiency measure (design parameters

A process flow for the implementation of the measure

Technical toolbox - 1

21

A process flow for the implementation of the measure

The measurement & verification options.

aid for the SPINs. It consists of a holistic,

approach for the design, implementation and

the EPC+ services. Where available, the

(both technical and financial) that are

charge (i.e. from technology suppliers,

projects). Some tools will also be developed

Technical toolbox

The choice of technical measures is crucial for the whole value

proposition, as it has to be customized to the specific needs of

the target group(s) of the SPIN. Moreover, to fit into the EPC+

service scheme the measures have to be:

• Standardisable, to minimize

preparation and supervision

• Approvable, to measure the performance with an acceptable

effort

• Suitable for the increase of demand side energy efficiency in

a facility


The choice of technical measures is crucial for the whole value

proposition, as it has to be customized to the specific needs of

the target group(s) of the SPIN. Moreover, to fit into the EPC+

service scheme the measures have to be:

22

minimize transaction costs of design,

Approvable, to measure the performance with an acceptable

Suitable for the increase of demand side energy efficiency in

Technical toolbox

Energy efficiency measures

1. Indoor lights: LED lights + control

system

2. Hydraulic adjustment of heating

system

3. Modernization of pumps3. Modernization of pumps

4. Modernization of electrical motors

5. Energy efficient ventilation and/or

cooling HVAC control systems

6. Programmers of BMS-systems of

different suppliers

7. Renovation/replacement of heating

boilers

8. Energy-efficient windows

9. Industrial boiler blow-down heat

recovery


Renewable energies

(in conjunction with an energy

efficiency measure)

1. Solar water heaters

2. Biomass heating systems

3. Micro CHP

23

3. Micro CHP

4. PV-panels

5. Small wind turbines

6. Heat pumps

Contents of Toolbox

1. General description and explanation how

Toolbox

2. Technical Description

3. Calculation Method


3. Calculation Method

4. Expected life-span of the measure and resulting

replacement-costs (if any)

5. Options on measurement & verification in order to

evaluate the performance in relation to the given

performance guarantee

Contents of Toolbox -4

General description and explanation how-to-use


span of the measure and resulting

Options on measurement & verification in order to

evaluate the performance in relation to the given

The model contract will be constructed

achieve a standardized procedure

between the client and the SPIN. This

then be adapted and modified quite easily,

requirements of the clients. In the contract,

in the several phases will be described

Modular Model Contracts

in the several phases will be described

pricing, indexing, causalities, etc.

The modules of this contract will be:

• Implementation phase

• Measurement and verification: responsibilities of the signatories

• Pricing + performance-oriented remuneration

• General terms and conditions

constructed in a modular way, in order to

in the stipulation of the contract

This standardized, modular contract may

easily, depending on the case-specific

contract, the responsibilities and duties

described as well as the regulations for

Modular Model Contracts

25

described as well as the regulations for

Measurement and verification: responsibilities of the signatories

oriented remuneration

Process of implementation


Process of implementation


European EPC Code of Conduct

The European Code of Conduct for Energy Performance Contracting

(EPC Code of Conduct):

� A voluntary commitment.

� Not legally binding.

� Launched by the Transparense project in 2014.

� Endorsed by:

� European Association of Energy Service Companies (eu.ESCO)

� European Federation of Intelligent Energy Efficiency Services (EFIEES)


� European Federation of Intelligent Energy Efficiency Services (EFIEES)

� More than 160 signatories across Europe, including 12 national associations of

EPC providers

The main role of the EPC Code of Conduct is to bring confidence to the EPC market

in the EU taking into account its variety across the member states.

Compliance with the Code of Conduct serves as a minimum guarantee of the

quality of EPC projects implemented.

www.transparense.eu/

European EPC Code of Conduct

The European Code of Conduct for Energy Performance Contracting

Launched by the Transparense project in 2014.

European Association of Energy Service Companies (eu.ESCO)

European Federation of Intelligent Energy Efficiency Services (EFIEES)

Energy Performance Contracting Plus Slide N° 27

European Federation of Intelligent Energy Efficiency Services (EFIEES)

More than 160 signatories across Europe, including 12 national associations of

The main role of the EPC Code of Conduct is to bring confidence to the EPC market

in the EU taking into account its variety across the member states.

Compliance with the Code of Conduct serves as a minimum guarantee of the



• Finance

– Options– Options

– Current situation

• Economics

– Calculation of economics

– Effect of Sharing Savings


Slide N° 28

Finance Options for EPC+

1. EPC With Client Finance


Finance Options for EPC+

1. EPC With Client Finance


Finance Options

2. EPC with SPIN Finance


Finance Options

2. EPC with SPIN Finance


Financing models most commonly

applied for EPC in the

� Initially, EPC projects were mostly financed by the customer

acquiring credit from a bank (third party financing

� Later, the situation change gradually as the EPC market developed

and the bank sector became accustomed to the EPC schemes:

� Credit of the customer became rare.� Credit of the customer became rare.

� More and more ESCOs were taking credit from a bank

(third party financing - credit of the ESCO).

� For a few small projects ESCOs provided financing from their own equity

(ESCO financing).

� In the last 6-7 years, the sale of claims by ESCO to a bank has become the most

used method of third party financing.


Financing models most commonly

applied for EPC in the Czech Republic

Initially, EPC projects were mostly financed by the customer

acquiring credit from a bank (third party financing – credit of the customer)

Later, the situation change gradually as the EPC market developed

and the bank sector became accustomed to the EPC schemes:

Slide N° 31

More and more ESCOs were taking credit from a bank

credit of the ESCO).

