SEMINAR HIJAU

THE PRACTICAL STEPS AND KEY

CRITERIA IN ENERGY PERFORMANCE CONTRACTING

Zaini Abdul Wahab

MAESCO 4th July 2013

Hotel Seri Malaysia, Ayer Keroh

Melaka

Outline

1. EPC Market Potentials

2. The Practical Steps & Key Success Factors For Successful EPC Projects Implementation

3. EPC Success Stories

4. The Way Forward

Shared Saving Mechanism

Adaptation from US Dept. of Energy, Measurement & Verification Guidelines, Version 3.0,

time

(year)

Energy Bills

During contract period

Lower Energy

Bill

After Contract period

Energy bill saved

Before Contract Period

Electricity bill

before energy

saving

measures

implementation

Payment to

ESCO

Savings for the

client

Baseline

Lower Energy

Bill

Savings for

the client

Implement EMS Develop & Plan

EMS

Guaranteed Savings Model

FACILITIE

S OWNER ESCO BANK

Project Design&

Implementation

Project Fees Loan

Repayment

Shared-Savings Model

FACILITI

ES

OWNER ESCO BANK

Project Design&

Implementation

Loan

Repayment

EE

PROJECT Energy saving share

(90%-70%)

Financing

Energy saving share

(10%-30%)

Energy Efficiency Market & Potentials in SEA

Source: www.reexasia.com

Saving Potentials (USD) in SEA

Clearly, the industrial and

commercial sector s offers

much higher savings potential Source: www.reexasia.com

EPC MARKET POTENTIALS IN MALAYSIA

Biggest Electricity Users For Government

Buildings (Sep 2009-Oct 2010)

Hospitals, 20%

Universities, 29%

Ministries, 19%

Others (States,

Agencies), 32%

Building Nos

Total Consumption

(kWh/year)

Total Bill

(RM/year)

Hospitals 22 367,587,657 130,640,653

Universities 25 543,961,738 193,324,002

Ministries 25 360,592,831 128,154,692

Others(States,

Agencies) 56 603,464,085 214,471,136

128 1,875,606,311 666,590,483

Estimated Total TNB

Bill for government

buildings

(Sep 2010-Aug 2011)

Total

Consumption(kWh/year)

Total Bill(RM/year)

7,896,508,329 2,726,767,394

10% saving equals

to about RM270

millions /year

Source:KeTTHA

EPC Market Potentials : Melaka

No. Building

Total Electricity

Bill

(RM/year)

Total

Consumption

(kWh/year)

1 Melaka Mall Complex Ayer Keroh 2,018,339 6,469,034

2 Seri Negeri Chief Minister Department

, Ayer Keroh 1,435,728 4,601,693

3 MITC Complex, Ayer Keroh 980,085 3,141,299

4 Wisma Negeri Building Ayer Keroh 1,095,472 2,547,610

5 Graha Maju Building, Jln Hang Tuah 674,267 2,161,113

6 Wisma PKMM Building, Ayer Keroh 646,924 2,073,473

7 Digital Mall, Jln Hang Tuah 550,110 1,763,174

8 Melaka Sentral Terminal Peringgit 735,193 1,709,750

9 Putra Specialist Hospital 2,858,772 1,905,848

Total 10,994,890 26,372,994

Source: JIMAT

Potential Areas For EPC Projects

EPC Potentials : A Building Facilities in Melaka

NO. Item

MOTOR

RUNNING NORMAL MODE ENERGY SAVING MODE

( Rated

kW )

( Running

kW ) kWh/Year

Rate/Year

(RM)

Amount

(kWh)

Rate/Year

(RM)

SAVING

(%)

SAVING

(RM/Year)

1 CHWP 1

18.5 19.1 165,024 70,960 107,266 46,124 35% 24,836 Old Block Chiller Room

2 CHWP 2

18.5 19.0 164,160 70,589 106,704 45,883 35% 24,706 New Block Chiller Room

3 CDWP 1

15 13.3 114,912 49,412 82,737 35,577 28% 13,835 Old Block Chiller Room

4 CDWP 2

18.5 15.3 132,192 56,843 95,178 40,927 28% 15,916 New Block Chiller Room

Sub-Total 67 576,288 247,804 391,884 168,510 32% 79,294

No Item Rated

(kW)

Actual

kW

Normal

kWh/Year

Saving Mode

kWh/Year Saving % Saving kWh

Saving

(RM/Year)

1 Chiller – Old Blk 210 128 1,105,920 995,328 10% 427,991 47,555

2 Chiller– New Blk 210 115 993,600 914,112 8% 393,068 34,180

Sub-Total 420 243 2,099,520 1,909,440 9.1% 821,059 81,734

TOTAL HVAC SAVING 161,028

Source: ESCO

EPC Potential:

Shopping Complex in Melaka

• Total Lighting Saving = RM 116,253

• Total Maintenance Saving = RM 44,768

• Total Saving for HVAC = RM 270,231

• Total Annual Savings = RM 431,252

18% from total annual

electricity bill

(Nov 2012-Feb 2013)

Source: ESCO

The Practical Steps & Key

Success Factors For Successful EPC Projects Implementation

The Key Steps

Confirm The Need!

