ESCO Seminar

1
ESCO Seminar St. Petersburg 12-12.5.2004 Basics
of ESCO and some cases Seppo Silvonen, Senior
Expert Motiva Oy Helsinki, Finland

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Definition of ESCO

• The National ESCO Association of the U.S.
  (NAESCO)
• An ESCO, or Energy Service Company, is
• business that develops,
• The National ESCO Association of Canada (CAESCO)
• An Energy Service Company is an organisation
• that contracts with energy users,
• Terms often used
• Energy Performance Contracting (EPC)
• Third Party Financing (TPF)

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Idea of ESCO-service
Energy cost
Savings
( - )
Time
( - )
To the ESCO fast out
To the client
Project cost

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Elements of ESCO-service

• Identification of the energy saving measures to
  be included in the contract
• Arranging financing for the measures
• Implementing the measures
• Verification of the savings

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Phases of an ESCO-project

• Energy audit
• Engineering
• Installation, incl. the operation (payback)
  period

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The link between energy audits and ESCO-services
An ESCO-service is one possible tool for
implementing energy saving measures reported in
energy audit reports

• Short payback times
• audit customers normally implement and finance
  the energy saving measures by themselves
• Longer payback times
• ESCOs can implement the measures separately or
  linked to measures with short pay-back times

7
Typical cost structure of an ESCO-project

• Expert services 15-30
• Financing costs 10-15
• Investment costs (equipment with related work)
  55-75

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The basic financial elements of an ESCO-project

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Conditions for payment verification of the
savings

• Calculated savings
• One measurement before and another after the
  installation
• Continuous measuring starting before the
  installation

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Investment cost and energy savings

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Verification of the savings

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Payback time as a function of the real savings