King’s Strategic Energy Partners KCH Strategic Energy Partners Presentation to: 14 th January 2014...
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Transcript of King’s Strategic Energy Partners KCH Strategic Energy Partners Presentation to: 14 th January 2014...
King’s Strategic Energy Partners
KCH Strategic Energy Partners
Presentation to:
14th January 2014
Iain [email protected]
King’s Strategic Energy Partners
Questions
What’s the difference between and EPC and an ESCo? In an energy-performance contract, does the supplier have to provide the finance? We’ve been advised that ‘off-balance sheet’ transactions will no longer be allowed, and all transactions will have to be shown on the balance sheet. How do we get around this? In an energy-performance contract (EPC), does the supplier have to take over the operation and maintenance of the estate, or of the equipment supplied?
King’s Strategic Energy Partners
KCH Strategic Energy Partners
Mission: enable public-sector to undertake successful strategic estate-development projects, backed by guaranteed revenue savings
Method: lifecycle support - feasibility study, procurement, contracts, financial-modelling, funding, project-management, guarantee M&V
Experience: initiated over 2 dozen projects, capital value >£100m; ten years’ public-sector procurement
Structure: procurement framework owned by King’s; services delivered by Ecovate Group in collaboration with King’s
King’s Strategic Energy Partners
Principles and Methods
DEMAND SUPPLYTHEN
ROI (years)
Cost
XX
XX
XX
XX X
Strategic Approach:•Energy consumption•Energy supply•Student comfort•Backlog maintenance•Risk & resilience•Maintenance•Energy-security•Money
King’s Strategic Energy Partners
Holistic Approach to…
Cost
Time
PPM
Reactive maintenance
Energy
All revenue costs
Lighting Controls Heating
IT Fabric Cooling
TechnologiesThe Estate
-15%
-25%
-20%
-2%
+15%-10%
-20%
-18%
IGA 1
King’s Strategic Energy Partners
Process
Investment-Grade Audit
Project-Installation
Guarantee + Continuous Improvement
ProcurementFeasibility Study
6 months 6-18 months 1-20 years1-2 months1 month
Phased approach to manage changing estates:
Project 1 Guarantee 1
IGA 2 Project 2 Re-baseline
Etc.IGA 3
King’s Strategic Energy Partners
Case Study: University of Sheffield
Requirement:•A more sustainable University / reduction in carbon footprint •Improved, long term quality, indoor climate and fitness for purpose •Reduction of operational / utility costs •Reduce corporate risk (legionella, risk of mechanical failures etc.)•Development of competency within estates team & University’s staff (“good housekeeping” etc.)
Project Results
Contract sum £3.8m
Summary of measures District heating optimisation, air-handling units, BMS, lighting, staff competency, behaviour-change
Backlog maintenance addressed £1.3m
Annual energy savings £480k
Annual reactive maintenance savings £250k p.a. (recycled)
Simple return on investment 5 years (inc. backlog)8 years (excl. backlog)
King’s Strategic Energy Partners
Case Study: Taunton NHS
Situation:● Estate condition deteriorating due to long-term under-investment: backlog £6m● Corporate risk “significant”● Mandatory CO2 targets (34% by 2020; 80% by 2050)● Rising energy costs (£1.8m p.a.)● Carbon taxes (£108,000 p.a.)● New Surgical Wing
Project Results
Contract sum £7.2m
Number of measures 200
Backlog maintenance addressed £2.5m
Annual energy & CRC savings
£756k, rising with energy inflation43% carbon saving
Annual savings on reactive maintenance £74k p.a. (recycled)
Simple return on investment
6 years (inc. backlog)10 years (excl. backlog)
Net cash surplus 20 yrs £17m
King’s Strategic Energy Partners
Case Study: King’s NHS
Situation:● Concerns re. patient comfort ● £4m energy consumption and rising● Backlog £10m, rising towards £25m over next 5 years● Planned building projects £90m
Project Results
Contract sum £7.9m
Immediate financial saving £3.1m (backlog)
Annual financial savings £427k - energy inflation 7%
Carbon savings 1,892 tCO2 = 9% (taking Trust to 24%)
Net cash surplus 20 yrs £7.0m
Measures including
CHP heat utilisation (improved CHP QA)BMS (Trend)Drives, pumpsHeat distributionPlate heat exchangers
King’s Strategic Energy Partners
Financial Illustration (borrowing)
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
