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    2022 ESCOBusiness Modelfor Promoting Energy Efficiency EGYPS

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    2022 ESCOBusiness Modelfor Promoting Energy Efficiency EGYPS

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    ورقة علمية

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    ورقة علمية

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    2 views19 pages

    2022 ESCOBusiness Modelfor Promoting Energy Efficiency EGYPS

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    hagergamal901003
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    © All Rights Reserved
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    net/publication/360006394

    ESCO Business Model for Promoting Energy Efficiency Dr. Eng. / Tarek
    ElShennawy (ANRPC) SESSION 38: ENHANCING EFFICIENCY AND
    PRODUCTIVITY

    Presentation · February 2022

    CITATIONS READS

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    1 author:

    Tarek El-Shennawy
    ANRPC
    31 PUBLICATIONS 318 CITATIONS

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    SESSION 38: ENHANCING EFFICIENCY AND PRODUCTIVITY

    ESCO Business Model for Promoting Energy Efficiency


    Dr. Eng. / Tarek ElShennawy (ANRPC)

    1
    Agenda
    Ø Energy Efficiency in the Petroleum Sector
    Ø Energy Service Companies (ESCOs)
    Ø ESCO business models:
    Ø Shared savings model
    Ø Guaranteed savings model
    Ø The concept of Super ESCO
    Ø Conclusions & Recommendations
    2
    Energy Efficiency (EE) & CO2 Emissions
    4
    Barriers to Energy Efficiency (EE)
    in the Egyptian Petroleum Sector

    Ø Top management often focus on Production.


    Ø Operators resist change (keep it running).
    Ø Lack of energy specialists.
    Ø Mistrust of new technologies.
    Ø No organizational structure or allocated budget.
    Ø ISO 50001 Certification!
    Ø Lack / difficult access to finance.
    5
    Energy Service Company (ESCO)

    Ø An ESCO is a company that provides EE


    services, that include engineering, procurement,
    installation, commissioning, measurement and
    verification of savings.
    Ø It allows the client to focus on his core business.
    Ø The ESCO can finance the EE projects by itself
    or can arrange for the client to have a loan from
    a financing institution or bank.
    6
    Energy Service Company (ESCO)

    7
    Energy Service Company (ESCO)

    Ø ESCOs emerged in USA in 1980’s.


    Ø Replicated successfully in UK, Germany, Canada
    and Japan.
    Ø ESCO business models are classified based on
    their role in financing EE projects. The most
    commonly used models are
    - Shared savings business model.
    - Guaranteed savings business model.
    8
    Shared Savings ESCO Model

    Ø ESCO provides financing needed to


    implement the EE projects.
    Ø The owner does not invest in the project but
    receives a share of the energy savings during
    the contract period and all the savings after the
    contract period.
    Ø Suitable for clients with limited capital.
    9
    Shared Savings Example

    • Cost of Project = 10 Million $ (paid by the ESCO)


    • Estimated annual energy savings = 5 Million $
    • The savings may be shared as 4 Million $ for the
    ESCO and 1 Million $ for the client during the
    contract period (for example 5 years).
    • After the contract period, all the savings will go to
    the client.
    10
    Guaranteed Savings ESCO Model

    Ø ESCO is not responsible for financing.


    Ø The client is responsible for financing in addition
    to paying all the ESCO expenses.
    Ø ESCO guarantees energy savings from the
    project. It is obligated by the contract to repay
    savings shortfalls over the life of the contract.
    • The client keeps all financial savings produced by
    energy upgrades. 11
    Guaranteed Savings Model Example

    • Cost of Project = 10 Million $ (paid by the client in


    addition to 2 Million $ (ESCO expenses).
    • Estimated annual energy savings = 5 Million $
    (guaranteed by the ESCO during the contract
    period). If savings exceed 5 Million $, it will go
    completely to the client. Otherwise, the ESCO will
    pay to the client any shortfall to achieve its
    guaranteed savings. 12
    Which is better for your facility?

    • A guaranteed savings model is more attractive for


    larger organizations with a great deal of capital
    to fund the cost of the initial project.
    • Whereas a shared savings model is ideal for an
    organization that lacks the funds or means to
    secure capital funding from a traditional lender
    (such as a bank).

    14
    Super ESCO

    Ø Attempts to implement ESCO model in Egypt


    are unsuccessful.
    Ø Super ESCO can be a good solution.
    Ø A Super ESCO is an entity (firm or company)
    that is established and financed by the
    Government and functions as an ESCO for
    implementing projects in government-owned
    (public) facilities. 15
    Role of the recommended Super ESCO

    1. Arrange financing from local and/or international


    financial institutions.
    2. Develop standard contracting models.
    3. Organize super tenders on behalf of its clients.
    4. Follow-up projects’ execution and hand-over
    5. Follow-up Measurement and Verification (M&V).
    6. Serve as a model for other Super ESCOs in
    various sectors of the country.
    16
    Recommendations

    Ø Legalizations are required to allow companies


    to sign contracts with the ESCO companies.
    Ø The petroleum ministry is invited to consider
    establishing a Super ESCO responsible for
    fostering energy efficiency projects in the sector.
    Ø This Super ESCO can overcome many barriers
    in the sector to implement EE measures in a
    comprehensive and systematic approach.
    17
    THANK YOU
    ANY QUESTIONS?

    18
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