For a few small projects ESCOs provided financing from their own equity

In the last 6-7 years, the sale of claims by ESCO to a bank has become the most

Source of information: Transparense


Based on the NPV method, projects may be summarized as follows:

• If the SPIN’s cost of an EPC project shall be

savings, the net present value of total project life cycle cost

subsidies)must not exceed the net present value of future savings

Economics in EPC projects


must not exceed the net present value of future savings

cost) accumulated during contract duration.

• If the net present value (NPV) of total project life cycle cost (minus

subsidies) is higher than the net present value of future savings

additional cost) accumulated EPC can be paid only in part from future savings.

, the major economic constraints for EPC

projects may be summarized as follows:

If the SPIN’s cost of an EPC project shall be paid completely from future

savings, the net present value of total project life cycle cost (minus

must not exceed the net present value of future savings (minus additional

Economics in EPC projects


must not exceed the net present value of future savings (minus additional accumulated during contract duration.

net present value (NPV) of total project life cycle cost (minus

is higher than the net present value of future savings (minus additional cost) accumulated during contract duration, the SPIN’s cost of an

from future savings.

Calculation of the economics of EPC projects

A demonstration tool

(Excel-Sheet) for calculating

economics of projects

Courtesy of

Total investment cost Equipment cost2,000,000.00

Equipment replacement costYear of replacement cost 0.00

Yearly energy savings 2,600,000.00 kWhPrice of energy 200.00 Euro/MWh

Financing %Own 25.00Subsidy 25.00Loan 50.00Total 100.00

Other cost Euros/yearMaintenance cost 48,000Maintenance cost 48,000Insurance cost 2,379Personnel cost 0Other cost 6,500Total 56,879

Loaninterest, % 8.0%

Duration of loan (maximum 15 years) 15Value of Loan 0.0%

Taxation 10%

Discount rate, % 8.00Depreciation (years) 10.00Asset depreciation per year,% 21%

Calculation of the economics of EPC projects

Equipment cost1,500,000.00

0.00

kWhEuro/MWh

Euros500,000.00500,000.00

1,000,000.002,000,000.00 -3,000,000

-2,000,000-1,000,000

01,000,0002,000,0003,000,0004,000,0005,000,0006,000,000

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

Cash Flows (€)

Slide N° 33

Cumulative Present Value, € 1,251,087Cumulative Cash Flow € (after taxes) 4,808,979IRR 15.4%

-2,500,000

-2,000,000

-1,500,000

-1,000,000

-500,000

0

500,000

1,000,000

1,500,000

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21

Cumulative Present Values (€)

Module III: Project Selection and Tendering Procedures


• Legal Framework ‒ European Directives

‒ National Rules

• Project Selection

– Tendering Option EPC vs Traditional

• Tendering Procedures

– Public vs Private

– Terminology

– Tendering Process

– Evaluation methods

– Templates, Documents

– Role of Facilitator

Project Selection and Tendering Procedures

Slide N° 34

Legal framework at EU level

EU Directives promoting EPC for public buildings

� Directive 2012/27/EC of the European parliament and of the Council of 25 October 2012 on

efficiency, (Energy Efficiency Directive; EED)

� The EED defines energy performance contracting as: “contractual arrangement between the

beneficiary and the provider of an energy efficiency improvement measure, verified and

monitored during the whole term of the contract, where investments (work, supply or service) in

that measure are paid for in relation to a contractually agreed level of energy efficiency that measure are paid for in relation to a contractually agreed level of energy efficiency

improvement or other agreed energy performance criterion, such as financial savings”

• Directive 2010/31/EU of the European Parliament and of the Council of 19 May 2010 on the

performance of buildings (Energy Performance of Building Directive; EPBD)

� Member states shall encourage public authorities to take into account the leading role which they

should play in the field of energy performance in buildings.

• Directives 2009/72/EC and 2009/72/EC of the European Parliament and of the Council of 13 July 2009

concerning common rules for the internal market

� Member states shall strongly recommend that electricity and gas undertakings optimize the use of

electricity or gas, for example by providing energy management services.


EU Directives promoting EPC for public buildings

Directive 2012/27/EC of the European parliament and of the Council of 25 October 2012 on energy

The EED defines energy performance contracting as: “contractual arrangement between the

beneficiary and the provider of an energy efficiency improvement measure, verified and

monitored during the whole term of the contract, where investments (work, supply or service) in

that measure are paid for in relation to a contractually agreed level of energy efficiency that measure are paid for in relation to a contractually agreed level of energy efficiency

improvement or other agreed energy performance criterion, such as financial savings”

Directive 2010/31/EU of the European Parliament and of the Council of 19 May 2010 on the energy

(Energy Performance of Building Directive; EPBD)

Member states shall encourage public authorities to take into account the leading role which they

should play in the field of energy performance in buildings.

Directives 2009/72/EC and 2009/72/EC of the European Parliament and of the Council of 13 July 2009

common rules for the internal market in electricity and gas

Member states shall strongly recommend that electricity and gas undertakings optimize the use of

electricity or gas, for example by providing energy management services.


EU Directive on public procurement

Directive 2004/18/EC of the European Parliament and of the Council of

31 March 2004 on the coordination of procedures for the award of

public works contracts, public supply contracts and public service

contracts, which is still implemented in national legislation of EU contracts, which is still implemented in national legislation of EU

Member States was replaced by:

Directive 2014/24/EU of the European Parliament and of

the Council of 26 February 2014 on public procureme

Directive 2014/24/EU is currently on its way of being implemented in

national legislation of EU Member States.



EU Directive on public procurement

Directive 2004/18/EC of the European Parliament and of the Council of

31 March 2004 on the coordination of procedures for the award of

public works contracts, public supply contracts and public service

contracts, which is still implemented in national legislation of EU contracts, which is still implemented in national legislation of EU

Directive 2014/24/EU of the European Parliament and of

the Council of 26 February 2014 on public procurement

Directive 2014/24/EU is currently on its way of being implemented in

national legislation of EU Member States.


