The role of facilitators to accompany the process of studying, approving, planning, realizing and financing energy efficiency projects and programmes in general, and energy performance contracting has been recognized by customers, industry experts and even ESCOs and investors in various countries in Europe as crucial. This is according to Lieven Vanstraelen, Co-CEO, Inerginvest, Belgium, who will be speaking at ESCO Europe 2015.
Facilitators have much to offer EPC projects
He says that most markets, where the ESCO-model and engineering, procurement and construction (EPC) projects have been successful, have seen the emergence of public and/or private facilitators who can offer the following:
The necessary multi-disciplinary (technical, operational, financial and legal) expertise to customers to outsource energy performance projects in buildings
Provide key resources that are often lacking
Help identify and lift external and internal barriers
Help the decision process
Create trust between customers and energy services providers such as ESCOs
Have developed tools that are used in projects
Play a crucial role in finding, structuring and engineering necessary finance
Anticipation and solving problems
Standardisation of contracts, methodologies, processes and tools, thereby reducing transaction costs significantly
Vanstraelen points out that in larger EPC programs, they can provide or assist a Program Management Office (PMO) by broadening the scope to include maintenance and renewable energy for instance, focusing on ambition levels and understanding life cycle costing and total cost of ownership.
It is however important to note that the scope of work can differ from one facilitator to another and from one market to another, explains Vanstraelen. Some provide very strategic advice, whereas others focus more on operational aspects. Others cover the project’s entire life cycle.
Local authorities and bundling projects
Buildings can be pooled together, especially in the case of EPC, into one project and one tender. Aggregating several pools into a bigger energy performance programme, is made possible by framework tendering programs, that - in the public sector - often use innovative aspects of public tendering law.
Pooling of buildings of several local authorities can be done, but requires a very good coordination of decision processes and extra work around facilitating common project goals, explains Vanstraelen. “Aggregation is an excellent way of clustering projects and programmes of different projects, but requires a dedicated organization (the aggregator) that centralizes expertise and delivers that to individual local authorities.”
He adds that aggregators need to get help from specialized and experienced consultants, of which very few exist today.
“Working with different local authorities can provide important economies of scale and can also help in aggregating financing solutions. This is often key to get EU funding or attract certain private investors, for whom individual local authorities' projects are sometimes too small. Pooling and aggregation also allows faster market growth and is a key to attract ESCOs and new facilitators to the market.”
Benefits for local authorities to work with an independent agency
Public actors, like agencies of dedicated facilitators, are generally more trusted than private players, says Vanstraelen. However, expertise is very important and unless public actors have pioneered facilitation, as is the key for example in Germany (e.g. BEA; KEA), Austria (GEA) or Belgium (Fedesco), they may need to get help from private experts.
But, sometimes private consultants lack the necessary expertise in the areas of EPC and financing. “Therefore, an interaction and joint development of expertise often works best. In any case there may be a need for incentives (e.g. pilot projects, subsidies) to stimulate the emergence of such actors. Independence is very important, both for public and private facilitators.”
Even though facilitators often get called upon by the end customer, they need to find a good balance between their customers’ interests and what ESCOs and investors can and want to get out of a project. “Public agencies should, in my opinion, play a role to kick-start and support a market development, but not take the place of private facilitators nor of ESCOs.”
Looking forward to ESCO Europe
Vanstraelen says he would like to hear various conversations at ESCO Europe such as what can be learnt from experienced facilitators, and how the public sector and private sector can complement one another. He adds that a debate on whether public ESCOs are a potential barrier to private ESCO/EPC market development would also be interesting.