Multiple benefits of renovation in buildings - PU Europe
Multiple benefits of renovation in buildings - PU Europe
Multiple benefits of renovation in buildings - PU Europe
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<strong>Multiple</strong> <strong>benefits</strong> <strong>of</strong> <strong>in</strong>vest<strong>in</strong>g <strong>in</strong> energy<br />
efficient <strong>renovation</strong> <strong>of</strong> build<strong>in</strong>gs<br />
Box 3 ESCO partnerships <strong>in</strong> <strong>Europe</strong><br />
The most common ESCO <strong>in</strong> <strong>Europe</strong> is an <strong>in</strong>dependent company specialis<strong>in</strong>g <strong>in</strong> provid<strong>in</strong>g<br />
services such as energy analysis and audits, project design and implementation<br />
and monitor<strong>in</strong>g and evaluation <strong>of</strong> sav<strong>in</strong>gs to name just a few. While 62 per cent <strong>of</strong> <strong>Europe</strong>an<br />
ESCOs def<strong>in</strong>e themselves <strong>in</strong> this category, 17 per cent are Energy utility or<br />
supply companies, and about 16 per cent are public sector agencies or public-private<br />
jo<strong>in</strong>t ventures. Almost all companies provide f<strong>in</strong>anc<strong>in</strong>g services, 89 per cent <strong>of</strong>fer<br />
guarantee <strong>of</strong> performance mean<strong>in</strong>g that they are prepared to accept part <strong>of</strong> the technical<br />
and f<strong>in</strong>ancial risk, and about 58 per cent <strong>of</strong>fer <strong>in</strong>surance coverage.<br />
The vast majority <strong>of</strong> ESCO projects take place <strong>in</strong> either <strong>in</strong>dustry (50 per cent) or <strong>in</strong> the<br />
public sector (38 per cent). The choice <strong>of</strong> applied technology is more diverse and<br />
ranges from improved heat<strong>in</strong>g systems, heat<strong>in</strong>g ventilation and air condition<strong>in</strong>g to improved<br />
light<strong>in</strong>g and <strong>in</strong>dustrial processes and combustion improvement. The length <strong>of</strong><br />
an ESCO partnership contract is typically 5-15 years.<br />
Germany was one <strong>of</strong> the first movers, and is currently one <strong>of</strong> the most mature ESCO<br />
markets <strong>in</strong> the EU. The focus has primarily been on public build<strong>in</strong>gs <strong>in</strong> the commercial<br />
sector with build<strong>in</strong>g “pools” <strong>of</strong> up to 100 separate build<strong>in</strong>gs <strong>in</strong> order to m<strong>in</strong>imize transaction<br />
costs. In 1995 Berl<strong>in</strong> launched an energy sav<strong>in</strong>g strategy, and by an ESCO<br />
partnership managed to reduce the annual energy cost bill by almost €3 billion and to<br />
reduce CO 2 emissions by 25 per cent.<br />
In Nyköp<strong>in</strong>g <strong>in</strong> Sweden, an ESCO <strong>of</strong>fered a contract cover<strong>in</strong>g 123 <strong>of</strong> the municipality’s<br />
build<strong>in</strong>gs totall<strong>in</strong>g an area <strong>of</strong> 257,000 m 2 . The improvements <strong>in</strong>cluded the <strong>in</strong>stallation<br />
<strong>of</strong> a Build<strong>in</strong>g Management System <strong>in</strong> all build<strong>in</strong>gs to monitor energy consumption, new<br />
heat pumps and solar panels, <strong>in</strong>clud<strong>in</strong>g sensor controlled light<strong>in</strong>g and heat<strong>in</strong>g/cool<strong>in</strong>g.<br />
The project resulted <strong>in</strong> a reduction <strong>of</strong> 21 per cent <strong>in</strong> the municipality’s energy bill.<br />
The Royal Gwent Hospital <strong>in</strong> UK engaged an ESCO to renovate old <strong>in</strong>frastructure and<br />
ensure energy sav<strong>in</strong>gs. The project <strong>in</strong>troduced more effective energy and heat<strong>in</strong>g systems,<br />
a light<strong>in</strong>g retr<strong>of</strong>it and water conservation measures. The project has resulted <strong>in</strong><br />
annual sav<strong>in</strong>gs <strong>of</strong> at least €620,000.<br />
Source: DG JRC (2005) and www.EU-esco.org<br />
Energy costs are a small share <strong>of</strong> overall costs<br />
While the total value <strong>of</strong> energy sav<strong>in</strong>gs at macro level might be substantial, energy costs<br />
account typically for a small part <strong>of</strong> overall costs for bus<strong>in</strong>ess and to a less extent households.<br />
46 One study has found that the energy costs <strong>in</strong> commercial build<strong>in</strong>g <strong>in</strong> high cost city<br />
centres like London account for just 1-2 per cent <strong>of</strong> total costs. 47 Partly for the same reason,<br />
energy cost management is typically not centralised with<strong>in</strong> a s<strong>in</strong>gle unit that holds<br />
responsibility for the overall energy bill. Instead, energy cost management may be shared<br />
across different departments with<strong>in</strong> firms and <strong>in</strong>stitutions. This gives little <strong>in</strong>centive to<br />
<strong>in</strong>vest resources <strong>in</strong>to reduc<strong>in</strong>g the energy bill, especially as these projects <strong>in</strong>volve transaction<br />
costs <strong>of</strong> gather<strong>in</strong>g <strong>in</strong>formation, <strong>in</strong>convenience <strong>of</strong> <strong>in</strong>stall<strong>in</strong>g new equipment etc.<br />
46 For some households, especially low-<strong>in</strong>come households, energy costs may be a substantial share <strong>of</strong> total costs.<br />
47 <strong>Europe</strong>an Commission (2012), cit<strong>in</strong>g Guertler, Pett and Kaplan (2005)<br />
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