Laws and regulations promoting EPC in public buildings

� Under S.I. 542 and theProcurement public bodies are encouraged to avail of energy performance contracting (EPC), including energy services companies (ESCOs), where appropriate.

Legal background of EPC at national level

Ireland

Laws and regulations ruling over the public procurement process

� Energy efficient procurement practices and energy performance contracting are now part of programme for government and central to EU and national policy.

� This legislation includes:

� S.I. No. 542/20092009)

� SI 151 of 2011 (Energy Efficient Public Procurement)


Laws and regulations promoting EPC in public buildings:

Under S.I. 542 and the National Action Plan on Green Public public bodies are encouraged to avail of energy performance

contracting (EPC), including energy services companies (ESCOs), where


37


Energy efficient procurement practices and energy performance contracting are now part of programme for government and central to EU and national

This legislation includes:

S.I. No. 542/2009 (Energy End-Use Efficiency and Energy Services Regulations

(Energy Efficient Public Procurement)



� Greece:

� Laws and regulations promoting EPC in public buildings:

� Law 3855/2010 ‘Measures to improve energy efficiency in end use, energy

services and other provisions’

� Ministerial Decision D6/13280/07.06.2011 (Government Gazette, Series II,

No 228) entitled “Energy Service Companies. Operation, Register, Code of No 228) entitled “Energy Service Companies. Operation, Register, Code of

Conduct and relevant provisions”.

� Law 4342/2015 on Energy Efficiency

� Laws and regulations ruling over the public procurement process

� Ministerial Decision D6/Β/14826/17.6.2008 ‘Measures to improve energy

efficiency and energy savings in the central and general government’

� Law 3855/2010 ‘Measures to improve energy efficiency in end use, energy

services and other provisions’

� Law 4342/2015 on Energy Efficiency



Law 3855/2010 ‘Measures to improve energy efficiency in end use, energy

Ministerial Decision D6/13280/07.06.2011 (Government Gazette, Series II,

No 228) entitled “Energy Service Companies. Operation, Register, Code of

Slide N° 38

No 228) entitled “Energy Service Companies. Operation, Register, Code of

Conduct and relevant provisions”.

Law 4342/2015 on Energy Efficiency


Ministerial Decision D6/Β/14826/17.6.2008 ‘Measures to improve energy

efficiency and energy savings in the central and general government’

Law 3855/2010 ‘Measures to improve energy efficiency in end use, energy

Law 4342/2015 on Energy Efficiency



� Energy Act (Energetski zakon EZ

� Non-binding guidelines and rules

� Guidelines for the conduction of energy efficiency measures in public sector buildings

with EPC (Smernice za izvajanje ukrepov izboljšanja energetske učinkovitosti v stavbah

javnega sektorja po principu energetskega pogodbeništva)

� Rules on efficient use of energy in buildings (Pravilnik o učinkoviti rabi energije v

stavbah - PURES)

Slovenia:


stavbah - PURES)

� Technical Guideline Efficient Use of Energy (Tehnična smernica TSG


� Public Finance Act (Zakon o javnih financah ZJF)

� Public Procurement Act (Zakon o javnem naročanju ZJN

� Public Private Partnership Act (Zakon o javno

� Services of General Economic Interest

� Act Regulating Public Procurement in Water, Energy, Transport and Postal Services

(Zakon o javnem naročanju na vodnem, energetskem, transportnem področju in

področju poštnih storitev ZJNVETPS



Energy Act (Energetski zakon EZ-1)

binding guidelines and rules

Guidelines for the conduction of energy efficiency measures in public sector buildings

with EPC (Smernice za izvajanje ukrepov izboljšanja energetske učinkovitosti v stavbah

javnega sektorja po principu energetskega pogodbeništva)

Rules on efficient use of energy in buildings (Pravilnik o učinkoviti rabi energije v


Technical Guideline Efficient Use of Energy (Tehnična smernica TSG-1-004:2010 URE)


Public Finance Act (Zakon o javnih financah ZJF)

Public Procurement Act (Zakon o javnem naročanju ZJN-3)

Public Private Partnership Act (Zakon o javno-zasebnem partnerstvu ZJZP)

Services of General Economic Interest Act (Zakon o gospodarskih javnih službah ZGJS)

Act Regulating Public Procurement in Water, Energy, Transport and Postal Services

(Zakon o javnem naročanju na vodnem, energetskem, transportnem področju in

področju poštnih storitev ZJNVETPS)


Germany:


� Law on Energy Services

Energiedienstleistungsgesetz (EDL


� Law against restraints in competition of 26 August 1998

contracts

Gesetz gegen Wettbewerbeschränkungen vom 26. August 1998 Vergabe Öffentlicher Aufträge

� Law regarding modernisations

Vergaberechtsmodernisierungsgesetz

� Services Tendering and Contract Regulations

Vergabe- und Vertragsordnung für Leistungen (VOL/A)

� Construction Tendering and Contract Regulations

Vergabe- und Vertragsordnung für Bauleistungen (VOB/A)



Energiedienstleistungsgesetz (EDL-G) vom 21. April 2015


Slide N° 40

Law against restraints in competition of 26 August 1998 – Section 4 on public

Gesetz gegen Wettbewerbeschränkungen vom 26. August 1998 – Vierter Abschnitt:

of procurement regulations from December 2015

ergaberechtsmodernisierungsgesetz – VergRModG 12/2015

Services Tendering and Contract Regulations

und Vertragsordnung für Leistungen (VOL/A)

Construction Tendering and Contract Regulations

und Vertragsordnung für Bauleistungen (VOB/A)


Bulgaria:


� Energy Efficiency Act (State Gazette 35 / 15.05.2015)

Закон за енергийната ефективност

� Regulation RD 16-347 from 2nd April 2009 on the conditions and procedure for the

determination of the amount and payment of the planned funds for energy

performance contracts, resulting in energy savings in State and municipal (public)



buildings.

