This project co-founded by the European Union and the Republic of Turkey European Union / Instrument For Pre-Accession Assistance (IPA) Energy Sector Technical Assistance Project MENR IPA12 / CS04 Consultancy Services For Energy Efficiency Energy Purchase Agreement Template A project prepared for Ministry of Energy and Natural Resources i
Summary Project Title: Number: Service Contract: European Union (EU) / Instrument For Pre-Accession Assistance (IPA), Energy Sector Technical Assistance Project, Consulting Services for the Energy Efficiency TF 016532 - TR MENR12/CS04 Commencement Date: 8 October 2015 Completion Date: Time for Completion: Employer: Observer: Lead Contractor: Address: 24 months 24 months General Directorate of Foreign Relations and EU of the Ministry of Energy and Natural Resources EUD (European Union Delegation) MWH (Montgomery Watson Harza) AsmadalıSok. No:27 Koşuyolu, Kadıköy / İstanbul Tel. number: +90 216 545 32 28 Fax number: +90 216 546 04 77 Contact person: JV: Address: Dr. Murat Sarıoğlu MWH Exergia Escon Expertise FR Alternatif Plaza, KızılırmakMah. 1446. Cad. No:12/20 Çukurambar, Çankaya / Ankara Tel. number: +90 312 900 18 80 Fax number: +90 312 210 17 76 Contact person: Dr. Murat Sarıoğlu Date of report: 4 th August 2017 Author of report: N. Pitsas, J. Marousek - 2 -
Table of Contents SUMMARY... - 2 - ENERGY PURCHASE AGREEMENT FOR THE DELIVERY OF HEAT AND HOT WATER SERVICES... - 4-1 DEFINITIONS... - 5-2 SUBJECT-MATTER OF SUPPLIES, QUANTITY AND QUALITY OF DELIVERIES... - 6-3 PRICES FOR DELIVERIES OF HEAT... - 8-4 DISTRIBUTION OF HEAT TO THIRD PARTIES... - 9-5 MEASURING AND BILLING OF HEAT DELIVERIES, AND PAYMENT ARRANGEMENTS... - 10-6 HEAT CONDUCTION/DISTRIBUTION EQUIPMENT... - 11-7 ACCESS TO EQUIPMENT... - 12-8 TERM AND TERMINATION... - 13-9 LEGAL SUCCESSION... - 14-10 GENERAL PROVISIONS... - 15 - SCHEDULE 1... - 17 - SCHEDULE 2... - 18 - SCHEDULE 3... - 21 -... - 22 - - 3 -
ENERGY PURCHASE AGREEMENT FOR THE DELIVERY OF HEAT AND HOT WATER SERVICES Agreement Date: Agreement No.: Parties: (hereinafter referred to as Client ) (hereinafter referred to as ESCO ) Each referred to as a Party and collectively as the Parties, - 4 -
1 DEFINITIONS The expressions listed below shall have the following meaning: ESCO s Equipment means the materials and goods, which are attached by the ESCO to the Site in order to supply the heat and hot water services set forth herein, together and with any and all additions, modifications, attachments, replacements and parts thereof. Fixed Price has the meaning specified in Article 3.1. Point of Delivery means a facility that forms an autonomous and permanently interconnected unit at the Site that consumes heat. Signing Date means the date this Agreement is signed. Site means the Client s premises in which the heat and hot water services will be supplied by the ESCO Transfer Station and Transfer Point have the meaning specified in Article 2.6. Variable Price the meaning specified in Article 3.1-5 -
2 SUBJECT-MATTER OF SUPPLIES, QUANTITY AND QUALITY OF DELIVERIES 2.1 The subject-matter of this Agreement concerns the delivery by the ESCO of heat and hot water services to the Points of Delivery at the Site, as specified in Schedule 1 to the present Agreement. The Site to be heated has a total heated area of square metres [insert amount in sq.m.]. 2.2 The Client undertakes to purchase heat for the purposes specified in Paragraph 1 of this Article from the ESCO and under the terms and conditions set forth in this Agreement. 2.3 The projected annual quantity of heat consumed by the Client at the Site amounts to GJ [insert amount in GJ] for all Points for Delivery. The Client has specified its requested input in respect of all Points for Delivery at kw [insert amount in kw]. The initial price calculation has been based on the amount specified by the Client. 2.4 Heat will be supplied pursuant to the existing generally binding legislation of the Republic of Turkey, provided that the Client s heating system will have been duly regulated. 2.5 The limits of deliveries of heat are represented by Transfer Points situated on the facilities belonging to the Points of Delivery where such deliveries of heat will be directed. 2.6 Deliveries of heat will be performed by the ESCO for the entire term of the life of the present Agreement, as specified in Article 8, with the exception of pre-agreed shutdowns. The Site will be heated via a heat Transfer Station, which forms part of the ESCO s Equipment. Heat required for the heating of the Client s Points of Delivery will be carried by way of heating water supplied via the Transfer Station s secondary circuit. Temperature of such heating water constitutes the basic value as regards the determination of deliveries of heat for heating, subject to its constant flow in keeping with the designed parameters. Temperature of heating water will depend in a linear manner on the outside temperature. Hot service water will be produced via a Transfer Station and be pumped into the Client s piping system. Cold water to be heated into hot service water will be drawn from the Site. The basic value determining the deliveries of hot service water is represented by its temperature at the Transfer Point, provided that its flow is in the designed quantity and at the temperature of 45-60 degrees Celsius. 