Esc os characteristics sana'a 2012 12-11


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Regional Workshop “NEEAP Development in the Arab region: Monitoring and Evaluation Methodology” December 11th, 2012

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Esc os characteristics sana'a 2012 12-11

  1. 1. This project is funded by the European UnionThe role of ESCO in the process of recovering energy saving potentials – experiences gathered in selected countries Dr. Kurt Wiesegart, MED ENEC Workshop on the ESCO Market – Barriers and Support Mechanism European Commission Sana‘a Dec 11, 2012
  2. 2. MED ENEC This project is funded by the European UnionEnergy Efficiency in the Construction Sector in Mediterranean Countries 2
  3. 3. MED ENEC Activity Overview This project is funded by the European Union Financing ESCO Development NEEAP Development AwarenessEE Building Codes Campaign EE Building Projects 3
  4. 4. MED ENEC Activity Overview This project is funded by the European UnionNEEAPs developped for: Under- Lebanon discussion:- Palastine - Morocco- Jordan - Algeria NEEAP Development 4
  5. 5. MED ENEC Activity Overview This project is funded by the European Union Developping - A Roadmap for EE Building Codes and its implementation - A NAMA for the Building Sector LEBEE Building Codes 5
  6. 6. MED ENEC Activity Overview This project is funded by the European UnionDevelopping a Roadmap for ESCO DevelopmentRegulation and Certificationof Energy Service Companies Conducting Energy Audit and ESCO Training WSs Cooperating with the EUREM Programme 6
  7. 7. End Use Electricity Efficiency This project is funded by the European Union End use =Input 100 0.8 !!!! η= <42 η= <97 η= <94 η= 2 Efficacy 20 lm/W Overall luminous efficiency 2% 7
  8. 8. EE the primar solution for energy supply problems This project is funded by the European Union…being thecleanest „energy source“, and- the cheapestand it- Contributes to Independence of energy imports, or: ensures more (primary) energy for exports (export income)it- Creates employmentthus- Contributs to the overall economic development
  9. 9. Energy Efficiency makes money! This project is funded by the European Union…. for the stakeholders (customers) involved and forthe country‘s government!A well functioning ESCO business is one of the mostimportant measures to recover the huge sources ofenergy efficiency in a country.
  10. 10. What is an „ESCO“ This project is funded by the European Union- Energy Contracting – labled as ESCO (Energy Service Co) – is a comprehensive energy service concept… to minimized project cycle cost- Typically: an ESCO acts as general contractor and implements a customized energy efficiency service package- Key features: ESCO remuneration is normally performance based – EPC Energy Performance Contract: It guarantees the outcome and all inclunsive cost of the services, takes over commercial as well as technical implementation and operation risks over the whole project term
  11. 11. ESCO and NEEAP This project is funded by the European Union ESCO activities belong to the major measures to implement aNational Energy Efficiency Actions Plan
  12. 12. Classification of ESCOs This project is funded by the European UnionBasic models of independent ESCOs1. Building equipment manufacturers-ESCOs owned by bldg equipment or control manufacturers2. Utility companies-ESCOs owned by electric or gas utilities- Energy or engineering company ESCOsAccording to their marketing structure/approach:A) TechnologiesB) Vertical marketsC) Utility / energy suppliers
  13. 13. ESCO – Full Service Model Shared Savings EPC Model This project is funded by the European UnionFinancial Institution Repayment of Loan portion of savings share Project development, financing and implementation ESCO Client / End User Payment based on saving share 13
  14. 14. ESCO – Part Service Model Garanteed Savings EPC Model This project is funded by the European Union Financial Institution Arrange Repayment with Financing Loan funds according to EPC Project development and implementationClient / End User ESCO Payment for services according to EPC Savings Guarantee 14
  15. 15. ESCO – Basic Characteristics This project is funded by the European Union• ESCO model offers an appealing, market-based approach to energy efficiency project development• Various ESCO Models are in use – also in developing countries; eg. India: approx 20 larger ESCOs are working on a energy performance contracting business model• In China meanwhile several hundert companies are registered• Some Co‘s already well established. However – most of the companies (India) are very small 15
  16. 16. ESCO – Basic Requirements This project is funded by the European UnionThe development of an „ESCO market“ requests certain frame conditions• The committment of the goverment to go for EE – in different sectors of the economy – industry, buildings, transport,.. – Only in a few of the ENPI countries• A energy pricing system which reflects the real costs of energy – Not the case in most of the ENPI countries• A certain development status of the EE market maturity - beside a.m. issues: – Human ressources: Qualified staff to conduct the ESCO business • Master courses in EE, courses for further training of engineers, technicians,.. – Banks and banking staff who is aware of the potential energy saving business • A (total) gap in most developing countries – A responsibility system for economic performance • Not the case in most of the state owned companies, also not in public institutions/buildings etc) – Laws, rules, regulations supporting energy savings • e.g. emission limits, EE building codes mandatory) – A medium/long term plan of the Gvmt to mitigate climate change challenges • e.g. a NEEAP, energy consumption reduction targets,… – The committment of local institutions to EE measures and financing (e.g. China) 16
