ManagEnergy Networking Event: Stimulation of the EPC Market in Lithuania

14. November 2013

Presented by Mr. Kaj Leonhart Petersen

EC Network / ManagEnergy

Background

• ManagEnergy is a technical support initiative of the European Commission’s Intelligent Energy Europe programme

• Support for local and regional sustainable energy actions

• Launched in 2002, originally as a think-tank

Major Activities

• Web platform: ManagEnergy.net

• Capacity building workshops

• Networking events

• ManagEnergy Local Energy Action Award

• Publications

ManagEnergy.net

• Policy and funding updates – via newsletter and homepage

ManagEnergy.net

• Visit the microsite for this event:

• managenergy.net/events/

• Download presentations and documents

Capacity Building Workshops

• Skills development on technical and financial topics

• Customised to address specific local and regional needs - working In cooperation with local partners

• 45 workshops in the period September 2012 – February 2015

• September 2012 – February 2013: 13 workshops focusing on SEAP development (Covenant of Mayors)

• March 2013 - February 2014: 18 workshops focusing on EPC – Energy Performance Contracting

Networking Meetings

• Targeted, thematic events that aim to promote good practices and facilitate learning, exchange and networking

• The meetings are held on a regular basis across Europe for a selected number of participants.

• Workshops and events are highly visible in the EU context:

• Promotion via EU channels

• Follow-up through reporting, articles etc.

EU Campaign on Energy Performance Contracting

Launched by DG Energy (September 2013 – March 2014) in relation to the new Energy Efficiency Directive

To highlight awareness of EPC at national, regional and local levels

enable country-specific discussion and capacity building of the core stakeholders

The three main pillars of the campaign are the

• European Public-Private Partnership (PPP) Expertise Centre targeting central governments,

• ManagEnergy targeting regional and local actors (EPC training), • and the Covenant of Mayors targeting local actors and CoM

signatories - webinars

EU is not on track to meet it’s 20% energy savings target by 2020!

A new impetus is needed! Therefore On 25 October 2012, the EU adopted the

Directive 2012/27/EU on energy efficiency.

• Repealing Directive on energy end-use efficiency and energy services 2006/32/EC

• Entered into force on 4 December 2012 and to be transposed by 5 June 2014

• Establishes a common framework of measures for the promotion of energy efficiency in order to ensure the achievement of the Union’s 2020 20 % target on energy efficiency

• Imposes obligations on Member States to support the energy services market: • model contracts, qualification/certification, provision of

information, removal of barriers

The New Energy Efficiency Directive Promoting the Energy Service Market (Art.14)

EU Energy Efficiency Directive (EED) defines energy performance contracting as: • contractual arrangement • between the beneficiary and the provider of an energy efficiency

improvement measure • Where the investments made by the provider (work, supply or

service) are paid for in relation to o a contractually agreed level of energy efficiency improvement o or other agreed energy performance criterion, such as financial

savings

Cost savings in EPC

end of contract implementation of measures

op

era

tio

nal

co

sts

with EPC

cost savings guaranteed savings

covered volume of investments

customer benefit

without EPC

time

12

The New Energy Efficiency Directive Promoting the Energy Service Market (Art.14)

A typical EPC project is delivered by ESCO = Energy Service Company

Energy service providers, providers of EPC projects

Clients – Those who are interested from public and private sector –

owners or property managers

Subcontractors – Providers of energy efficient installations and components,

they are liable to an ESCO, they are not in direct contact with the client

Consulting companies (Facilitators) – Assistance with preparation of projects on the client side,

organization of tenders, monitoring and verification of savings for clients

EPC – A partnership between the beneficiary and the ESCO!

• Creation of added value through synergies between e.g. public authorities and private sector companies

• A real partnership is WIN-WIN:

• Client: Implementation of measures in a speedy and efficient manner to obtain better indoor climate, costs savings etc.

• ESCO: Good reference, expansion of the business

• The EPC model must create clear incentives for both parties to implement measures efficiently and professionally at the client’s facility

The New Energy Efficiency Directive Promoting the Energy Service Market (Art.14)

WHY EPCs?

Can help building owners finance efficiency projects through the energy savings over time, with very little upfront investment

Off balance sheet financing on commercial basis Comprehensive measures can be implemented in a

relatively short time thereby accumulating annual energy savings

Guaranteed savings Involvement of private sector expertise contributes to

eliminate project risks and create bankable projects. • well-proven technology well adapted to local needs

• well documented project in terms of technical, economic and financial analysis

• proper organization and management in place to ensure proper implementation and operation

EPC – some of the barriers

Lack of awareness

Mistrust

Aversion to outsource energy

Procurement difficulties

Lack of policy incentives

Accounting & budgetary rules

Lack of appropriate forms of finance - reliance on government funding

Lack of accepted standardized measurement and verification procedures

– Energy Service Companies Market in Europe Status Report 2010

Certain countries (like Germany, Italy and France) have large number of ESCOs, while in most countries there are only a few ESCOs established

A strong market growth has been revealed during 2007-2010 in Denmark, Sweden and Romania

The most common trend across all countries is, however, a slow market growth.

The financial crisis and economic downturn are partly responsible for the slow growth – counterbalanced by improved supportive and legislative frameworks

Market Survey

New Multiannual Financial Framework (2014-2020)

In line with EU 2020 strategy: "smart, sustainable & inclusive growth“

Thematic concentration: shift to a competitive low carbon economy

Public authorities to pave the way (including use of EPC)

The big bulk of EE/RES investments should come from private sector – EU and national funding to complement

New Multiannual Financial Framework (2014-2020)

Investment need 2011 – 2020: 850 billion € across sectors

Approx. 85 billion € per year - 60 billion € per year is related to buildings

Horizon 2020

– Commission proposal for a 80 billion euro research and innovation funding programme (2014-2020)

– € 6.5 to be allocated to "Secure, clean and efficient energy"

– A single programme bringing together three separate programmes/initiatives

– Coupling research to innovation

– Focus on societal challenges facing EU society, e.g. health, clean energy and transport

– Simplified access

Financial support: Project Development Assistance

Networking Event, Vilnius 14. November 2013 Stimulation of the EPC market in Lithuania

• Transparense project: IEE project supporting EPC Market

• International Experience

– Denmark: Public buildings

– Latvia: Residential buildings

• National stakeholders: Status and opinions

• Financing: EBRD, EIB

• Debate and discussion: Oppurtunities, actions…

Thank you for your attention!

Kaj Leonhart Petersen

Klp@ecnetwork.dk

Info@managenergy.net