Energy-Performance Contracting for Municipal Energy Suppliers

AI Quick Summary

Swissesco and Primeo will look at what form of energy-performance contracting can be introduced to the Primeo municipal energy suppliers community, what needs to be taken into account during implementation, and how it generates positive contribution margins for both Primeo and its associated energy suppliers. In this business model, investments in energy efficiency are financed by the subsequent efficiency gains. Thus it is a key for the energy optimisation of municipal buildings and infrastructure. Energy Lab_ Energy-Performance Contracting for Municipal Energy Suppliers Project idea description ■ What problem would you like to solve?Many cities and municipalities have buildings and infrastructures such as swimming pools, ice and sports halls or schools that are outdated and not energy efficient. Although these cities and municipalities often pursue ambitious climate and energy goals, they usually lack the means to renovate their infrastructures.■ Who are the customers and how will they profit from a solution?Our suggested solution is energy performance contracting. With this business model, the investments in energy efficiency and energy saving are financed by the subsequent efficiency gains. The customer receives a contractually guaranteed saving. The investments are usually taken over by an ESCO, an Energy Service Company. A Municipal Energy Supplier can thus provide the required energy efficiency measures and generate additional contribution margins in the process: see project examples.The customers are Municipal Energy Suppliers, Primeo is a leading company under which the umbrella of a community of 150 Municipal Energy Suppliers has been established. The owners of buildings and infrastructure like municipalities in the first step and subsequent steps also private owners of buildings and infrastructure. The municipal energy supply companies benefit from additional profit contributions and the building owners from lower energy consumption and thus lower maintenance costs for buildings and infrastructure.■ How does your project idea affect energy savings or CO2 emissions?If successful, this approach will enable the energy optimisation of municipal buildings and infrastructure using the expertise and financial strength of their municipal energy suppliers. This unfolds a whole range of win-win situations CO2 emissions from buildings can be reduced. The municipal energy suppliers learn the business model and use it first in the municipal sector and then expand their energy-saving contracting offer to private trade and industry. In this way, they become multipliers of the energy transformation and earn good money in the process. The municipality or city receives energy-optimised buildings and infrastructures and, as the owner, benefits from the profits of the municipal energy suppliers. In this way, fossil energy can be substituted on a local basis. The financial resources that are saved on fossil energy benefit local value creation via the municipal energy supplier. Society and local people benefit threefold: CO2 emissions are reduced; renewed infrastructures are made available; the corresponding added value benefits the local labour market. Current status and previous activities■ What has been tried before?Swissesco is the national Swiss association for energy performance contracting and is committed to strengthening the corresponding market. Swissesco has already attempted to approach municipal energy suppliers directly or to invite them to Swissesco events to familiarise them with the business model of energy performance contracting. ■ What was not successful?Unfortunately, this has not been successful so far, because it has not been possible - with a few exceptions - to win over the municipal energy suppliers for energy performance contracting. Due to a lack of interest and time, many municipal energy suppliers have not participated in the events.■ What have you learned?If we don't succeed in getting the municipal energy suppliers to come to us, we have to try to go to them. That is why we chose Primeo as our partner. Over the last few years, Primeo has built a community of about 150 municipal energy suppliers who are provided with energy services by Primeo. There is reasonable confidence that municipal energy suppliers will be more accepting of energy savings contracting if this comes through a channel from which they already purchase other energy services. Another incentive may be that national energy legislation requires energy suppliers to save a certain percentage of the energy they supply (between 1 and 2% per year). In this situation, energy savings contracting can be a good solution because it saves energy and yet generates profit margins for the energy supplier that carries it out.Consequently, the two project partners are Swissesco and Primeo. We assume that in the course of the project, an additional partner can join, possibly taking over a back office function for the communal energy suppliers. This should be a large company with a presence throughout Switzerland, but one that is not in direct competition with municipal energy suppliers, such as Siemens, Schneider or Boygues.Resources needed■ What are your planned work packages?Step sequence / Work packages1. Publicising the energy-performance contracting business model within the Primeo EVU community.2. First evaluation of how high the interest is in the community to adopt this business model for themselves and in which aspects support is required to be successful on the market.3. First market orientations as to who could provide know-how and back-office support, so that not each of the municipal EVUs has to set up the process themselves and Primeo is also relieved. The idea is to find a big player with competence and neutrality in the energy market who is willing to contribute back-office services to municipal energy suppliers.4. Primeo business model foundation: Primeo could take on a liaison and multiplier function and thus participate in the business model with relatively little effort. Before Primeo embarks on the establishment of a business model, an internal orientation takes place as to the extent to which Primeo wants to participate and which activities should be taken over by third parties - the neutral big player.5. After strategic orientation: detailed elaboration of the Primeo business model and any necessary internal processes within Primeo. 6. Drawing up specifications as to which services are to be provided by this third party - the big player -, which parts of the service are to be taken over by Primeo and which tools are to be used by the municipal energy supplier to work with customers on a local basis. 7. Tendering based on these specifications and agreement of a corresponding service agreement between Primeo, the members of its EVU community and the big player.8. Start implementation with one or two energy supply companies in the form of a pilot project. These utilities start their activities in the field of energy-saving contracting and test to what extent the planned implementation process is suitable in practice and where adaptations are needed. 9. Adaptation phase based on experience from the pilot project.10.Roll-out: Energy performance contracting is available to all members of the Primeo EVU community, is used systematically and generates contribution margins for the participants. Steps 1 to 3 can be completed in the currently targeted innovation booster proposal. Step 4 can be tackled. But it is rather unlikely, but not to be ruled out, that step 4 can be completed within the IB project. ■ How can the Energy Lab help you?Swissesco is a small association with currently 40 members and disposes of low personal resources. With the funding from the IB Energy Lab, an additional workforce can be organised to perform the underlying project proposal. In addition, there exists a vast experience in energy optimisation of buildings and stakeholder processes by the Energy Lab, particularly from the HSLU Hochschule Luzern which can be very beneficial for carrying out this project.

