Energy Saving Companies (Ecos) offer a range of integrated services to organisations like local authorities to help them save costs through reduced energy use.
An Esco can provide a guarantee on this reduced level of energy use, and instead of a direct payment for its services, the Esco takes a portion of the energy savings made through energy saving initiatives on a risk/reward basis.
The UK has one of the most established Esco markets in Europe, although until recently under a slightly different model; the traditional, well-known term in the UK is Contract Energy Management (CEM). As the government, organisations, businesses, and the public are becoming more aware of energy efficiency, the demand for energy management services has increased further.
The Esco’s main objective is to save the client money and in order to share in that saving, an Energy Performance Contract (EPC) will underpin this agreement.
The government has provided a model EPC contract and a best practice guide to help inform the wider business community. The contract contains two subsections regarding the call-off contract phase:
- The first phase allows the client to have investment grade proposals drawn up without having to invest in the works that they advise should take place.
- The second phase allows the local authority to be released from the contract if the agreed savings are not being met.
In terms of process, the Esco will undertake an audit on the client’s energy use and infrastructure, which is then used to determine how the client can reduce its energy costs. The critical output from this audit will provide the basis of clients existing energy usage as a baseline.
Once the baseline has been agreed with the client, the Esco will make recommendations which may result in changes to the client’s existing energy supply contracts and energy consuming portfolio of assets, for example; motor operation, heating, air conditioning and lighting.
The Esco can take responsibility for the entire enhancement process from energy modelling and design through to operation and maintenance. The Esco may also take full control of the client’s energy management systems depending on the particular opportunity, together with client agreement.
The client’s energy use will then be monitored to ensure that the client is achieving optimum energy savings.
Using an Esco to reduce energy costs can be cheaper for local authorities rather than attempting to reduce energy usage through the use of limited internal resources. With the world of energy management constantly evolving, it is difficult to keep up to date on the latest services, products and technologies and assess how they may assist in reducing energy costs.
Energy supply contracts also need to be monitored as energy suppliers continually change their service offerings based on a number of external factors, such as time of the year, political pressure and fuel availability.
There are also a significant number of stakeholder interfaces that an organisation will need to consider with connection to their energy use which needs to be carefully managed. This diagram shows how an ESCO can reduce the number of interfaces for a client.
There are a number of organisations now providing Esco services and as in any sector, there are differences between the providers. While there is no official Esco accreditation body, it is advisable to check the technical experience of the team members to ensure you get the most appropriate Esco.
With the right Esco in place, a local authority should expect to see significant savings through a reduced energy bill over the length of the contract.
Column sponsored and supplied by UK Power Networks Services - contact Mark Donovan at Mark.Donovan@ukpowernetworks.co.uk