Наредба РД 16-347 от 2 април 2009 г.


� Public Procurement Act (State Gazette 13 / 16.02.2016)

Закон за обществените поръчки (ДВ

� Public-Private Partnership Act (State Gazette 13 / 16.02.2016)

Закон за публично-частните партньорства

� Municipal Debt Act (State Gazette 61 / 11.08.2015)

Закон за общинския дълг (ДВ 61 / 11.08.2015



State Gazette 35 / 15.05.2015)

Закон за енергийната ефективност

April 2009 on the conditions and procedure for the

determination of the amount and payment of the planned funds for energy




347 от 2 април 2009 г.



(ДВ 13 / 16.02.2016 г.)


частните партньорства (ДВ 13 / 16.02.2016 г.)

Municipal Debt Act (State Gazette 61 / 11.08.2015)

61 / 11.08.2015 г.)


Portugal:


� Energy Efficiency Program in Public Administration (Eco.AP), was launched in January 2011;

� Decree-Law Nº 29/2011 of 28 February 2011, establishes the legal regime for the formation and execution of EPCs to be concluded between Public Administration and


formation and execution of EPCs to be concluded between Public Administration and energy service companies;

� Legislative order nº 15/2012 - On 3 July 2012 the “Regulation of Qualification System of Energy Services Companies” (SQESE) was approved, establishing minimum requirements for technical and financial capacity of ESCOs.


� DL n.º 18/2008, de 29 de Janeiro;

� DL n.º 214-G/2015, de 02/10 (introduces revisions to the above DL);

� Decree-Law Nº 29/2011 of 28 February 2011.



Energy Efficiency Program in Public Administration (Eco.AP), was launched in January

Law Nº 29/2011 of 28 February 2011, establishes the legal regime for the formation and execution of EPCs to be concluded between Public Administration and


formation and execution of EPCs to be concluded between Public Administration and

On 3 July 2012 the “Regulation of Qualification System of Energy Services Companies” (SQESE) was approved, establishing minimum requirements for technical and financial capacity of ESCOs.


G/2015, de 02/10 (introduces revisions to the above DL);

Law Nº 29/2011 of 28 February 2011.


Spain:


� Law 6/2010 measures for economic and employment recovery. Art. 19 of ESCOs and Art. 20 of ESCOs contracting in public sector;

� Law 2/2011 of sustainable economy sets that Public Administration should adopt a plan for energy consumption optimization with energy services


adopt a plan for energy consumption optimization with energy services contracts that will be paid by the achieved savings.

� Law 3/2011 as recast of Public Sector Contracts Law.

� Royal Decree 56/2016 as partial transposition of EED 2012/27/EU for energy audits, accreditation of energy service providers and energy auditors.


� Law 6/2010 measures for economic and employment recovery. Art. 19 of ESCOs and Art. 20 of ESCOs contracting in public sector;

� Law 3/2011 as recast of Public Sector Contracts Law.



Law 6/2010 measures for economic and employment recovery. Art. 19 of ESCOs and Art. 20 of ESCOs contracting in public sector;

Law 2/2011 of sustainable economy sets that Public Administration should adopt a plan for energy consumption optimization with energy services


adopt a plan for energy consumption optimization with energy services contracts that will be paid by the achieved savings.

Law 3/2011 as recast of Public Sector Contracts Law.

Royal Decree 56/2016 as partial transposition of EED 2012/27/EU for energy audits, accreditation of energy service providers and energy auditors.


Law 6/2010 measures for economic and employment recovery. Art. 19 of ESCOs and Art. 20 of ESCOs contracting in public sector;

Law 3/2011 as recast of Public Sector Contracts Law.


Italy:


� Legislative Decree of July 4, 2014, n. 102, Implementation

amending Directives 2009/125 / EC and 2010/30 / EC

� Legislative Decree of 30 May 2008, n. 115, Implementation

efficiency and energy services and repealing Council

Laws and regulations ruling over the public procurement

� Legislative Decree 12 April 2006, n. 163, Code� Legislative Decree 12 April 2006, n. 163, Code

implementation of 2004/17 / EC and 2004/18 / EC -

207, the implementing regulation and implementation

Code) - Outline of the legislative decree for the implementation

2014/25 / EU (New Procurement Code - not yet in force)

Guidelines and Certification:

� Contractual model of EU tender open procedure, pursuant

by the Consip S.p.A. a single shareholder, on behalf

art. 26 of l. n. 488/1999 and subsequent amendments,

D.M. May 2, 2001, for the awarding of the Integrated

notice sent for publication in the EU Official Journal on

Republic.

� UNI CEI 11352 in April 2010, Energy Management. Companies


Implementation of Directive 2012/27 / EU on energy efficiency,

EC and repealing Directives 2004/8 / EC and 2006/32/EC.

Implementation of Directive 2006/32 / EC on energy end-use

Council Directive 93/76 / EEC.

procurement process:

of public contracts for works, services and supplies

Slide N° 44

of public contracts for works, services and supplies

- Decree of the President of the Republic October 5, 2010

implementation - the State Law 28/01/2016 n. 11 (Reform Procurement

implementation of Directives 2014/23 / EU, 2014/24 / EU and

force).

pursuant to art. 54 of Legislative Decree. N. 163/2006 issued

of the Ministry of Economy and Finance, in accordance with

amendments, the D.M. February 24, 2000, art. 58 of l. n. 388/2000,

Integrated Energy Services for Public Administration under Contract

on 30.11.2015, published in the Official Gazette of the Italian

Companies providing energy services (ESCO).