2.7 The delivery shall be deemed as duly fulfilled by completing supplies of heat to the Transfer Point. The ESCO will concurrently record all measured values regarding its deliveries of heat. The Client will be provided such records together with the relevant breakdown. 2.8 The ESCO may cut down on or suspend deliveries of heat to an extent as required: a) due to an immediate threat to life, health or property of people, and due to any actions required to remedy such conditions; b) during a state of emergency occurring due to natural events, measures of State authorities required for military preparedness, accidents at power generation and distribution facilities, - 6 -
long-term lack of energy sources, or acts of terrorism, or any other event during which the State authorities impose compulsory regulation of energy sources; c) during repairs, reconstructions, routine maintenance and reviews, provided that the Client has been notified thereof at least fifteen (15) days in advance; d) due to emergence and removal of defects of the distribution facilities; e) due to the execution of any necessary handling operations; f) if the Site fails to meet certain legal or safety-at-work or technical standards, according to findings of any competent State or public authority; g) due to immediate and not previously known suspension or restriction of supplies by the ESCO s own contractual suppliers (primary network heat, electricity, water). In such cases, the ESCO and the Client will agree on alternative deliveries of heat; or h) due to default in payment for heat deliveries in excess of thirty (30) business days. 2.9 The following notification duty has been agreed over and above the notification duty pursuant to the generally binding legislation: a) the ESCO shall notify the Client without any undue delay about such restricted or suspended supplies of heat due to reasons as contained in the present Agreement or in the relevant applicable legislation of the Republic of Turkey; b) the ESCO shall notify such restriction or suspension of supplies of heat due to material breaches of the present Agreement by the Client at least two (2) days in advance; c) the ESCO shall notify the Client in writing within the term of one (1) month about any changes of the gauge of the measuring equipment or its replacement; d) the Client shall notify the ESCO without any undue delay about any defects occurring on its heat distribution facilities resulting in leaks of water from the ESCO s Equipment, and it shall apply immediate measures in order to prevent such leaks or restrict such leaks as much as possible; e) the Client shall notify the ESCO not later than within one (1) month about any changes in the floor area, and/or any transfer of ownership to the Points of Delivery; f) the Client shall notify the ESCO in writing sufficiently in advance about any intentions to perform any modifications to the distribution network at the Site where the measuring equipment has been installed, that would impact, either immediately or subsequently, on the results of measurements. - 7 -
3 PRICES FOR DELIVERIES OF HEAT 3.1 The price payable for heat deliveries shall be governed by a pricing formula, as stipulated in Schedule 2. The final price for heat deliveries consists of Fixed Price payable for the Client s connection power input by way of pre-determined monthly payments, and Variable Price per 1 GJ of supplied heat. 3.2 Both Parties agree on the payment of the monthly Fixed Price (independent of the quantity of supplied heat) in the amount of TL [insert monetary sum]. - 8 -
4 DISTRIBUTION OF HEAT TO THIRD PARTIES 4.1 The Client shall not be entitled to distribute any heat supplied by the ESCO to any third party without the ESCO s written consent. Such consent shall not, however, be required in cases where the Client distributes heat to its own tenants at the Site. - 9 -
5 MEASURING AND BILLING OF HEAT DELIVERIES, AND PAYMENT ARRANGEMENTS 5.1 The accounting and billing period shall always extend to one (1) calendar year, unless both Parties agree otherwise in writing. 5.2 Unless the Parties agree otherwise, the deliveries of heat shall be measured by the meter owned by ESCO. The metering equipment shall be certified by the respective competent State authority. 5.3 The supplied heat will be billed according to its quantity as identified by measuring performed at the Transfer Point. If the measuring equipment is not operational due to an electricity blackout or any other defect caused by the ESCO, such unmeasured heat consumption will be charged on the basis of the mean value of the average daily heat consumption over the period extending fourteen (14) days prior to the defect and fourteen (14) days after the defect. 