-600
-400
-200
0
200
400
600
800
1,000
1,200
Yearly Cash Costs
Yearly Costs
Time (years)
Co
st /
Sa
vin
g V
alu
e (
£0
00
's)
Project capital cost £3.52mFunded via 12-year on-balance sheet capital borrowing @ 5.5% interest
King’s Strategic Energy Partners
Financial Illustration (borrowing)
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
-600
-400
-200
0
200
400
600
800
1,000
1,200
Yearly Cash Costs and Savings
Yearly Costs
Yearly Savings
Time (years)
Co
st /
Sa
vin
g V
alu
e (
£0
00
's)
Energy savings: 20% of £2.2m energy bill Year 1: £400k; rising to >£1m with 6% energy inflationCumulative energy saving £11m over 15 years
King’s Strategic Energy Partners
Financial Illustration (borrowing)
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
-600
-400
-200
0
200
400
600
800
1,000
1,200
Yearly Costs, Savings and Net Savings
Yearly CostsYearly SavingsNet Savings
Time (years)
Co
st /
Sa
vin
g V
alu
e (
£0
00
's)
Once capital borrowing repaid, most of the energy saving hits the bottom line
King’s Strategic Energy Partners
Financial Illustration (borrowing)
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
-1,000
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
Yearly Cash Costs and Savings and Cumulative Net Savings
Yearly Costs
Yearly Savings
Cumulative Net Savings
Time (years)
Co
st /
Sa
vin
g V
alu
e (
£0
00
's)
Cumulative net cash saving after 15 years = £5.7m
King’s Strategic Energy Partners
Financial Illustration (Sheffield)
£3.8m capital project£480k annual saving, rising by 7% energy inflation
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
-5,000
-4,000
-3,000
-2,000
-1,000
0
1,000
2,000
Yearly Costs, Savings and Net Savings
Yearly Costs Yearly Savings
Net Savings
Time (years)
Co
st
/ S
av
ing
Va
lue
(£
00
0's
)
King’s Strategic Energy Partners
Financial Illustration (Sheffield)
£3.8m capital project£480k annual saving, rising by 7% energy inflationIncluding saving of £1.3m backlog maintenance
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
-5,000
-4,000
-3,000
-2,000
-1,000
0
1,000
2,000
Yearly Costs, Savings and Net Savings
Yearly Costs Yearly Savings
Net Savings
Time (years)
Co
st
/ S
av
ing
Va
lue
(£
00
0's
)
King’s Strategic Energy Partners
Financial Illustration (Sheffield)
£3.8m capital project£480k annual saving, rising by 7% energy inflationIncluding saving of £1.3m backlog maintenance
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
-6,000
-4,000
-2,000
0
2,000
4,000
6,000
8,000
10,000
Yearly Costs and Savings and Cumulative Net Savings
Yearly Costs Yearly Savings
Cumulative Net Savings
Time (years)
Co
st
/ S
av
ing
Va
lue
(£
00
0's
)
King’s Strategic Energy Partners
Contracts and Financial Structures
Investment-Grade Audit
General Agreement of Co-operation between Contracting Authority ("CA") and ESCo
Project- Implementation Guarantee
Multiple options may be combined:•Government grants [e.g. SALIX, HEFCE]•Capital purchase•Capital borrowing [own bank / Ecovate source]•Shared-Savings Agreement•Operating Lease [off-balance sheet]•Operation & Maintenance Agreement [off-balance sheet]•Power-Purchase Agreement [off-balance sheet]•Special-Purpose Vehicle / Joint Venture •Government incentives [e.g. RHI, FIT]
King’s Strategic Energy Partners
Services Offered from King’s / Ecovate
Investment-Grade Audit
Project-Installation
Guarantee + Continuous Improvement
ProcurementFeasibility Study
StrategicTechnicalCommercialFinancialPresent to Board
Framework or OJEUSelect Preferred Bidder
based on capabilityContracts
Project-ManagementFinancial-ModellingFunding if requiredContracts
Project-Management
Monitoring & VerificationManage Continuous
Improvement
King’s Strategic Energy Partners
Have I Answered your Questions?
What’s the difference between and EPC and an ESCo? In an energy-performance contract, does the supplier have to provide the finance? We’ve been advised that ‘off-balance sheet’ transactions will no longer be allowed, and all transactions will have to be shown on the balance sheet. How do we get around this? In an energy-performance contract (EPC), does the supplier have to take over the operation and maintenance of the estate, or of the equipment supplied?
King’s Strategic Energy Partners
KCH Strategic Energy Partners
Iain France07854 540325