ESCO-model presentation. Thore Aslak Business Developer Energy Solutions Schneider Electric Buildings Denmark Tlf:

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1 ESCO-model presentation Thore Aslak Business Developer Energy Solutions Schneider Electric Buildings Denmark Tlf:

2 Schneider Electric The Global Specialist in Energy Management Energy & Infrastructure Industry Data Centers & Networks Buildings Residential 2

3 Schneider Electric Buildings - Overview Vision A world where we all can achieve more while using less of our common planet. Mission Help people make the most of their energy, while providing added value through building services for energy and security. ESCO experience Schneider Electric Buildings has been working with ESCO projects since 1992 in the USA and has expanded the ESCO-business to many other countries. The ESCO business started up in Denmark in 2004 and we now have 7 ESCO-partnerships. Schneider Electric Buildings has on a globale scale implemented more than 400 ESCO projects. Indoor Climate Security Energy Our partners are: - Municipalities/Cities - Public Housing Companies - Educational Institutions - Hospitals - Government 3

ESCO experience Schneider Electric Buildings has been working with ESCO projects since 1992 in the USA and has expanded the ESCO-business to many other countries.

4 What is the ESCO-model? ESCO = Energy Service Company The ESCO model is a Partnership model that Facility Owners can use to improve the value of their facilities, while minimizing the financial risk associated with such Facility Improvement Projects The Facility Owner will partner-up with an ESCO in order to create a Facility Improvement Project. The ESCO-partner will develop and implement the project according to the Facility Owner s goals, wishes and needs, and follow-up on the projects performance. This is usually a long-term partnership (e.g years), that gives the Facility Owner one point of contact during the entire project. Improving the value of the facilities Lowering energy costs Improving the user-comfort of the facilities Reducing deferred maintenance The financial risk is minimized because the ESCO model uses Performance Contracting where the ESCO-partner will guarantee energy savings 4

Facility Improvement Projects The Facility Owner will partner-up with an ESCO in order to create a Facility Improvement Project.

5 Why use the ESCO-model? Facility Owner Challenges for Facility Owners: - Operational expenses are rising due to increasing energy consumption and prices, but also due to more and more reactive maintenance - No insight into how the energy is consumed - No means to control the energy consumption - Ambitious climate goals that are hard to achieve - Poor user-comfort (e.g. bad indoor climate, lighting is not appropriate, room temperature is too high/low) - Lack of resources (i.e. money, manpower and knowledge) to implement the improvements wanted 5

also due to more and more reactive maintenance - No insight into how the energy is consumed - No means to control the energy consumption

6 The ESCO-model - Overview Facility Improvement Needs and Goals 30 GWh 24 GWh Energy 2.5 mill. Euro 2 mill. Euro Energy Costs Euro Yearly Energy Savings Facility Owner Utility Provider Facility Improvement Project Guaranteed Savings ESCO 5 mill. Euro Up-front Cost Financial Institution 6

000 Euro Yearly Energy Savings Facility Owner Utility Provider Facility

7 The ESCO-model - Facility Improvement Project One of the main ideas with the ESCOmodel is that the low hanging fruits can help pay for the high hanging fruits. In the same way buildings with a quick ROI will help pay for buildings with a long ROI. Return on Investment (ROI) Building envelope upgrades Sustainable energy solutions Lighting retrofits Energy management Mechanical upgrades Investment Investment: Euro ROI: 30 years Investment: Euro ROI: 2 years 7

In the same way buildings with a quick ROI will help pay for buildings with a long ROI.

8 The ESCO-model - Guaranteed savings Energy consumption Before Guaranteed savings After ESCO 50/50 Start of guarantee periode End of guarantee periode Years 8

9 The ESCO-model - Lowering Operational Expenses Upgrade the technical infrastructure and building envolope Transfer competences to the operations team 1. Lower energy consumption 2. Less reactive maintenance 3. More effective planned maintenance Lower Operational Expenses Energy & Maintenance Expenses Reactive maintenance Planned maintenance Energy Reactive maintenance Planned maintenance Guaranteed Energy Savings Energy Direct Effect Reactive maintenance Planned maintenance Energy Total Effect Today During project After project 9

More effective planned maintenance Lower Operational Expenses Energy & Maintenance Expenses Reactive maintenance Planned maintenance

10 The ESCO-model - Financing Third party financing Euro Additional reduced operational expenses Guaranteed Savings Years Cost of loan Up-front cost 10

11 The ESCO-model - The proces Decision Point Yes/No Decision Point Yes/No ESCO-project WS 1 WS 2 Savings potential Guaranteed savings Pre-study Suggested improvements Added Value Next step Analysis & Project dev. Improvement plan Project plan Financing Added value Installation G&P 2-3 months 6-8 months 1-2 years 5-10 years 11

improvements Added Value Next step Analysis & Project dev.

12 Why use the ESCO-model? Facility Owner Benefits for Facility Owners: - Guaranteed savings minimize the financial risk of the facility improvement project - The facility improvement project is done over a short period of time -The energy consumption for every facility/building is monitered and controlled -Improved user-comfort (e.g. better indoor climate, lighting is up-to-date, room temperature is appropriate) - Additional resources are supplied by the ESCO-partner that are experts in facility improvement projects - Competencies are transferred to the maintenance team, so they can identify and implement energy savings on their own -Positive press coverage regarding the the facility owner s effort to reduce CO2-emissions 12

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