Energy Efficiency Challenge - Stepping Up Projects

Facilitators have a key role as mediator between ESCOs and their clients in project development.
Published: Thu 09 Jul 2015

Finance is not the major barrier for economically viable Energy Savings Company (ESCO) projects in most parts of Europe. The challenge is the length of time it takes for clients to take the step towards adopting energy efficiency projects, says Jan W. Bleyl-Androschin, CMVP, lecturer & IEA DSM Task 16 "Competitive Energy Services" leader, who will be speaking at European Utility Week.

He says, “In my perception, money is available. While there may be an issue with providing finance for off-balance solutions for private and public sector clients, finance for ESCO projects is not a major barrier in Europe.”

The crucial role of facilitators

This is why, explains Mr Bleyl in an exclusive interview with Engerati, facilitators play a crucial role in enabling clients to structure projects from a financial, technical and organisational perspective and help them to go out into the market and procure energy efficiency services.

With more than 21 years in the energy services sector, Mr Bleyl is well placed to discuss ESCO opportunities. He has built and managed an ESCO in Berlin and currently heads his own energy efficiency consultancy, which is called Energetic Solutions. He also heads the International Energy Agency task on energy services (Demand Side Management, Task 16 “Energy Services”), which brings together experts (mostly from the European region) to develop innovative ESCO models and markets.

Mr Bleyl is convinced that facilitators will help the energy services industry to provide a more significant contribution towards energy policy goals. He explains: “ESCOs are already trying hard and doing a good job but if client demand is insufficient, it is difficult for the supply side to deliver these services. Long-term experience, e.g. in Germany or Austria, shows that wherever there are facilitators to enable clients, a market pull will be created.”

He explains that successful market development is often demand side driven. ESCO customers have to structure  their needs and goals for energy services packages and submit requests for proposals on the market. To foster market development, the role of independent market and project facilitators as mediators between ESCOs and their clients has proved to be of great value. This facilitator role requires more active players and more support.

ESCO market development in Europe

While reliable market data on national or European ESCO markets is scarce and often not very reliable or not publicly available, there is sufficient evidence that energy supply contracting projects dominate the market, says Mr Bleyl.

The “Verband für Wärmelieferung“, one of Germany’s ESCO associations, reports an 85% market share of ESCOs based on the 2008 survey of its members. This number corresponds to the results of a recent comprehensive market query performed by Prognos AG: “Almost two thirds of the respondents declared to make more than 80% of their turnover with energy supply contracting including the replacement of the existing installations.”

Mr Bleyl reports a slow but continuous market development in Austria and Germany. “It’s not an exponential growth and it is far from meeting energy policy goals. Most projects involve individual buildings as opposed to a programme that would look at an entire building portfolio. There are programmes like this, for example the Austrian Federal Contracting Campaign (“Bundescontracting Offensive“) or the London retrofit programme, but generally these need to be multiplied and it can take a long time for these to come about and get clients onboard.”

He says that the aim should be to develop a programme portfolio approach instead of an individual building approach. “The portfolio approach would be of higher value and should have a major market pull effect. There are many opportunities provided you take a long-term perspective.”

Extending utilities’ value chain and opportunities

When asked why a utility should act as an ESCO, Mr Bleyl says they can expect a number of benefits but he highlights the fact that if they don’t do it, others will. “They can extend their value chain by offering energy services and increase long-term customer relationships.”

He goes on to explain the importance of highlighting the market opportunity: “There is a significant opportunity from potential clients in need of investment for deep retrofit solutions. There is an opportunity to refinance a large share of the investments (around 80%) from future energy and maintenance cost savings. This opportunity deserves more voice and awareness.”

In conclusion, Mr Bleyl says that he is looking forward to attending European Utility Week as the event is all about networking with people in the same field. “It is an opportunity to speak with industry leaders who have a great deal of experience and knowledge to share. It provides a peer to peer atmosphere and opens minds to new ideas. It really makes a difference when you are doing business face to face and I am always inspired by some of the presentations. There is always something relevant.”

At European Utility Week, Mr Bleyl will be chairing a session that pertains to finance in particular to off-balance and Maastricht-neutral solutions, the drivers for investments and the innovative financial tools available. The session will also cover the introduction of new tools and resources into the market to help ESCOs and utilities leverage market forces and initiatives to design and deliver better energy efficiency programmes.