Project Idea Metadata

Project Idea Name: Energy-Performance Contracting for Municipal Energy Suppliers
Date: 8/16/2023 9:36:26 PM
Administrators:
- Stephan Juen

Project Idea Description

Energy Lab_ Energy-Performance Contracting for Municipal Energy Suppliers

Project idea description

■ What problem would you like to solve?

Many cities and municipalities have buildings and infrastructures such as swimming pools, ice and sports halls or schools that are outdated and not energy efficient. Although these cities and municipalities often pursue ambitious climate and energy goals, they usually lack the means to renovate their infrastructures.

■ Who are the customers and how will they profit from a solution?

Our suggested solution is energy performance contracting. With this business model, the investments in energy efficiency and energy saving are financed by the subsequent efficiency gains. The customer receives a contractually guaranteed saving. The investments are usually taken over by an ESCO, an Energy Service Company. A Municipal Energy Supplier can thus provide the required energy efficiency measures and generate additional contribution margins in the process: see project examples.

The customers are Municipal Energy Suppliers, Primeo is a leading company under which the umbrella of a community of 150 Municipal Energy Suppliers has been established. The owners of buildings and infrastructure like municipalities in the first step and subsequent steps also private owners of buildings and infrastructure.

The municipal energy supply companies benefit from additional profit contributions and the building owners from lower energy consumption and thus lower maintenance costs for buildings and infrastructure.

■ How does your project idea affect energy savings or CO2 emissions?

If successful, this approach will enable the energy optimisation of municipal buildings and infrastructure using the expertise and financial strength of their municipal energy suppliers. This unfolds a whole range of win-win situations CO₂ emissions from buildings can be reduced. The municipal energy suppliers learn the business model and use it first in the municipal sector and then expand their energy-saving contracting offer to private trade and industry. In this way, they become multipliers of the energy transformation and earn good money in the process. The municipality or city receives energy-optimised buildings and infrastructures and, as the owner, benefits from the profits of the municipal energy suppliers. In this way, fossil energy can be substituted on a local basis. The financial resources that are saved on fossil energy benefit local value creation via the municipal energy supplier. Society and local people benefit threefold: CO₂ emissions are reduced; renewed infrastructures are made available; the corresponding added value benefits the local labour market.

