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ESCo market development: A role for Facilitators to play
 

ESCo market development: A role for Facilitators to play

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This webinar introduces the ‘Facilitator’ concept and discusses its added value for the development of comprehensive, performance based demand side EE and RE projects and ESCo markets. Besides ...

This webinar introduces the ‘Facilitator’ concept and discusses its added value for the development of comprehensive, performance based demand side EE and RE projects and ESCo markets. Besides enabling project development, another important feature of the buyer-led project facilitation approach is to foster competition between ESCos, other EE suppliers but also financiers on a fair and supportive playing field.

During the webinar we will discuss questions such as: What challenges and barriers does a (potential) client encounter, when setting out to procure comprehensive, performance based energy service packages or EE projects? Which know-how, procedures and organizational change processes are needed? And how can clients be enabled to do so?

The webinar builds on a recent ECEEE publication by IEA DSM Task 16.

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    ESCo market development: A role for Facilitators to play ESCo market development: A role for Facilitators to play Presentation Transcript

    • Task 16 ”Competitive Energy Services” www.ieadsm.org Task 16 @ IEA DSM University ESCo Market Development: A Role for ‘Facilitators’ to Play Jan W. Bleyl Energetic Solutions Jan W. Bleyl Energetic Solutions & IEA DSM Task 16 Operating Agent © Jan W. Bleyl – Energetic Solutions ⏐ For requests: EnergeticSolutions@email.de ⏐ Task 16_Facilitator-Webinar_04 February 2014⏐ Slide 1
    • Outline Research presentation 1.  Motivation 2.  Research questions and methodology 3.  A clients perspective on procuring energy services 4.  Project ‘Facilitators‘ to enable clients (Market Facilitators not covered in this presentation) 5.  Project facilitation cost and funding 6.  (Organizational and psychological change management required => informal session with IEA DSM Task 24) 7.  Conclusions and Outlook © Jan W. Bleyl – Energetic Solutions ⏐ For requests: EnergeticSolutions@email.de ⏐ Task 16_Facilitator-Webinar_04 February 2014⏐ Slide 2
    • Outline 1.  Market participant terminology, motivation and questions to be answered 2.  A clients perspective on procuring energy services 3.  ‘Project Facilitators‘ to enable clients (‘Market Facilitators’ not covered in this presentation) 4.  Empirical project facilitation cost 5.  Organizational and psychological change processes needed beyond economic rationale 6.  Conclusions and discussion © Jan W. Bleyl – Energetic Solutions ⏐ For requests: EnergeticSolutions@email.de ⏐ Task 16_Facilitator-Webinar_04 February 2014⏐ Slide 3
    • Terminology: ESCo Market Participants Market ‚Facilitator‘ Client (Intermediary) (Demand side) Efficiency Structuring & renewable of projects markets Facilitator ESCo (Supply side) Source: [Bleyl 2011] © Jan W. Bleyl – Energetic Solutions ⏐ For requests: EnergeticSolutions@email.de ⏐ Task 16_Facilitator-Webinar_04 February 2014⏐ Slide 4 CCI CCI memmemClient bers Client bers
    • Motivation 1.  Energy-Contracting is a proven ‘delivery mechanism’, but: Market volume behind expectations + energy policy goals 2.  Empirical evidence: ESCo market development often driven by client side, e.g. by public institutions putting out calls for proposals for ESCos to bid for => buyer-led approach These clients were enabled by ‘Facilitators’, who served as intermediaries between ESCOs and their (potential) clients 3.  However almost no mention of ‘Facilitators’ in literature or outside Europe 4.  Policy and consultancy puts too little focus on client perspective on ESP markets © Jan W. Bleyl – Energetic Solutions ⏐ For requests: EnergeticSolutions@email.de ⏐ Task 16_Facilitator-Webinar_04 February 2014⏐ Slide 5
