Presentation to ESTA Energy Performance Contracting Group January 2017

1. Steven Fawkes
EnergyPro Ltd
ESTA-EPCG
16th January 2017
De-risking energy efficiency
project investment

2. Contents
• Bridging the gap
• Low hanging fruit?
• Derisking tools
• The future

3. Energy
people
Finance people

4. Understand
the process

5. Pre-financing
Baselining Savings
Term
sheet
Design,
Construction,
Commission
Financial
close
Operations,
Maintenance,
Monitoring
Servicing
Measurement &
Verification
Inspectio
n
Initial
model
Risk
analysis
Final
model
Comparison of actual
performance against model
Model refinement
Draw
down
Energy efficiency investment underwriting

6. • Something on EEFIG Underwriting guide

7. Standardize the
process

8. Lack of standardization results in:
Greater performance risk
Uncertainty limiting demand
Higher transaction costs
Difficult to build capacity
Difficult to aggregate

9. Investor Confidence Project Protocols
BASELINING
• Existing Building
• Drawings
• Weather File
• Energy Usage
• Energy Rates
• Occupancy
SAVINGS
• Model File
• Calibration Data
• Bid Packages
• Certifications
OPERATIONS
• BMS Points
• Fault Plan
• Maintenance Plan
MEASUREME
• M&V Model
• Regression Model
• Adjustments
• Impact
• Baseline
Adjustments
COMMISSION
• Cx Plan
• Cx Authority
• Test Procedures
• Facilities Req.
C
x
Protocols standardize best practice in
project development and
documentation

10. ICP EU Protocols
Large
Standard
Targeted
Whole building retrofit,
dynamic modeling
Whole building retrofit, no
dynamic modeling
Single or limited number of
EE measures
ApartmentTertiary
6 European Building Protocols
available now and being applied.

11. Investor Ready Energy Efficiencytm
Third-Party
Verification
Project
Development

12. Learn the language

14. CFOs
This is a great energy saving
project with a three year
payback period
Blah blah energy – that is
boring – how do I know it will
save – not strategic – sounds
risky

16. Energy Finance

17. Energy Finance
This project has a three year payback.

18. Energy Finance
This project has a three year payback. What is the life of the project?
Who says?
What’s the IRR?
What are the risks?
What assumptions?

19. Energy Finance
This left handed widget will reduce
energy use by 8.75% and save 3,650,452
kWh over a normal year

20. Energy Finance
WTF?This left handed widget will reduce
energy use by 8.75% and save 3,650,452
kWh over a normal year

21. Pre-financing
Baselining Savings
Term
sheet
Design,
Construction,
Commission
Financial
close
Operations,
Maintenance,
Monitoring
Servicing
Measurement &
Verification
Inspectio
n
Initial
model
Risk
analysis
Final
model
Comparison of actual
performance against model
Model refinement
Draw
down
Energy efficiency investment underwriting
TIME TO START
TALKING TO
FINANCE

22. DERISKING ENERGY EFFICIENCY PLATFORM (DEEP)
DEEP is an open-source initiative to up-scale energy efficiency investments in Europe
through the improved sharing and transparent analysis of existing projects in
Buildings and Industry.
Initially contains data for over 7,800 building and industry projects contributed by:

23. THE DE-RISKING ENERGY EFFICIENCY PLATFORM (DEEP)
EMERGING RESULTS - BUILDINGS
In buildings, single measures (e.g. Lighting or HVAC) payback in a median of 3 years, whereas projects
with deeper or integrated renovations (incl. building fabric measures) typically require over 11 years to
be paid back.

24. THE DE-RISKING ENERGY EFFICIENCY PLATFORM (DEEP)
EMERGING RESULTS - INDUSTRY
The median payback from over 2,700 DEEP contributed projects from Industry is 2 years
Many energy efficiency opportunities in industry have payback times below 3 years

25. Building Button

26. Understand decision making

27. The more strategic a proposed investment is, the more it contributes to
competitive advantage or the organization’s strategic objectives, the more
important it is and the higher the probability of a decision to invest.
Energy efficiency is rarely – if ever - strategic.
Non-energy benefits of energy efficency are much more strategic e.g.
- added asset value
- Job creation
- Health and well-being
- Improved productivity
- Improved sales
- etc.
Therefore – value and sell non-energy benefits..

28. Source: Cooremans, 2007

29. Source: Cooremans, 2007

30. It is not surprising that proposed energy
efficiency investments are often turned
down – even when they have an attractive
financial return and low risks!!

31. How does this energy efficiency project
contribute to the strategic aims of the
organisation? (OR appeal to what is
important to the consumer)
- how does it add value?
- how does it reduce risks?
- how does it reduce costs?
Important questions

32. How do we value non- energy benefits and
link these to strategic aims?
- work being done by IEA
- work being done by WGBC
Remember that benefits can be hard to
value in other areas as well.
Important questions

33. Money?
Coolness?
Which is more important in decision making?

34. Conclusions
• Involve finance at the beginning
• Standardize processes from beginning to end
• Learn the language of finance
• Stress non-energy benefits ahead of energy efficiency
• Think how this project contributes to overall strategic direction of the
organization
– Value added to customers
– Risks (resilience)
– Cost reduction
• Value non-energy benefits
• Evaluate all risks

35. Contact
Dr. Steve Fawkes
EnergyPro Ltd
steven.fawkes@energyproltd.com
@DrSteveFawkes
+44 77 0223 1995

36. ICP – The future
The future