EPC project development models

WP 2 training sessionEPC project development modelsBerlin, 2006-02-08Dipl.Ing. Vollrad Kuhn, Berliner Energieagentur GmbH Berliner Energieagentur GmbH

EPC project development models Two different project development models: • Single-stage procedure(e.g. Energy Saving Guarantee Contract from the Hesse guidelines, guidelines was elaborated from BE/legal experts for Hesse Environmental Ministry, published 2003) • Two-stage procedure(e.g. Success Guarantee Contract from the dena guidelines, published from German Energy Agency dena for the Federal Ministry of Transport, Building and Urban Affairs 2003) Berliner Energieagentur GmbH

EPC project development models Main differences between both models Single-stage model: • Bidder as potential contractor has to provide an energy saving guarantee already after performance of the energy rough analysis (including the 1st validation of building data, determination of energy and cost saving potential, concret energy efficiency measures) • no separate project planning contract, no separate remunaration of the bidders planning costs for rough and fine analysis • 2nd validation of building data / fine analysis is part of the preparation phase of project implementation phase Berliner Energieagentur GmbH

EPC project development models Main differences between both models two-stage model: • Bidder as potential contractor has to provide also an energy saving guarantee after performance of the energy rough analysis (including the 1st validation of building data, determination of energy and cost saving potential, calculation of planning costs for fine analysis), but selected Contractor must verify the saving potential and specify his rough analysis results before the project implementation • Stage 1: Contractor has obligation for fine analysis (detailed 2nd validation of potential energy and cost savings) on basis of separate project planning contract for fine analysis prior to conclusion of EPC contract (or planning contract is part of the whole EPC contract), he can adjust the building data sheets, saving measures • separate remuneration of the contractors planning costs for fine analysis (if there is a confirmation with rough analysis, but decision against start of the stage 2 by client) • Stage 2: implementation of energy eficiency measures/performances and success guarantee by the Contractor (if confirmation of rough analysis or seperate decision of the client) Berliner Energieagentur GmbH

EPC project development models Course of the negotiation procedure Phase I: request for submission of a tender and sending of the bidding documents two-stage model: requirements for fine analysis are content of the documents Phase II: negotiation of the tenders (1 – 2 negotiation rounds), negotiation closing Phase III: review, evaluation and award or cancellation of the negotiation procedure After award decision, contract conclusion start of project implementation by the Contractor Two-stage model: Contractor has to start with stage 1 (fine analysis), if the results confirm rough analysis, client can choose from two alternatives • Order to start with stage 2, fine analysis costs are content of calculated basic remuneration for the EPC services • Decision against implementation of stage 2 (due to fair reasons by the client), remuneration of contractors fine analysis costs by the client Berliner Energieagentur GmbH

Tasks of project development and implementation I Project preparation and -development step 0: Frame establishing • description / communication of the project • Checking the data situation • Integration of • decision maker / professional departments • approval authorities Building selection / definition of targets • Energy costs for electricity, heat etc. • Using data (operating hours, numbers of pupils etc.) • Description of the sites/buildings step1: • Fixing of • Energy cost-baseline • System request Berliner Energieagentur GmbH

Tasks of project development and implementation II competition step 2: Call for tender • Announcement with giving kind of project development model, award procedure • Call for expression of interest / prequalification • Dispatch of request • Presentation of • model contract (single- ore two-stage model) • assessment criterias Rough analysis / laying of offer • Site-visits at the buildings • Validation of data • Determination of saving guarantee (and planning costs fine analysis) step 3: • Offer with • saving guarantee • catalogue with measurements, investment costs • (planning costs and duration of fine analysis) Berliner Energieagentur GmbH

Tasks of project development and implementation III competition step 4: Checking the offer / negotiations • Condensing the competition step by step • Negotiations with max. 3 best bidders • Offer comparison with exactly assessment criterias and with own direction • Benefit amount-analysis integrated • technical-economical analysis • ecological assessment Contract signature • Approval by the authorities • Proof of the economy step5: • Contract includes • rights and responsibilities • cooperation principles • (stage 1: project planning contract, stage 2: performances and success guarantee) Berliner Energieagentur GmbH

Tasks of project development and implementation IV Energy saving-guarantee-contract / Project implementation (single-stage model) step 6: Preparation phase • Detailled planning and • realisation of the saving measures • Contractor is responsible for • Planning, financing and construction in coordination with the building owner inspection • End of construction measurements by Contractor • Inspection by building owner step7: • Building owner get • property of the realised facilities Berliner Energieagentur GmbH

Tasks of project development and implementation IV Energy saving-guarantee-contract / fine analysis (two-stage model) step 6: Stage 1: fine analysis • Detailed validation of energy and cost savings • Verification of the rough analysis energy saving prognosis • Contractor is responsible for • Detailed calculation/estimation of economic saving potential of the planned efficiency measures including the investment costs Comparison of the results, final decison of the building owner • Confirmation of rough analysis: order to start with stage 2 • Confirmation of rough analysis: decision against start of stage 2 (due to fair reasons, e.g. changes in utilization) • Nonconfirmation: cancellation of project (or other decision by the building owner, if he is responsible for nonconform.) step7: • Building owner get the ownership on the results • If confirmation and decison against stage 2: remunaration of contractors planning costs Berliner Energieagentur GmbH

Tasks of project development and implementation V Energy saving-guarantee-contract / Project implementation (stage 2 of the two-stage model) step 8: Preparation phase • Detailled planning and • realisation of the saving measures (from fine analysis) • Contractor is responsible of • Planning, financing and construction in coordination with the building owner inspection • End of construction measurements by Contractor • Inspection by building owner step9: • Building owner get • property of the realised facilities/plants Berliner Energieagentur GmbH

Tasks of project development and implementation V / VI Energy saving-guarantee-contract (both models) step 8 (10): Main performance phase • Begin of the energy management and -controlling as well as • Implementation of user motivation • Contractor guaranteed • consumption- and cost decrease • operating safety Expiration of contractual time step9 (11): • Building owner get • Responsibilty of operation • Full advantage of saving Berliner Energieagentur GmbH

EPC project development models Comparison of advantages and disadvantages General: both models models have advantages and disadvantages two-stage model current opinion of ESCOs is that there are lower risks • the model gives more opportunities for approximation regarding the project goals and solution approaches between potential client and bidder • the planning costs for fine analysis are covered (remuneration in most cases) • Contractor can try to give objective reasons if the results of fine analysis not confirm the rough analysis Single-stage model • Bidder has to make an accurate validation of building energy data in the frame of rough analysis, that means higher risks (due to uncertainties for calculation of energy saving measures and saving guarantee at this early stage of project development) • most of the bidders take security premiums in their calculations Berliner Energieagentur GmbH

EPC project development models Comparison of advantages and disadvantages (I) Berliner Energieagentur GmbH

EPC project development models Comparison of advantages and disadvantages (II) Berliner Energieagentur GmbH

EPC project development models Thank you for your attention! Berliner Energieagentur GmbH

EPC project development models