Current status and previous activities

■ What has been tried before?

Swissesco is the national Swiss association for energy performance contracting and is committed to strengthening the corresponding market. Swissesco has already attempted to approach municipal energy suppliers directly or to invite them to Swissesco events to familiarise them with the business model of energy performance contracting.

■ What was not successful?

Unfortunately, this has not been successful so far, because it has not been possible - with a few exceptions - to win over the municipal energy suppliers for energy performance contracting. Due to a lack of interest and time, many municipal energy suppliers have not participated in the events.

■ What have you learned?

If we don't succeed in getting the municipal energy suppliers to come to us, we have to try to go to them. That is why we chose Primeo as our partner. Over the last few years, Primeo has built a community of about 150 municipal energy suppliers who are provided with energy services by Primeo. There is reasonable confidence that municipal energy suppliers will be more accepting of energy savings contracting if this comes through a channel from which they already purchase other energy services.

Another incentive may be that national energy legislation requires energy suppliers to save a certain percentage of the energy they supply (between 1 and 2% per year). In this situation, energy savings contracting can be a good solution because it saves energy and yet generates profit margins for the energy supplier that carries it out.

Consequently, the two project partners are Swissesco and Primeo. We assume that in the course of the project, an additional partner can join, possibly taking over a back office function for the communal energy suppliers. This should be a large company with a presence throughout Switzerland, but one that is not in direct competition with municipal energy suppliers, such as Siemens, Schneider or Boygues.

Resources needed

■ What are your planned work packages?

Step sequence / Work packages

1. Publicising the energy-performance contracting business model within the Primeo EVU community.

2. First evaluation of how high the interest is in the community to adopt this business model for themselves and in which aspects support is required to be successful on the market.

3. First market orientations as to who could provide know-how and back-office support, so that not each of the municipal EVUs has to set up the process themselves and Primeo is also relieved. The idea is to find a big player with competence and neutrality in the energy market who is willing to contribute back-office services to municipal energy suppliers.

4. Primeo business model foundation: Primeo could take on a liaison and multiplier function and thus participate in the business model with relatively little effort. Before Primeo embarks on the establishment of a business model, an internal orientation takes place as to the extent to which Primeo wants to participate and which activities should be taken over by third parties - the neutral big player.

5. After strategic orientation: detailed elaboration of the Primeo business model and any necessary internal processes within Primeo.

6. Drawing up specifications as to which services are to be provided by this third party - the big player -, which parts of the service are to be taken over by Primeo and which tools are to be used by the municipal energy supplier to work with customers on a local basis.

7. Tendering based on these specifications and agreement of a corresponding service agreement between Primeo, the members of its EVU community and the big player.

8. Start implementation with one or two energy supply companies in the form of a pilot project. These utilities start their activities in the field of energy-saving contracting and test to what extent the planned implementation process is suitable in practice and where adaptations are needed.

9. Adaptation phase based on experience from the pilot project.

10.Roll-out: Energy performance contracting is available to all members of the Primeo EVU community, is used systematically and generates contribution margins for the participants.

Steps 1 to 3 can be completed in the currently targeted innovation booster proposal. Step 4 can be tackled. But it is rather unlikely, but not to be ruled out, that step 4 can be completed within the IB project.

■ How can the Energy Lab help you?

Swissesco is a small association with currently 40 members and disposes of low personal resources. With the funding from the IB Energy Lab, an additional workforce can be organised to perform the underlying project proposal. In addition, there exists a vast experience in energy optimisation of buildings and stakeholder processes by the Energy Lab, particularly from the HSLU Hochschule Luzern which can be very beneficial for carrying out this project.