The ESCO as a driver for the energy transition
Let’s first come back to the principles of the Energy Service Company. Energy service companies develop, design, build, and fund projects that save energy, reduce energy costs, and decrease operations and maintenance costs at their customers’ facilities. In general, ESCOs act as project developers for a comprehensive range of energy conservation measures and are responsible for the technical and performance risks associated with a project.
The investments to achieve energy savings are financed on basis of a future lower energy bill. These investments are made by a third party – the ESCO – and are thus not the responsibility of the initiating party.
The SMEs sign the agreement with the ESCO for period of 10 years, for example.
During this period of time :
– The SMEs pay a proportion of the energy savings to the ESCO.
– Often, a part of the energy saving is already attributed to the SMEs from the start.
First results of ESCO4Gent presented to different stakeholders of this project
ESCO4Gent is a feasibility study where the set up of an ESCO-approach at the level of an industrial zoning is being analysed. This feasibility study is financially supported by the “Enterprise Flanders” agency. Project partners are 3E & Quares. Project started in October 2014 and will last 2 years.
On June 18th a plenary session has been organised where all stakeholders were invited to discuss and brainstorm over the first results of this project. Representatives from City of Ghent, Enterprise Flanders Agency, Eneco, Imtech, Etap, KBC, Triodos, Cofely, Stibbe, Blixt lawyers, Rebel attended this meeting.
ESCO and sustainable park management : 1 + 1 = 3
As energy Management doesn’t constitute a core business for SMEs, they seek the advantage in pooling their local and industrial energy management and optimizing their energy contracts. Furthermore, by pooling their knowledge, they can count on better purchase terms, transition towards a renewable energy base and count on expertise concerning the eventual link to the grid.
In this example, ESCO4Gent aims at effectively improving the energy efficiency of the companies in the industrial area of Ghent’s Industrieweg and Drongen I (more information HERE).
While taking into account the investment volumes we can easily say such energy investments are not realistic for a SME. However, integrating multiple SMEs in an targeted area ESCO makes these projects feasible.
This industrial approach is an ideal starting point for a local ESCO business.
Based on the the first results of the ESCO4Gent-project it is relatively clear that, first and foremost, there are sufficient technical resources available and many companies are interested. This has been monitored and reported through survey results.
However, stakeholders agreed that the bottleneck seems to present itself in terms of financing. Banks and financial institutions are a bit reluctant to move forward in projects spanning over 5 years.
One of the main contributions could come from the government. Are there possibilities for state warranties, white certificates,…? As we progress towards a multiplication of these kinds of initiatives, this question will have to be answered.
What remains clear is the fact that these ESCOs could potentially be the leverage needed to accelerate energy efficiency investments and the transition to a renewable energy system.