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2 Energy Performance contracting in condominiums Webinar 6 July 10am 11am

3 Energy Performance contracting in condominiums Speakers: Ian Turner, Energy Cities, ACE- Retrofitting project manager Yohann Desgeorges, Paris Climate Agency (Agence Parisienne du Climat - APC), research fellow Harijs Svarcs and Nicholas Stanciof, Latvian Baltic Energy Efficiency Facility (LABEEF) 3

4 Energy Performance contracting in condominiums Agenda: 10:00 Quick introduction to ACE-Retrofitting Ian Turner, Energy Cities 10:05-10:20 Experience of Energy Performance Contracting in Paris and other French examples, Yohann Desgeorges, APC 10:20-10:30 Questions and answers 10:30-10:45 Financing and legal issues concerning EPCs in Latvian condominiums Experience from the work that is being carried out within the Accelerate SUNShINE project, an H2020 project designed to prove the comprehensive financial viability of renovation, using suitable project organization, partnership of municipalities and financial instruments, Nicholas Stancioff and Harijs Svarcs, LABEEF. 10:45-10:55 Questions and answers 10:55-11:00 Conclusions and final comments Ian Turner, Energy Cities 4

5 Energy retrofitting in condominiums: A common challenge for EU countries A complex and unattractive market for building professionals Long decisionmaking process to develop a renovation project Many buildings constructed before 1980, with low energy efficiency Financing engineering of a renovation project is complex A key sector to reach cities energy and climate targets 5

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7 Energy Performance Contracting Experiences in France ACE-Retrofitting Webinar Paris Climate Agency Yohann Desgeorges Efficacity Nicolas Damesin Friday 06 th of July 2018

8 Summary - Presentation of Paris Climate Agency - planning and aim of the study - Result of the survey among 25 condominiums - Focus on 2 important key points: From the «global audit» to the choice of the performance target Instrumentation, running of heating equipment and occupant awareness 06/07/2018 Pied de page 8

9 Paris Climate Agency

10 Paris Climate Agency Not-for-Profit organisation Created by the city of Paris, and supported by 7 founding members (mix of public and private companies) : Neutral position (free advice for every people) Mission : Establish more connections between owners and building professionals Support the development of succesful refurbishment work plans Owner of an online collaborative platform : 06/07/

11 ENERGY PERFORMANCE OUR PLAN

12 Refurbishment of condominiums and Energy performance contracting Action Plan Benchmark of studies and experiences on energy performance guarantee especially on condominiums May 2018 Organizing a work group to consult field workers 22nd of June 2018 Publication of a guidebook about energy performance guarantee to inform condominium owners July /07/2018 Pied de page 12

13 RESULTS OF THE SURVEY CONDOMINIUMS

14 Survey among 25 condominiums Content of the survey Typologies (Number of apartments, date of construction, energy ) Elements of decision making (Why? How?) Contract : type, duration, which professional Type of building tasks concerned by the guarantee Performance indicator, instrumentation Incentive payment, penalties Co-owners : consultation, awareness 06/07/2018 Pied de page 14

15 Survey among 25 condominiums Where from? Energy Performance Contracting Observatory developed and ran by ADEME and CEREMA Our network (French local energy agencies, building professionals) 15 global projects (global project = at least 1 action on framework and 1 action on heating systems) 10 projects with actions only on heating systems 8 qualitative interviews (on global projects) Ile de France : Saint Denis, Noisy le Grand, Paris, Montrouge Alsace : Strasbourg Rhône-Alpes : Vénissieux, Miribel, Lyon 06/07/2018 Pied de page 15

16 Location of the 15 global projects 9 projects completed 6 projects in progress 06/07/2018 Pied de page 16

17 Definition Intrinsic Energy Performance Guarantee (GPEI) : This guarantee shall cover a theoretical level of performance It concerns steps of Design and Refurbishment It ensures the maximum level of consumption for a scenario In France we call that a «guarantee of resources» (The professional ensures that he will allow necessary resources during refurbishment. Please note: After acceptance of work the professional is not responsible if occupants do not make the right use of equipment) 06/07/2018 Pied de page 17