Understanding on EPC concept by the building owner

The needs to adopt EPC model

Self assessment

Comparing energy benchmark

Estimation of project costs & saving potentials

Private investment & Risks transfer to ESCO - viable sharing ratio/%

Opened or Closed Tender?

Scope of Services under EPC

Project Funding & Financing Options

Engineering & Economic Feasibility Studies

Project Design, Engineering & Permitting

Project Construction

Project Commissioning

Operation, spare parts & Maintenance

Performance measurements & monitoring

Preparation

Facility Profile Basic building information

Floors & areas

M&E equipment & system data

Building materials information & data

Energy consumption

Define project & preliminary scope

Evaluation criteria ESCOs

EPC Project Proposals

Prequalification of ESCOs

Qualifying criteria

Own criteria – must consider the nature of

ESCO business for EPC

MAESCO’ s /International guidelines

Current criteria by ST is insufficient to

determine the financial & technical capabilities

of registered ESCOs

Identify Potential ESCOs

Selection of ESCOs

Experiences in EPC/Track Records in energy services

Financial Strengths

Management capacity in

energy services

Technical Competency &

Expertise

ESCO

To secure

financing & ensure

sustainable

operations

Issue Request for Proposal

Evaluation of Proposals

Example: Evaluation Score Sheet

Detailed Energy Audit

Investment Grade

Energy Audit

Owner’s roles

Scope & schedule

Findings

Energy saving

potentials analysis

Projected annual cash

flow

Measurement,

Monitoring &

Verification of actual

savings

EPC Contract Document

Drafted by JKR for government buildings as reference To be customized based on requirements of each building owner

Factors should be considered to reduce dispute in EPC Contract Obligations of owners & ESCOs

Factors affecting savings performance

Valuating savings uncertainty

Minimum operating conditions

Energy prices/tariff rates

Verification by A third party

Baseline modification/review(non-routine)

Balancing uncertainty and costs

Protection from risks by both parties

Project Implementation

EPC Contract Negotiation &

Signing

Install permanent sub-meters

Collect energy data to

establish energy

baseline values

Improve & optimize energy

consumption with proposed

saving measures

Measure & monitor actual

energy savings achieved

against agreed baseline values

Measurement, Monitoring &

Verification

For actual savings achieved

Methodology/Protocol

Baselines agreed

Permanent metering (highly recommended)

Options For

Energy Baseline & Saving Calculation

Method Advantages Disadvantages

Utility billing history Low cost •Effects of weather ,

occupancy, other

changes may mask

savings

•May be unreliable

unless savings are

significant compared to

normal bill variation

Data already available

Independent data

Represent all effects of

ESMs

Account for interactive

effects

System/Equipment

sub-metering

Isolate effects of ESMs

•Higher cost

•Misses interactive

effects

Very accurate for

lighting measures

Results are more

predictable(low risk)

Baseline:

Baseline year from electricity bill data (kWh)

(kW

h)

Example:

Energy saving calculated by the difference between a

baseline year and a subsequent year from electricity bill

(kW

h)

Baseline : Building Monthly Load Profile (kW) from sub-metering

31

Baseline :

Building monthly electricity consumption profile(kWh) from sub-metering

32

Baseline :

Building monthly load profile(kW) for AHU from sub-metering

33

Baseline :

Monthly electricity consumption profile(kWh) for AHU from sub-metering

34

Example: Savings calculated based on actual

measurement from sub-meters

Modifying/Reviewing Baseline

To establish standards for “Materials” changes which may reasonable expected to change energy consumption trend in the facility Occupied square footage, operating hours

Facility’s energy equipment/operating parameters other than the ESCO equipment

Energy equipment, other than ESCO equipment, that malfunctions, or is repaired, or replaced in a manner that increases or decreases energy consumption;

Other actions taken by the facility owner that may reduce or increase energy use; and,

Discovery of an error in the original baseline, in which case the change would be retroactive

Trust , good

relationship &

effective

communication

between ESCO &

building owner is

crucial to identify the

needs to

modify/review

baseline!

Example: Monitoring & Measurements for Air

Conditioning System

Your Energy Management

Specialist &

Total Energy Conservation

37

(Before) Conventional FL 36W (After) HP T8-28W

Example : Before & After Implementation

EPC Success Stories:USA

ESCO Fund:Thailand

EPC Success Stories: Malaysia

Source: ESCO

THE WAY FORWARD

Capacity building for ESCOs and building operators to enhance competencies in energy saving projects implementation

Incentives/rewards/recognition for buildings which produced significant energy savings To create motivation

Supports from banks with independent technical assessment from a competent agency for EPC project proposals for funding To increase numbers & sizes of participation by ESCO & building

owners

One-stop & competent agency for EPC project proposals evaluation & performance measurement & verification

Fiscal incentives for ESCOs & Business friendly procedures

Thank you for your time & attention!

• secretary@maesco.org.my

• 019 2152700

• www.maesco.org.my