  17. 17. Impediments for recovering the „saving energy“ source This project is funded by the European Union- Government commitment and support - Awareness of policy decision makers - Regulations (e.g. for ESCO Certification Schemes) - Incentives (tax reduction, revolving fundes,….)- Financing - Ignorance (lack of experience) of banks and financial institutions - Lack of financial sources - Lack of awareness of customers- In many countries: Energy prices (energy subsidies)
  18. 18. Items to support ESCO development This project is funded by the European UnionRegulatory support, e.g.- Rules and regulations for certification- Develop criteria for ESCOs- An authorized agency to provide support- A certification body to be in place- Cooperation with donor entitiesFinancial support , e.g.- Tax incentives (incl import tax)- Provide Fund (e.g. for start-up phase)- Provide Guarantees (for funds, for ESCO investment,….)
  19. 19. Financing in Emerging Markets This project is funded by the European Union- During last decade comprehensive support by MDBs to support development of ESCO business- Progress differs from country to country, in general it is however limited- Limited to too many obstacles – regarding institutional set-up, financing,…- Owners understanding of EE measures- Complexity of EPC projects- Reluctance of financing/funding institutions for EE projects
  20. 20. Selected Countries This project is funded by the European UnionExperience in selected countries- US- Germany- Tunisia- China
  21. 21. ESCO Development Worldwide This project is funded by the European Union- More than 50 countries have or are about to develop ESCOs- Development slow and hampered by impediments- No unique understanding of the category ESCO business in the countries- Accordingly: no confirmed statistical data – neither on the number of ESCOs nor their turnover
  22. 22. Example: US This project is funded by the European Union- Different development stages- EPC is growing now by 20% annually- In 2011 ESCO total revenues 6-7 bio USD- 70% of the ESCO business are performanced based- Limitations and bottlenecksMarkets:- Strong support of the Gvmt- Approx 90% of project implemented in public facilities- Technology is available- „Competitive selection processes“- Role of state energy offices- Problems whith new laws or budget deficits
  23. 23. Example: Germany This project is funded by the European Union- Germany is the leading market in ESCO business in Europe- ESCO development started in the early 90s- Since mid 90s independent intermediaries (agencies) on state level- Hessia, e.g.f, developed model contracts.- Number of ESCOs 250 to 500, contracting value (2011) Euro 3 Bill.- Remarkable: The ESCO business more than 40 % provided by utilities- Two major Associations supporting ESCO business- Sectors: residental sector (60%) of the market; public sector (15%; EPC contracts); industrial and commercial projects (20%)Impediments: - EE services still appear as low-interst-products / Lack of credit rating of small ESCOs /In public sector: public budget restrictions procurement / The pricing and tariffs of the German Renewables Feed-in Act power generation / EC Directive 32/2006 Germany refused to follow / The BfEE (Bundesstelle fuer Energieeffizienz) founded in 2010
  24. 24. Example: Tunisia This project is funded by the European Union- First ESCO in 1999 (Econoler and three different banks)- The first legal recognition of ESCO activities energy efficiency law 2004- ESCO concept supported by international donors – PEEI 2005- The five year pilot phase implementation of 125 projectsMarkets- Contracts between 2006 and 2010 totaled USD 16 Mio- Most projects imiplemented in the industrial sector- Facilitator: ANME as a State Agency- Guarantee fund provided by PEEI (2010) to promote EPC and encourage ESCOs.Governmental Actions- A legal framework supporting since 2004, Several other decrees 2005- PEEI provided support- Development of creditlines with donors
  25. 25. Example: PR China This project is funded by the European Union- EPC concept started in 1998 (World Bank)- From 2002 rapid development of ESCOs in 2010 turnover USD 4.25 bill; No of 428; 2011: 1700)- Gvmt support: taxation, subsidies,…- Contracts: EPC contracts mainly- Mainly corporate clients (industries, commercial bldgs, heat service co‘s,…)Government Actions- Strong committment! (Policy measures, financial support, cooperation with int.Donors- Promoting EPC a good example for others
  26. 26. This project is funded by the European UnionThanks for your Attention !ً‫شكراً جزيل‬ MED-ENEC Project Office, Cairo, Egypt 7 Tag El-Din El-Soubky Street Tel. +2 24183064 26