Italy:� Laws and regulations promoting Energy Efficiency:

� Decrees of June 26, 2015, Application of energy performance

requirements for buildings and Adaptation of the decree

Guidelines for energy certification of buildings.

� Law Decree 4 June 2013, n. 63, Urgent measures for the transposition

the Council of 19 May 2010 on the energy performance for

Commission, as well as other provisions on social cohesion.,

� Legislative Decree of March 3, 2011, n. 28 Implementation


� Legislative Decree of March 3, 2011, n. 28 Implementation

sources and amending and subsequently repealing Directives

� Legislative Decree of 19 August 2005, n. 192, Implementation

Legislative Decree February 8, 2007, n. 20 Implementation

useful heat demand in the internal energy market and amending

the light of new decrees June 26, 2015.

� Ministerial Decrees of 20 July 2004, New identification of

renewable sources, according to art. 16, paragraph 4, of

quantitative targets for improving energy efficiency in end

Decree 16 March 1999, n. 79.

� Decree of Ministry of Industry, Trade and Crafts of 24 April 2001

� Law 9 January 1991 n. 10, Rules for the implementation of the

development of renewable energy sources.


performance calculation methods and definition of the requirements and minimum

of the Minister of Economic Development, June 26, 2009 - National

transposition of Directive 2010/31/EU of the European Parliament and

for the definition of infringement proceedings launched by the European

, converted into Law 90 of August 3, 2013.

of Directive 2009/28 / EC on the promotion of energy from renewable


of Directive 2009/28 / EC on the promotion of energy from renewable

Directives 2001/77 / EC and 2003/30 / EC.

Implementation of Directive 2002/91/EC on the energy performance of buildings and

of Directive 2004/8 /EC on the promotion of cogeneration based on

amending Directive 92/42/EEC - new Coordinated text of D.Lgs.192/2005

of national quantitative targets of energy saving and development

of Legislative Decree 23 May 2000, n. 164 and New identification

end-use of energy, in accordance with art. 9, paragraph 1 of Legislative

2001, Efficiency and energy saving in the final uses.

the National Energy Plan on the rational use of energy, energy saving and

Legal background of EPC at

Austria:


� Energy Efficiency Law, legit since 1/1/2014,

� Agreement between state and federal state according Art. 15a B


� Agreement between state and federal state according Art. 15a Bthe building sector for reduction of emission of greenhouse gases.

� Energy Performance Certificate Law (Energieausweisenhances transparency in the building

� Climate Protection Law (Klimaschutzgesetz), enhances the implementation of measures, which reduce GHG emissions.


� Bundesvergabegesetz (Federal Procurement



Energy Efficiency Law, legit since 1/1/2014, § 16.

Agreement between state and federal state according Art. 15a B-VG for measures in


Agreement between state and federal state according Art. 15a B-VG for measures in the building sector for reduction of emission of greenhouse gases.

Law (Energieausweis-Vorlage-Gesetz), 2012, building sector.

Climate Protection Law (Klimaschutzgesetz), enhances the implementation of measures, which reduce GHG emissions.


Procurement Act )


Czech Republic:


� Act No. 406/2000 , on energy management, which came into effect on 1 July 2015

� Includes newly a definition of energy services; requirements for energy services contracts;

and a list of energy services providers.

� According to Section 10f of the Energy Management Act, the Ministry of Industry and Trade

will maintain a list of energy services providers and will lay down basic conditions for

registration and deletion from this list.registration and deletion from this list.

� Non-binding guidelines and rules

� Guidelines for the preparation and implementation

� Process of procurment procedure preparation

� EPC model contract


� Public Procurement Act 137/2006




Act No. 406/2000 , on energy management, which came into effect on 1 July 2015

a definition of energy services; requirements for energy services contracts;

and a list of energy services providers.

According to Section 10f of the Energy Management Act, the Ministry of Industry and Trade

will maintain a list of energy services providers and will lay down basic conditions for

registration and deletion from this list.

Slide N° 47

registration and deletion from this list.

implementation of the energy efficiency projects via EPC

preparation for EPC



Tendering Procedures




Tendering procedures





� In the public sector, the procurement procedure must be in compliance with

the national public procurement legislation (based on the EU Public Sector

Directive 2004/18/E2004/18/EC)

� In the private sector, the clients are not obliged� In the private sector, the clients are not obliged

requirements applicable for the public sector but their procurement process

may include similar steps (that may be applied in a simplified version)



the procurement procedure must be in compliance with

the national public procurement legislation (based on the EU Public Sector

obliged to follow the legislative obliged to follow the legislative

requirements applicable for the public sector but their procurement process

may include similar steps (that may be applied in a simplified version)




Basic Terminology for Tendering

• ITT: Invitation to Tender

• PQQ: Pre-Qualification Questionnaire

• RFT: Request for Tender

• MEAT: Most Economically Advantageous Tender

• OJEU: Official Journal of EU



Basic Terminology for Tendering

Qualification Questionnaire

MEAT: Most Economically Advantageous Tender

51Energy Performance Contracting Plus


Procurement Options

Procedure Characteristics

Open All qualified applicants must be given the

opportunity to bid

Restricted Two stage process with facility to shortlist

(PQQ + Tender)

Negotiated Two stage process with facility to negotiate at

second stage

Competitive

Dialogue

Two stage process with facility to enter into a

dialogue with potential suppliers to consider

potential solutions and refine specification

before invitation to tender

Framework

Agreement

Stage One: Suppliers selected through

open/restricted procedure to a panel of

suppliers for given period

Stage Two: Call-Off or Mini competition will

be held when services/goods required



Procurement Options

When the procedure is adopted

For lower risk procurement where supplier

capability is less important or where the focus is on

price

Where capability of supplier is key determining

factor in the delivery of the contract, market

response likely to be huge to allow short-listingresponse likely to be huge to allow short-listing

facility to negotiate at Specification is not clear or some creative, artistic or

expert input is required.

