EnergaP mentoring in PROSPECT Learning Cycle 1

The Mentor ‘EnergaP - Energy Agency of Podravje (SI)’ and Mentee ‘Câmara Municipal de Loures (PT)’ of the 3rd Learning Group participated in the online session on the 21st of June 2018. +Mentors' Corner

The Local Energy Agency of Podravje presented the project Establishing markets for the uptake of guaranteed energy services in the form of EPC, a work programme aiming at an increased market uptake of guaranteed energy services through raising knowledge, transparency and trust. More specifically, the programme will provide support to concrete projects and promote energy performance contracts (EPC) in 9 European regions by using street lighting refurbishment as a learning and testing ground, fostered by the provision of regional EPC facilitation services. It consists of the following main actions: Internal capacity building and setting up regional ESCO facilitating services; Provision of regional EPC facilitation services; Financing EPC projects; Supporting and implementing real-life procurements of EPC street lighting projects; Applying the knowledge to other EPC applications; European dissemination and networking. The total savings are expected to exceed 32,000 MWh , as well as it is planned that 2 new ESCOs will be established in each of the involved regions.

During Step 2 of the Learning Programme, a second online session took place on the 28th of August 2018. The Mentee presented projects and ideas related to the role of EPC in public lighting. Specific needs to be addressed during the visit by the mentor were discussed as well.

 

The Portuguese Municipality of Loures visited Energa P in Slovenia to learn about EPC for public lighting

The physical meeting took place in the City of Maribor on November 22nd and 23rd. Dr. Vlasta Krmelj, Director of Energy agency of Podravje, a European Energy Manager and certified expert for energy certificates for buildings has been a wonderful host in Slovenia to Dr. Fernando Noivo, Energy Municipality Manager, from Portuguese Municipality of Loures. During the visit they had the opportunity to talk about all general steps needed to start the procurement for EPC, as well as all necessary clauses a true EPC contract should entail.


Vlasta Krmelj organizes a visit to Slovenska Bistrica, where Fernando Noivo talked to Mr. Tomaž Pristovnik, an EPC project manager
Main square in the City of Maribor, Slovenia
Mentor Vlasta Krmelj (ENERGAP), Mentee Fernando Noivo (Loures) and Facillitator Mia Dragović Matosović (PROSPECT)
Retrofitted public building in Slovenska Bistrica

After the theoretical part, on both days there was a site visit organised to nearby municipalities, in order to witness three examples of EPC realized in practice. First visit was to Municipality Radje ob Dravi, where EPC was used to refurbish an old municipality building.

This scheme is interesting as it includes a public and a private owner which share the building. Also, the municipality has refurbished 486 luminaries, or almost entire public lighting through EPC, making it not only new and modern, but the lighting also changes colours in the ones chosen by citizens as the most attractive.

The second day was a day for meeting an EPC project manager, Mr. Tomaž Pristovnik in Slovenska Bistrica, who shared his positive experience of implementing EPCs in 16 of their public buildings.

 

Replication/Transferability: EPC in public lighting

The Mentor and Mentee of the group participated in the transferability and evaluation session on the 26th of February 2019.

The project in Loures is now the responsibility of Iolanda Maria Gonçalves de Sousa from the energy efficiency sector in the Municipality of Loures.

An advice concerning the longevity of the EPC is to try to make it around 12 years long, not more than 15! Concerning sharing the investment, at least 20:80 public:private share is advised (not less as it would make the contract too long, and savings are of course less for the municipality).

When trying to convince the city mayor/city council to opt for ESCOS, instead of calculating only the investment, also look at the savings in the management and management of the system. Also, just taking the money from the bank gives you now assurance the savings will be achieved, and all the risk is on the public partner. With EPC, the risk is shared with the private partner, and the private partner is motivated to achieve greater savings.

Rethinking the financing scheme

Main impressions and understanding about the financing scheme:

EPC is not a bank but rather a provider of service. The main thing to look for in an EPC contract is guarantees (for savings, for maintenance for performance).

Key strengths of the financing scheme:

It brings in solutions that a public owner does not have access to, and the private partner invests their money. If set up properly, it comes with numerous guarantees.

Key weakness of the financing scheme:

If we only observe the money needed for equipment, then EPC is much more expensive. It is a costly contract, but it offers services and level of savings beyond what a public partner can achieve on its own. Setting up a real contract takes time and patience and a dedicated team.

Key steps to set up or develop the financing scheme:

Move away from current contracts and way of thinking (it is not about the equipment the public partner wants, but rather about service/performance characteristics they want).

Think about a pilot project but keep in mind that EPC contract are very costly and time consuming and are thus best suited for large projects.

Look at the audits again and see if enough information is provided, as well as if all the current costs were taken into account (think of hidden costs).