    • Questions to be answered ?  What are challenges and barriers on the client side of the energy service market, when preparing projects and setting out to procure comprehensive energy service packages? ?  Which know-how and processes are needed on the client side? ?  How can potential clients be enabled to become knowledgeable partners in EE + ESP markets? ?  How high are typical ‘Facilitator’ cost? ?  Why do we need organizational and individual change processes? © Jan W. Bleyl – Energetic Solutions ⏐ For requests: EnergeticSolutions@email.de ⏐ Task 16_Facilitator-Webinar_04 February 2014⏐ Slide 6
    • Outline 1.  Market participant terminology, motivation and questions to be answered 2.  A clients perspective on procuring energy services 3.  ‘Project Facilitators‘ to enable clients (‘Market Facilitators’ not covered in this presentation) 4.  Empirical project facilitation cost 5.  Organizational and psychological change processes needed beyond economic rationale 6.  Conclusions and discussion © Jan W. Bleyl – Energetic Solutions ⏐ For requests: EnergeticSolutions@email.de ⏐ Task 16_Facilitator-Webinar_04 February 2014⏐ Slide 7
    • ESP (+EE) projects: Clients face non-core-business questions EE Suppliers ESCos Finance, subsidy programs Consultants, engineers, architects … Manufacturers Technologies … ? ? ? ? ? ? How to structure and specify my energy service needs => ToR How to calculate life cycle cost evaluations Non-standard procurement procedures Client Contractual design of longterm energy service agreements Source: after [IEA DSM Task XVI 2010] Multi-year financing across Capex and Opex budgets? How to enable changes in my organization and its individuals © Jan W. Bleyl – Energetic Solutions ⏐ For requests: EnergeticSolutions@email.de ⏐ Task 16_Facilitator-Webinar_04 February 2014⏐ Slide 8
    • Clients perspective on ESP project workflow 2a. Tender announcement + ESCo qualification Procurement 2b. Tender documents 2c. ESCo offer 2d. Award negotiations, tender evaluation Service Construct 2f. Awarding of contract 3. Detailed planning, construction, commissioning 4a. Service delivery 4b. Controlling, M&V + quality assurance, reporting, invoicing © Jan W. Bleyl – Energetic Solutions ⏐ For requests: EnergeticSolutions@email.de ⏐ Task 16_Facilitator-Webinar_04 February 2014⏐ Slide 9 Source: after [IEA DSM Task XVI 2010] 2e. Detailed analyses by best bidder (optional) Blue = Client (+ Facilitator) Red = ESCo 1. Project development, ‘make or buy’ ... (pre-procurement)
    • Client perspective summary 1.  Some of the tasks to procure comprehensive energy service packages may constitute significant obstacles for a potential client, because they require know-how and experience, which is often not readily available 2.  Project implementation commonly necessitates organizational and personal changes from established routines, procedures and personal relationships, which is an often overlooked but persistent obstacle => Support needed! © Jan W. Bleyl – Energetic Solutions ⏐ For requests: EnergeticSolutions@email.de ⏐ Task 16_Facilitator-Webinar_04 February 2014⏐ Slide 10
    • Outline 1.  Market participant terminology, motivation and questions to be answered 2.  A clients perspective on procuring energy services 3.  ‘Project Facilitators‘ to enable clients (‘Market Facilitators’ not covered in this presentation) 4.  Empirical project facilitation cost 5.  Organizational and psychological change processes needed beyond economic rationale 6.  Conclusions and discussion © Jan W. Bleyl – Energetic Solutions ⏐ For requests: EnergeticSolutions@email.de ⏐ Task 16_Facilitator-Webinar_04 February 2014⏐ Slide 11
    • ‘Facilitators’ as Enablers and Link between Clients and ESCos EE Suppliers ESCos Finance, subsidy programs Consultants, engineers, architects … Manufacturers Technologies … ‘Facilitator‘ as Intermediary Client Project goals, feasibility, ‘make or buy‘? Project structuring, business model Financial structuring, subsidies Legal structuring, ESCo contract (Pot.) Client Tender documents, procurement [Bleyl et al. 2013] Proposal evaluation, contract award M & V + quality assurance, mediation © Jan W. Bleyl – Energetic Solutions ⏐ For requests: EnergeticSolutions@email.de ⏐ Task 16_Facilitator-Webinar_04 February 2014⏐ Slide 12