5.4 In the event of any doubts on the part of the Client about correct readings of the ESCO s heat measuring equipment, the Client may request the ESCO in writing to perform an inspection review. 5.5 If such an inspection identifies the values reported by the measuring equipment to be within the range of accuracy pursuant to the existing technical standards of the Republic of Turkey, the Client shall pay all costs of any such inspection. 5.6 If such an inspection identifies the values reported by the measuring equipment to differ from values as stipulated in the said technical standards, the ESCO shall pay all costs of any such inspection and shall be obliged to have the measuring equipment replaced at its own cost and expense. In such cases, the Client shall pay the price for its genuinely consumed heat in the amount as reported by the defective measuring equipment, reduced or increased by such difference as identified. 5.7 The Client undertakes to pay to the ESCO, always on or before the fifth business days of each calendar month, an advance for the Fixed Price and Variable Price in the amount as determined by the ESCO in writing with reference to the planned annual consumption of the Client. The Client shall pay such advances to a bank account designated by the ESCO. 5.8 The total price for the deliveries of heat will be determined according to the heat consumption, as measured at the individual Points of Delivery over the billing period and the annual Fixed Price for the total connection power (capacity). However, it shall include consumption breakdown, which consists of consumption of heat for heating, heat for the production of hot service water, the quantity of water required for the production of hot service water (if technically feasible) and the determination of the price for the deliveries of heat (for each Point of Delivery). The billing period shall extend to one (1) calendar year. The ESCO will perform settlement of the advance payments by 31 st of January of each year. Any differences will be settled against invoices issued by the ESCO. 5.9 In the event of any delay, the delaying Party shall pay to the other Party late interest on the sums due and unpaid in the amount of the usual interest rate charged by banks at the location of the Client, increased by percent ( %) [insert percentage: e.g. 2%]. - 10 -
6 HEAT CONDUCTION/DISTRIBUTION EQUIPMENT 6.1 The ESCO owns the technological equipment serving the delivery of heat and hot water services as far as the Transfer Point. The ESCO s Equipment also comprises measuring equipment, the electricity distribution line connected to the electrical circuit of the Client and the heat distribution network as far as the measuring point, indicators, sensors, connecting lines and other necessary pieces of technology that have been placed, fixed or installed on the Client s facilities, while remaining an inseparable part of the ESCO s Equipment. The Client undertakes to protect all such equipment attached by the ESCO to the Site, and to give the ESCO and its personnel a right of access to the Site in order to inspect, modify or repair any such equipment. 6.2 The ESCO undertakes to exercise its activities in a considerate manner, in order to prevent any damage to the property and uninterrupted operation of the Site, and to pay any damages caused by its authorised personnel. 6.3 In the event of any termination of the present Agreement, the Client will allow the ESCO to remove the ESCO s equipment no later than ninety (90) days from the date of any such termination. - 11 -
7 ACCESS TO EQUIPMENT 7.1 The Client shall allow the ESCO s authorised personnel, according to their requirements, access to the ESCO s Equipment, including technical equipment and parts of the heating system owned by the ESCO, as well as to the off-take equipment, for the purposes of checking their technical state, in order to commence and perform repairs, as well as for the purposes of reading the gauges or identification of pricing assessments. 7.2 If, in the opinion of the ESCO, it is required to enter any premises belonging to the Client or any third party in order to ensure its rights and duties, the Client undertakes to allow or ensure such access by the ESCO. - 12 -