facility to enter into a

dialogue with potential suppliers to consider

Complex procurement where suppliers expertise has

significant impact on the development of the

specification

Capability and Capacity is important and is generally

a recurring/constant requirement (max 4 years;

including extension options)


A basis to select suppliers using MEAT –

Partial selection criterion Weight

Amount of guaranteed savings in all forms of energy 45%



during the contractual period (in technical or

financial units)

Bid price i.e. the total price to be paid by the contracting entity 35%

to the selected applicant for the duration of the contract

Quality of the technical design and contract 20%


– criterion (example)

Partial selection criterion Weight




Bid price i.e. the total price to be paid by the contracting entity 35%

to the selected applicant for the duration of the contract

Quality of the technical design and contract 20%



Sample Tender Templates

� UK Department of Energy & Climate Change (DECC 2012)

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/395240/contract_gu

idance_note_and_model_contract_energy_performance_contract.doc

� European Energy Services Initiative (EESI 2020) by Berliner Energieagentur GmbH / SCHLAWIEN

NAAB Partnerschaft

� Energy Performance Contracts Handbook - Sample Document: Invitation to Tender Document



� Energy Performance Contracts Handbook - Sample Document: Invitation to Tender Document

Template (SEAI Ireland)

http://www.seai.ie/Your_Business/Energy-Contracting/Support

Invitation-to-Tender-.docx

� Sample Tender Document Energy Performance Contracting

Provided from the South-African-German Energy Program (SAGEN). Mainly designed for EPC for industrial clientshttp://www.sanedi.org.za/wp-content/uploads/2014/03/ESCo

UK Department of Energy & Climate Change (DECC 2012)

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/395240/contract_gu

idance_note_and_model_contract_energy_performance_contract.doc

European Energy Services Initiative (EESI 2020) by Berliner Energieagentur GmbH / SCHLAWIEN-

Sample Document: Invitation to Tender Document



Sample Document: Invitation to Tender Document

Contracting/Support-and-Guidance/Sample-Document-

Sample Tender Document Energy Performance Contracting

German Energy Program (SAGEN). Mainly designed for EPC for

content/uploads/2014/03/ESCo-EPC_Sample_Tender.pdf


Tender documentation

Tender documents must define� Clear objectives: min % saving

� Organisational aspects:

� What tasks should be carried out by the SPIN?

� Technical aspects:


� Technical aspects:

� Buildings framework description

� energy statistics going back 3 years ( normalised for heating/cooling, etc., operation

times, list of equipment, building use, needed indoor climate (temperature,

ventilation, ...)...

� Consumption baseline

� Obligatory actions, desirable ones and options

� Financial aspects:

� Max payback time

� Financial organisation : must the SPIN make investment or not


What tasks should be carried out by the SPIN?


energy statistics going back 3 years ( normalised for heating/cooling, etc., operation

times, list of equipment, building use, needed indoor climate (temperature,

Obligatory actions, desirable ones and options

Financial organisation : must the SPIN make investment or not


Provide necessary know-how and experience to support and

guide client through all phases of an EPC project

Role and tasks of a facilitator


1. Project development phase:

‒ Financial and technical analyses

‒ Comparison of different supply options

‒ Project pre-structuring and business models

‒ Selection and adaption of SPIN business models


how and experience to support and

guide client through all phases of an EPC project




Continued. . . .

2. Project procurement phase:– Selection of procurement procedure

– Definition of SPIN qualifications and selection criteria



– Definition of SPIN qualifications and selection criteria

– Drafting of tender–SPIN contract design–Negotiations and selection of

best bidders

3. Construction phase – Representation and project management in some or all phases

4. Measurement and Verification

Areas of expertise:– Technical, economic, financing, industrial relations


Definition of SPIN qualifications and selection criteria



Definition of SPIN qualifications and selection criteria

Negotiations and selection of

Representation and project management in some or all phases

industrial relations and legal know-how


• Potential risks and risk mitigation strategies

‒ from the bank’s point of view

Module IV: Risk Mitigation and Monitoring and Verification


‒ from the bank’s point of view

‒ from the SPIN’s point of view

‒ from the building owner’s point of view

• Monitoring and Verification

‒ IPMVP

‒ Baseline Establishment

‒ Normalisation with Degree Days

‒ Examples of Projects Suitable for EPC+

Potential risks and risk mitigation strategies

Module IV: Risk Mitigation and Monitoring and Verification


from the building owner’s point of view

Examples of Projects Suitable for EPC+

Risk Mitigation

• Risk Strategies

• Dispute Resolution


• Dispute Resolution

• Contract Enforcement

• Risk Management and Transaction Cost

Risk Mitigation

Energy Performance Contracting Plus Slide N°

Risk Management and Transaction Cost

Risk Mitigation

• Scale and scope of project determines financing strategy

• SPIN balance sheet /loan

• Client loan with EPC guarantee

• Project finance


• Project finance

• Financing strategy details risk mitigation measures

• Technical risk often incorrectly overshadows other risks

• Client (and their activity) is a key component of risk

Risk Mitigation

Scale and scope of project determines financing strategy


Financing strategy details risk mitigation measures

Technical risk often incorrectly overshadows other risks

Client (and their activity) is a key component of risk

• EPC needs scale to cover transaction & verification costs

Therefore….

• “traditional SME methods” of financing may not work for larger

projects

• “traditional SME methods” of risk management may need to be

strengthened

Risk Mitigation


strengthened

Clearly

• Streamlined transaction management required.

• Standard agreements

• Standard methods of project establishment required

• Standard and robust dispute resolution required.