    • Outline 1.  Market participant terminology, motivation and questions to be answered 2.  A clients perspective on procuring energy services 3.  ‘Project Facilitators‘ to enable clients (‘Market Facilitators’ not covered in this presentation) 4.  Empirical project facilitation cost 5.  Organizational and psychological change processes needed beyond economic rationale 6.  Conclusions and discussion © Jan W. Bleyl – Energetic Solutions ⏐ For requests: EnergeticSolutions@email.de ⏐ Task 16_Facilitator-Webinar_04 February 2014⏐ Slide 13
    • Project Facilitation cost [% of investment] Project facilitation cost Empirical data from 32 European projects 14% Austria 12% Belgium 10% Germany 8% Sweden Netherlands Austria trend 6% Germany trend 4% 2% [Bleyl et.al. 2012] ] [Bleyl et.al. 2013 0% 0 1 2 3 Energy efficiency (+ renewable) investment [Million Euros] © Jan W. Bleyl – Energetic Solutions ⏐ For requests: EnergeticSolutions@email.de ⏐ Task 16_Facilitator-Webinar_04 February 2014⏐ Slide 14 4  
    • Outline 1.  Market participant terminology, motivation and questions to be answered 2.  A clients perspective on procuring energy services 3.  ‘Project Facilitators‘ to enable clients (‘Market Facilitators’ not covered in this presentation) 4.  Empirical project facilitation cost 5.  Organizational and psychological change processes needed beyond economic rationale 6.  Conclusions and discussion © Jan W. Bleyl – Energetic Solutions ⏐ For requests: EnergeticSolutions@email.de ⏐ Task 16_Facilitator-Webinar_04 February 2014⏐ Slide 15
    • ‚Economic rationale‘ or ‚Environmental awareness‘ is not enough to drive change “…we want to raise awareness among Facilitators and other stakeholders, that the identified organizational needs for change require approaches beyond economic rationale or environmental awareness. Instead psychological and organizational change processes need to be put on the agenda, even though this may be new territory for most energy efficiency professionals.” [Bleyl et al. 2013] © Jan W. Bleyl – Energetic Solutions ⏐ For requests: EnergeticSolutions@email.de ⏐ Task 16_Facilitator-Webinar_04 February 2014⏐ Slide 16
    • Need for change in client‘s organizations ESP projects require, e.g.: ð  Non-standard procurement procedures (not individual components) ð  Life cycle cost evaluation and ð  Multi-year financing across Capex and Opex budgets ð  New types of life cycle contracts (performance based, planning + construction + operation&maintenance, M&V …) ESP projects require interdisciplinary cooperation between ð  different departments (technical, legal, financial …) and ð  technical divisions/trades (electrical, HVAC, construction …). ⇒  How can this know how and cooperation be enabled/ supported beyond economic and technical rationale? © Jan W. Bleyl – Energetic Solutions ⏐ For requests: EnergeticSolutions@email.de ⏐ Task 16_Facilitator-Webinar_04 February 2014⏐ Slide 17
    • Need for changes in individuals Resistance to changes because of ð  anticipated loss of power or status, ð  possible extra work or ð  fear of individual failure to cope with innovations … ð  … => How can these individual change processes be enabled, supported, imposed beyond technical and economical rational? => What are the meaningful sticks, carrots and tambourines? © Jan W. Bleyl – Energetic Solutions ⏐ For requests: EnergeticSolutions@email.de ⏐ Task 16_Facilitator-Webinar_04 February 2014⏐ Slide 18
    • New, practical guidance paper … … currently under preparation… “Facilitators as intermediaries between ESPs and clients. Practical guidance for change management”, Questions to be answered, e.g.: ?  What are Tools to be used by Facilitators for accompanying change processes? ?  How to strengthen project driving forces? ?  Who to partner with? Authored by Dr. Ruth Mourik & Dr. Sea Rotmann, IEA DSM Task 24 ‘Behaviour Change in DSM’ in cooperation with Task 16. © Jan W. Bleyl – Energetic Solutions ⏐ For requests: EnergeticSolutions@email.de ⏐ Task 16_Facilitator-Webinar_04 February 2014⏐ Slide 19