18 Definition Energy Result Guarantee (GRE) : This guarantee shall cover a real (and measured) level of performance It concerns steps of the running of equipment (after refurbishment) or the entire project It ensures a maximum level of consumption whatever the use In France we call that a «guarantee of results.» (The professional ensures that the condominium will not 06/07/2018 Pied de page 18

19 Survey Answers (focus on 15 global projects) What type of guarantee did the condominium choose : Number of answers 13 06/07/2018 Pied de page 19

20 Survey answers (focus on 15 global projects) Size of the condominium (number of apartments) Number of answers 25 06/07/2018 Pied de page 20

21 Survey answers (focus on 15 global projects) Period of construction Number of answers 11 06/07/2018 Pied de page 21

22 Survey answers (focus on 15 global projects) Principle reasons that encourage people to choose energy performance contracting To make sure that energy performance will be reached 10 To control energy consumption 5 To finance retrofitting works 4 Ensure a performance level in order to have public financial assistance 1 To have only one contact person (interlocutor) 0 Number of answers 11 06/07/2018 Pied de page 22

23 Survey answers (focus on 15 global projects) Did the owners take a contract assistant? Yes, During Design step Yes, During refurbishment works Number of answers 10 Yes, During period of guarantee (running of heating eqpmts) No 06/07/2018 Pied de page 23

24 Survey answers (focus on 15 global projects) Guaranteed period Number of answers 23 06/07/2018 Pied de page 24

25 KEY POINT N 1 FROM THE «GLOBAL AUDIT» TO OF THE PERFORMANCE TARGET

26 Key point n 1 : Global audit and performance target When did the condominium make the Audit? Before signing an energy performance contract After signing an energy performance contract Number of answers 11 06/07/2018 Pied de page 26

27 Key point n 1 : Global audit and performance target How long is the history of energy consumption: Number of answers 9 06/07/2018 Pied de page 27

28 KEY POINT N 2 INSTRUMENTATION, RUNNING EQUIPMENT AND OCCUPANT

29 Key point n 3 : Instrumentation, running of heating equipment and awereness Instrumentation tools : In the apartments : Temperature sensors in a pool of representative apartments Hygrometric sensor (to verify humidity) Ventilation rate On the Heating System : Calorimeter after the boiler 06/07/2018 Pied de page 29

30 Key point n 3 : instrumentation, running of heating equipment and awereness Are there any performance correction parameters included in the contract? Climate correction Inside temperature Number of answers 9 06/07/2018 Pied de page 30

31 Key point n 3 : instrumentation, running of heating equipment and awereness Is there any awareness-raising included in the contract? Only global projects NO YES Number of answers 11 06/07/2018 Pied de page 31

32 GUIDEBOOK

33 Goals of the future guidebook Provide a high level overview of information regarding energy performance contracting Why a guarantee could be interesting for condominiums? Definition of the two types of guarantees Raising awareness on several key points Conditions/requirements (which type of condominiums can request a guarantee?) How to define the performance target Contracts (clauses, professionals ) Instrumentation and running of heating equipment Occupant and owner awareness 06/07/2018 Pied de page 33

34 THANK YOU! APC: Agence Parisienne du Agence Parisienne du Climat 3, rue François Truffaut, Pavillon du Lac, Parc de Bercy Paris Contacter un conseiller : info-conseil@apc-paris.com Pour question administrative ou com merciale : contact@apc-paris.com

35 Energy Performance contracting in condominiums Questions to Yohann??

36 LATVIAN BALTIC ENERGY EFFICIENCY FACILITY (LABEEF) Harijs Švarcs LABEEF, council member 2017

37 PROBLEM Multifamily buildings 1500 Renovated buildings 4% of total 85% Do not correspond to current heat consumption requirements LATVIA ENERGY STRATEGY 2030 PAST ISSUES RISKS Motivation ENERGY PRICE TEMPERATURE Quality kwh/m 2 kwh/m 2 Scale INTEREST RATE EXECUTION Financing ENERGY SAVINGS PAYMENT Required financing more than EUR 4 billion Grants MAINTENANCE INFLATION