EPC needs scale to cover transaction & verification costs

“traditional SME methods” of financing may not work for larger

“traditional SME methods” of risk management may need to be

Risk Mitigation


Streamlined transaction management required.

Standard methods of project establishment required

Standard and robust dispute resolution required.

Potential risk s

from the bank‘s point of view

Risk mitigation options

� Insolvency or bankruptcy of the lender, if the

lender is the SPIN.

� Limit the duration of the loan

(may result in a reduction of acceptable EPC contract duration)� Include a risk premium

(higher interest rate � Request a high share of SPIN’s own equity to be included in the

financing concept

(high equity/loan ratio may limit the SPIN’s number of projects).

Risk Mitigation

Bank’s Point of View


(high equity/loan ratio may limit the SPIN’s number of projects).� Request for guarantees or collaterals/indemnity bonds.

(maybe to be provided by the building owner)

� Delay or cease of payment of annuities if the

lender is the building owner.� Request for guarantees and collaterals ‘.

� Dispute between the SPIN and the building

owner concerning delivery of agreed measures

and/or the achievement of guaranteed savings

in case of a sale of claims/forfaiting/ factoring)

from the SPIN to the bank.

� Request an objection

disputes on the building owner).

Risk mitigation measures taken by the bank

will in most cases increase the cost of EPC business models


the duration of the loan

(may result in a reduction of acceptable EPC contract duration).Include a risk premium in the interest rate

(higher interest rate – higher cost of the EPC).Request a high share of SPIN’s own equity to be included in the

financing concept

(high equity/loan ratio may limit the SPIN’s number of projects).

Risk Mitigation

Bank’s Point of View


(high equity/loan ratio may limit the SPIN’s number of projects).Request for guarantees or collaterals/indemnity bonds.

(maybe to be provided by the building owner).

Request for guarantees and collaterals ‘.

Request an objection waiver from the building owner (put the risk of disputes on the building owner).

will in most cases increase the cost of EPC business models.

Potential risks

from the ESCO’s point of view


� Change of political framework conditions.

� Cease of payment by the building owner (e.g. if a

building is no longer in use, or if new owner wants

to terminate contract).

�

�

Risk Mitigation

SPIN Point of View

� Delays in payments of the building owner.�

� Dispute between the SPIN and the building owner

concerning delivery, or proper evidence of

delivery, of agreed measures and/or guaranteed

savings.

�

�

�

�

� Failures in achieving guaranteed savings. �

Risk mitigation measures taken by the SPIN will in most cases increase the cost,

and may reduce the customer’s acceptance of proposed EPC business models.



Opt for as short contract duration as possible.

Include in the contract clear provisions for the full

compensation of the SPIN’s losses in case of termination of

contract prior to approved contract duration.

Risk Mitigation

SPIN Point of View

Request for compensation in case of delay of payments to be

established in the contract.

Plausibility check of the requested performance guarantee.

Involvement of a certified third party by contract agreement.

Establishment of monthly installments to be paid by the

building owner unconditionally during entire contract

duration.

Make penalties/incentives only after dispute being settled.

Use an insurance, if available.

Risk mitigation measures taken by the SPIN will in most cases increase the cost,

and may reduce the customer’s acceptance of proposed EPC business models.


Risk Mitigation

Client’s point of view

Potential risks

from the public building owner’s point of view


� Bankruptcy of the SPIN prior to finalization and hand-

over of equipment, facilities, and devices due for

delivery according to the contract.

�

� Bankruptcy of the SPIN after the acceptance of due

delivery of equipment, facilities, and devices, in �

delivery of equipment, facilities, and devices, in

particular in the case of claims sold by the SPIN to a

bank/factoring agent.

� SPIN failing to deliver agreed measures and/or

guaranteed savings.

�

�

� SPIN failing to provide any evidence of achieved

savings within a certain period of time following the

end of the agreed reporting period.

�

�

� Dispute between the SPIN and the building owner

concerning proper delivery of agreed measures

and/or the achievement of guaranteed savings.

�

�

Risk mitigation measures taken by the public building owner may create additional barriers

for SPIN to enter the EPC market and/or to submit an offer for a specific project.

Risk Mitigation


Request for a bank guarantee covering the cost of the building

owner that might occur in this case.

Request for a bank guarantee covering the cost of services to

be provided by a substitute for the SPIN in order to ensure be provided by a substitute for the SPIN in order to ensure

achievement of guaranteed savings.

Establish strong penalties in the contract.

Provide for the reduction of monthly instalments.

Establish in the contract the right to cease or reduce payments

until the SPIN provides proper evidence of achieved savings.

Involve a certified third party by contract agreement

Involve a certified third party by contract agreement.

Establish in the contract the right to cease or reduce payments

during the duration of the dispute, if this exceeds a certain

limit.

Risk mitigation measures taken by the public building owner may create additional barriers

for SPIN to enter the EPC market and/or to submit an offer for a specific project.Slide N

Risk Mitigation

For example: A dispute might occur between the SPIN and the Building owner

Building owner might assess data measured by the SPIN as

proof that guaranteed savings were under-achieved by far in

the last reporting period.��

Building owner’s concern:

Not pay for services not creating the expected effect. Not pay for services not creating the expected effect.

Buiding owner’s interest:

Be able to exert an agreed penalty on the SPIN (pay less)

Buidling owner’s prefered risk mitigation strategy:

Cease or reduce payment until disputes are settled.��

Risk Mitigation

A dispute might occur between the SPIN and the Building owner

SPIN might assess the same data as proof that the guaranteed

savings were over-achieved by far during the last reporting period.

SPIN’s concern: Get full pay for delivered services and achieved

savings.

Slide N° 65

savings.

Avoid insolvency during potential disputes.

SPIN’s interest:

Be able to invoice an agreed incentive

(get more)

SPIN’s preferred risk mitigation strategy:

Continue down-payments at any time during contract period, and

balance justified penalties/ instalments when related disputes

are settled (e.g. in arbitration).