8 TERM AND TERMINATION 8.1 The present Agreement shall come into force on the Signing Date and come into effect on the date of the approval of the project for use, and/or on the date of commissioning test operation of the ESCO s Equipment. The Parties presume in keeping therewith that the heat deliveries will be commissioned on [insert date]. 8.2 The Agreement shall be executed for a definite term, and it shall terminate on the expiration of ( ) years [insert years] of the date of effect of the present Agreement. This provision shall be without prejudice to an option of serving a notice of termination due to a material breach of the present Agreement. 8.3 The following cases constitute material breaches of the present Agreement: (a) wilful failures of the Client s facilities due to which the ESCO cannot normally operate the system for two (2) days, or defects preventing regulated operation of the system; (b) deliveries of heat in parameters different from those agreed according to the terms and conditions of the present Agreement for a term in excess of five (5) or more days in a calendar month; (c) unjustified suspension of heat deliveries for two (2) or more days in a calendar month; (d) wilful billing for more heat that delivered to the Client; (e) the determination of heat consumption at the Point of Delivery in a manner other than with the help of measuring equipment for a term in excess of one (1) month; (f) unauthorised off-take by the Client; (g) unauthorised intervention by the Client in the ownership of the ESCO s Equipment; and/or (h) default in payments of invoices issued by the ESCO in excess of three (3) months. - 13 -
9 LEGAL SUCCESSION 9.1 The rights and duties of the Parties under the present Agreement shall pass automatically to their legal successors, and also to any of their further legal successors. For current purposes, legal successors shall also include any person(s) that will have acquired the Site (or any part thereof), which will be supplied heat under the present Agreement. 9.2 Transfers of the rights and duties under the present Agreement to legal successors (which also include persons that will have acquired the Site - or any parts thereof) will be guaranteed by way of automatic amendment of this Agreement. - 14 -
10 GENERAL PROVISIONS 10.1 The Client shall not execute without the ESCO s consent any repairs, interventions, and modifications that would affect the parameters of the heating system as against the approved design. 10.2 The operability of the heating system at the Site affecting the performance of, and compliance with, the delivery standards shall be the responsibility of the Client. The Client shall inform the ESCO without any delay about any work performed on its own equipment that can affect the system of heat supplies. 10.3 The ESCO shall notify the Client at least fifteen (15) days in advance about the performance of any planned repairs, reviews, and planned maintenance, if they can result in any suspension of deliveries of heat, or if their carrying-out requires the ESCO s access to the Client s property. 10.4 The Client shall not, without the knowledge of the ESCO, consume any treated water from the heating circuit. Any potential costs of refilling (replenishment), and/or restoration of the system due to unauthorised consumption of water, and/or unprofessional intervention by the Client, shall be paid for by the Client. The ESCO shall charge all and any costs resulting from any unreported off-take of treated water from the heating system to the Client. 10.5 If the general economic or technical conditions should change in the course of the life of the present Agreement in such a material manner that the supplies and reciprocal services are no longer in a reasonable proportion to each other, the Parties will agree on a corresponding modification/amendment of the present Agreement or any parts thereof, so that they reflect the changed circumstances. 10.6 If the environmental protection regulations, which are in force on the Signing Date, are changed significantly or if any additional equipment will be required pursuant to any additional supporting documents or any substantial amendment of the current legislation, the ESCO may adjust its price for the deliveries of heat in a manner reflecting such changed circumstances. 10.7 The agreed connection power input shall not be exceeded without the ESCO s consent. Any potential increase thereof shall result in an adjustment of the price for the deliveries of heat and reimbursement of all and any costs expeditiously incurred in order to ensure such requested power input shall be required. 10.8 The present Agreement may be amended exclusively by way of an agreement of both Parties, which must be made in writing. 10.9 This Agreement shall be governed and interpreted according to the laws of the Republic of Turkey. The Parties shall use their best efforts to amicably resolve any dispute that may arise from or in connection with this Agreement. Any dispute that cannot be amicably resolved will be subject to the jurisdiction of the competent Turkish courts. 10.10 This Agreement, including all its Appendices, constitutes the entire agreement and cannot be cancelled, amended or terminated except with the written consent of both Parties. If any of its provisions become legally unenforceable, any such unenforceability shall be without prejudice to the - 15 -