38 ESCOs ARE PART OF THE SOLUTION 13 Gaujas Str. 11 Gaujas Str. 9 Gaujas Str. DUE DILIGENCE RESULTS DUE DILIGENCE RESULTS No defaults in 15 buildings/359 apartments since implementation in Buildings will last >30 years. No increased affordability risk. Savings exceed 50% 3 buildings, same series in Valmiera One did nothing, one renovated on its own, one used ESCO ESCO costs were 32% less while energy efficiency was 28% higher House maintenance costs lower under ESCO

39 LABEEF OPERATIONS SCHEME 1 LABEEF Standartized EPC Forfaiting agreement ESCO LABEEF buys energy savings and associated cash flows forward Standartized EPC Financing agreement 2 MULTIFAMILY BUILDING Renovation and guaranteed savings Payments ESCO Financing Payments BANK ESCO designs, implements and finances the project Banks ESCO 3 RESOLVES! FUNDAMENTAL ESCO PROBLEM FORFAITING LABEEF LABEEF LABEEF forfaits the contracts and provides long term financing

40 LONG TERM FINANCING SHORT TERM FINANCING AGGREGATION MECHANIZM FINANCING ESCO A ESCO B ESCO C ESCO D ESCO E SHAREHOLDER EQUITY PRIVATE EQUITY STANDARTIZED EPC ALTUM INSTRUMENTS BANK FINANCING LABEEF EBRD OTHER INSTITUTIONS INSTITUTIONAL INVESTORS DEBT FINANCING

41 INTEREST ALIGNMENT AND TRANSPARENCY LABEEFS 80/80 MODEL Base EPC EPC upside LABEEF buys at discount future EPC receivables 20% 80% 20% ESCOs retain cushion for LABEEF and get upside 80% LABEEF BUYS STANDARTIZED 20Y EPCs FROM ESCOs * LABEEF buys 100% of receivables and passes back 20% of base income and 80% of upside IT PLATFORM AND TRANSPARENCY RESIDENTS STANDARTIZATION ESCOs BANKS REPETITION BUNDLING BENCHMARKING INDUSTRIALIZATION LOWER COSTS IT PLATFORM SUPPORTS STANDARTIZATION AND SCALE BUILDERS PLANNING EXECUTING MAINTENANCE 41 CONFIDENTIAL LABEEF

42 DE-RISKING EXECUTION PAYMENT EPC project cycle: Steps for de-risking over time Investment guidelines: Required technical standards Analyse historic credit risk Contract templates LABEEF and independent verification consultants: Due diligence Review prior to disbursement approval ESCOs paid for on-going performance and maintenance services. ESCO motivated to select suitable buildings: Higher energy saving potential Low default risk of building owners ESCO motivated to implement at highest standards: Technical design Quality material ESCO motivated to ensure performance: Maintenance Operations Multi layer derisking approach Execution of works

43 BENEFITS Focus on quality (20Y quarantees) Separating execution and payment risk LONG TERM SUSTAINABLE SOLUTION WITH SCALE Separating short term and long term funding and financing base Enable scale through standartization and IT platform Introducing aggregation mechanism De-risking Introducing self sufficient and sustainable financing instrument

44 ABOUT LABEEF LABEEF signed agreement with EBRD December EUR 7.5M project. First EBRD disbursement expected in 2017 (6 buildings) ESCOs and LABEEF ecosystem supported by 2 Horizon 2020 projects Sunshine and Accelerate Sunshine (EUR 3M in total). Sunshine and Accelerate Sunshine aim to generate around EUR 50M in projects Number of large local players interested to start ESCO business when LABEEF starts operations. Potential in pubilc EPCs. Next Steps for LABEEF scaling up operations by attracting additional equity/debt financing.

45 HARIJS ŠVARCS LABEEF COUNCIL MEMBER TEL ENERGY SAVINGS DELIVERED

46 Energy Performance contracting in condominiums Questions to Harijs and Nicholas