After the equipment handover, it is necessary to provide M&V

‒ a rather frequent M&V in the beginning, conducted internally

least monthly)

Measurement & verification (M&V


It recommended to record any change in the way the buildings are being used

‒ the changes are reported in the annual calculation of savings

It is important to evaluate any deviation from standard conditions

– must be checked and recorded on an on-going basis

Preparation to hand over the installed equipment

– SPIN may offer to continue and provide services (M&V)

After the equipment handover, it is necessary to provide M&V

a rather frequent M&V in the beginning, conducted internally by the SPIN (at

Measurement & verification (M&V)


It recommended to record any change in the way the buildings are being used

the changes are reported in the annual calculation of savings

It is important to evaluate any deviation from standard conditions

must be checked and recorded on an on-going basis

Preparation to hand over the installed equipment

SPIN may offer to continue and provide services (M&V)

Measurement and Verification

The International Performance Measurement andVerification Protocol (IPMVP)

Options for M&VA. Retrofit isolation. Measure and estimate


A. Retrofit isolation. Measure and estimate

parameters. ("Key Parameter Measurement")

Example: Lighting retrofit

B. Retrofit isolation. Sub-meter actual energy use.

("All Parameter Measurement")

Example: Chiller replacement


The International Performance Measurement and

Measure and estimate


Measure and estimate

parameters. ("Key Parameter Measurement")

meter actual energy use.


IPMVP Options for M&V (cont'd

C. Compare before/after utility bills.

("Whole Facility")


("Whole Facility")

Example: Wind Turbine

D. Comprehensive computer modelling.

("Calibrated Simulation")

Example: HVAC controls retrofit


IPMVP Options for M&V (cont'd )

Compare before/after utility bills.


Comprehensive computer modelling.

Example: HVAC controls retrofit

� The monitoring report must be elaborated and presented to client

once a year

� The monitoring report must follow the construction of referential

costs and calculation of savings set in the contract



� The content of the reports differs based on the complexity of the

buildings and types of equipment

� Of crucial importance is the monitoring of the total energy

consumption (related to invoiced values)

always entered into the calculation

� Conversion of heat consumption used for heating/cooling in relation

to degree days heating/cooling

condition changes (used in calculation)

The monitoring report must be elaborated and presented to client

The monitoring report must follow the construction of referential

costs and calculation of savings set in the contract



The content of the reports differs based on the complexity of the

buildings and types of equipment

Of crucial importance is the monitoring of the total energy

consumption (related to invoiced values) – the measured values are

always entered into the calculation

Conversion of heat consumption used for heating/cooling in relation

to degree days heating/cooling – interdependence on climate

condition changes (used in calculation)

Baseline Correction Example of Heating Energy Using Degree Days

Heating Consumption Normalised for Degree DaysLabel

(What

Year/period?)

Actual Consumption

(kWh/period

(typcially 1 year)) Applicable DD

Period 1 2010 100000 2100



Period 2 2011 95000 2100

Period 3 2012 90000 2050

Period 4 2013 92000 2000

Period 5 2014 92000 2100

Period 6 2015 105000 2300

Average 2108

NB Normalised Energy Consumption is got by multiplying kwh/dd by average dd

For further reading on degree-day normalisation see http://www.energylens.com/articles/degree

Baseline Correction Example of Heating Energy Using Degree Days

Heating Consumption Normalised for Degree Days

Applicable DD

Consumption

(kWh/ Deg.

Day)

Normalised Energy

Consumption

kWH

% Savings (Period 1 as the

reference)

2100 47.6 100397 0%



2100 45.2 95377 5%

2050 43.90 92561 8%

2000 46.0 96600 4%

2100 43.8 92365 8%

2300 45.7 96250 4%

2108

NB Normalised Energy Consumption is got by multiplying kwh/dd by average dd

http://www.energylens.com/articles/degree-days#normalization

Suitable Example for EPC+: School Building Ireland

Attic insulation

Cavity insulation


Cavity insulation

Old boiler replacement

Lighting upgrade

Lighting upgrade with controls

Replace heating distribution

Other heating controls

Flat roof insulation

Window replacement

Savings 33%

Suitable Example for EPC+: School Building Ireland


Savings 33%

www.overy .ie/

Results of an energy audit:• Baseline energy costs (heat and electricity): 99.600

• Possible savings: ~ 58.000 €/y (i.e. ~58%) savings

Quantification of the monetary value of expected

energy savings (an example)

Overview of expected savings Electricity savings

Lighting 45,250


Lighting 45,250

HVAC

Heat generation (better prices for wood chips

& improved efficiency of the boiler)

Heat circulation system 11,100

District heating system 3,380

New controls

New thermostatic valves

Totals of expected savings 59,730

Results of an energy audit:Baseline energy costs (heat and electricity): 99.600 €/y (electricity: 0,21 €/kWh; heat 0,06 €/kWh)

/y (i.e. ~58%) savings.

Quantification of the monetary value of expected

energy savings (an example)

Electricity savings Heat savings Cost savings

45,250 kWh/y 9,503 €/y


45,250 kWh/y 9,503 €/y

40,280 €/y

11,100 kWh/y 22,000 kWh/y 3,651 €/y

3,380 kWh/y 4,310 kWh/y 968 €/y

38,600 kWh/y 2,316 €/y

27,600 kWh/y 1,656 €/y

59,730 kWh/y 92,510 kWh/y 58,374 €/y

The Partners wish to acknowledge

the financial assistance of the EU

under the Horizon 2020 Programme


Grant Agreement number: EPC_PLUS — H2020-EE2015/H2020-EE-2014-3-MarketUptake


Grant Agreement number: 649666 —EE-2014--