force of any other provisions; however, the Parties shall be obligated in such cases to replace such unenforceable provisions with other provisions, which are the closest in the economic and resultrelated aspects to the original provisions. This Agreement has been executed by each Party in duplicate on [insert date] by its duly authorized officers. [NAME OF CLIENT S OFFICIAL] [ NAME OF ESCO S OFFICIAL] Signature: Signature: - 16 -
Schedule 1 Specification of Points of Delivery No. Address Installed input Planned consumption /kw/ /GJ/year/ 1 Delivery Point 1 kw GJ 2 Delivery Point 2 kw GJ 3 Delivery Point 3 kw GJ 4 Delivery Point 4 kw GJ Total kw GJ - 17 -
Schedule 2 Pricing 1. PRICE 1.1 The price for heat comprises of Variable Price and Fixed Price. Variable Price is based on the price payable for consumed gas and the price payable for electricity required to run the equipment. It shall be derived from the current offer in the amount of ( ) TL/GJ [insert monetary sum], in the maximum amount of ( ) GJ [insert amount in GJ] per year. The price will be always adjusted according to the genuine amount of the price payable for gas and electricity. 1.2 The Fixed Price represents the minimum price payable by the Client to the ESCO in the relevant calendar month, irrespective of genuine heat consumption and shall be equal to TL ( ) [insert monetary sum]. In addition to the Fixed Price, the Client will pay the Variable Price, which will reflect genuine heat consumption. 1.3 Given the required input power of kw [insert input in kw and the planned annual heat consumption of GJ [insert amount in GJ], the annual costs will be as follows: - Fixed Price: TL per year [insert monetary sum, which should be the same as the one stated in paragraph 1.2 of this Schedule] - Variable Price: TL ) [insert monetary sum that represents planned annual consumption in MJ multiplied by the current offer in MJ] - Total: TL per year [insert monetary sum that represents both the Fixed Price and the Variable Price] Unit price: Monthly advance payments: TL per GJ [insert monetary sum] - Fixed Price: TL [insert monetary sum] - Variable Price: TL [insert monetary sum] Total monthly advance payments: TL [insert monetary sum] Unit price: TL per GJ [insert monetary sum] 2. VALUE ADDED TAX 2.1 The prices shown under Paragraph 1 represent net prices. Those prices will be increased by value added tax in compliance with a current statutory amount. - 18 -
3. PRICE ADJUSTMENTS 3.1 The ESCO will be entitled to adjust the total purchase price of heat during the duration of this Agreement only in the event of: - any changes of the heat pricing rules that are set by the Government; - any substantial changes in the input prices of the heating media, or economically justified costs (e.g. inflation rate and/or changes in fuel prices) All the changes are subject to the application of the following formulas: (a) For the Annual Fixed Price, the following formula will be applicable: where: PG n = PG 0 (0.7 + 0.3 * Id n/id 0) PG n = new Fixed price at the relevant year n PG 0 = initial Fixed price at the initial year of the Signing Date Id n = Turkish Statistical Institute s inflation index at the relevant year n Id 0 = Turkish Statistical Institute s inflation index at the year of the Signing Date n = index for relevant year change (b) For the Variable Price, the following formula will be applicable: PA n = PA 0 * (C 1 * G n/g 0 + C 2 * E n/e 0) where: PA n = new Variable price at the relevant year n PA 0 = initial Variable price at the initial year of the Signing Date G n = price for gas at the relevant year n G 0 = price for gas at the year of the Signing Date E n = price for electricity at the relevant year n E 0 = price for electricity at the year of the Signing Date C 1 = constant = 0.95 C 2 = constant = 0.05 The above-described price regulation is based on the following basic parameters: Annual limit of heat consumption at the Site: GJ/year [insert amount in GJ] Natural gas calorific value: MJ/m 3 [insert amount in MJ/cm] Natural gas purchase price: TL per m 3 [insert monetary sum] Electricity purchase price: TL per kwh [insert monetary sum] - 19 -
System efficiency rate: 0.90 Term of agreement: years [insert years number] The unit cost will decrease if the annual heat consumption increases. For instance, if the amount of heat delivered increases by ( %) per cent [insert percentage: e.g. 10%], the unit price will decrease as follows: - Fixed Price: TL [insert monetary sum, which should be the same as the one stated in paragraph 1.2 of this Schedule] - Variable Price: TL per year [insert monetary sum, which should be the maximum quantity set forth in Article 2.1 of this Agreement multiplied by the current offer of TL/GJ, which is also specified in Article 2.1 of this Agreement] - Total: TL per year [insert monetary sum] The resulting unit heat price then amounts to: TL per GJ [insert monetary sum]. - 20 -
Schedule 3 Position Plan showing distribution pipelines connected with the Site and Transfer Points [insert Position Plan] - 21 -
The contents of this publication are the sole responsibility of MWH JV and can in no way be taken to reflect the views of the European Union - 22 -