    • Conclusions: It’s the Client who must decide! ü  ESCo is just a ‘delivery mechanism’, which clients need to decide for (or not). ü  Clients need to decide what they want? And what kind of (external) support they need to implement DSM projects? ð  In-house implementation or Outsourcing (= make or buy)? ð  In- or excluding financing, maintenance …? ð  … state of the art ESCo packages are modular (packaged according to a clients needs) ⇒  Much more attention on the client/buyer side of the market needed => mass roll outs possible, e.g. in Berlin, Austria … © Jan W. Bleyl – Energetic Solutions ⏐ For requests: EnergeticSolutions@email.de ⏐ Task 16_Facilitator-Webinar_04 February 2014⏐ Slide 20
    • Conclusions: A Role for ‘Facilitators’ … 1.  Facilitators are enablers for ESCo Market development 2.  They serve as intermediaries between clients and ESPs ‘(corporate) cultures’, interests and expectations 3.  Buyer-led approach enables competition between ESCos, other EE suppliers but also financiers 4.  Facilitator approach provides a level and knowledgeable playing field for a fair competition 5.  F. cost: 1 - 14 % of EE investments. => obstacles for clients. Often outweighed by maximized savings, lower prices and better quality 6.  Clients need organizational + individual change processes => new territory for most energy efficiency professionals © Jan W. Bleyl – Energetic Solutions ⏐ For requests: EnergeticSolutions@email.de ⏐ Task 16_Facilitator-Webinar_04 February 2014⏐ Slide 21
    • Discussion and Outlook 1.  Is the Facilitator approach applicable in your context? 2.  How to multiply and fund the Facilitator approach? 3.  How to establish and standardize procedures in public and private sector administrations to move from individual projects, led by highly motivated individuals, to mass roll-outs of comprehensive building refurbishment portfolios? 4.  What are suitable ‘sticks, carrots and tambourines’ but also practical approaches to enable change processes on the client side of the market? 5.  Compare the buyer-led, facilitation approach to the more ESCo-led project development practice, which appears to be prevailing in Anglo-Saxon countries © Jan W. Bleyl – Energetic Solutions ⏐ For requests: EnergeticSolutions@email.de ⏐ Task 16_Facilitator-Webinar_04 February 2014⏐ Slide 22
    • Literature reference and webinar: Task 16 paper on the Role of ‚Facilitators‘ Bleyl,  Jan  W.  et  al.     ESCo  Market  Development:  A  Role   for  Facilitators  to  play     in  ECEEE  Summer  Studies,  paper  ID   3-­‐472-­‐13,  Belambra  Presqu'île  de   Giens,  France  June  2013   by  Adilipour;  Bareit;  Bleyl;   Bourgois;  Coolen;  Kempen;  Kim,   Kil-­‐Hwan;  Jang,  Hye-­‐Bin;  Cho,   Sung-­‐Hwan;  Vanstraelen   Webinar: www.leonardo-­‐energy.org/ webinar/esco-­‐market-­‐ development-­‐role-­‐facilitators-­‐play   © Jan W. Bleyl – Energetic Solutions ⏐ For requests: EnergeticSolutions@email.de ⏐ Task 16_Facilitator-Webinar_04 February 2014⏐ Slide 23
    • Task 16 ”Competitive Energy Services” www.ieadsm.org Thank you! Questions and remarks welcome! What can we do together? Energetic Solutions Jan W. Bleyl IEA DSM Task 16 c/o Jan W. Bleyl – Energetic Solutions Phone: +43 650 7992820 EnergeticSolutions@email.de © Jan W. Bleyl – Energetic Solutions ⏐ For requests: EnergeticSolutions@email.de ⏐ Task 16_Facilitator-Webinar_04 February 2014⏐ Slide 24
    • Task 16 ”Competitive Energy Services” www.ieadsm.org Reserve slides Energetic Solutions Jan W. Bleyl © Jan W. Bleyl – Energetic Solutions ⏐ For requests: EnergeticSolutions@email.de ⏐ Task 16_Facilitator-Webinar_04 February 2014⏐ Slide 25
    • Methodologies 1.  Analyses of a standard energy services project life cycle to identify know-how and processes needed to structure and outsource comprehensive energy service projects 2.  Procurement model for outsourcing: ‘Negotiated procedure’ 3.  Analyses of ‘Facilitator’ services based on interviews with existing ESP clients, Facilitators and ESCos in six European countries and Korea 4.  Economic analyses of project facilitation cost relies on empirical data from 32 “real world” ESCo projects 5.  Analyses of change processes based on Kurt Lewin’s Model of Change: First approach to apply it to change processes in client organizations and its individuals to outsource demand side energy projects © Jan W. Bleyl – Energetic Solutions ⏐ For requests: EnergeticSolutions@email.de ⏐ Task 16_Facilitator-Webinar_04 February 2014⏐ Slide 26