ESCo Projects

ESCo Concept

According to this formula, ESCo (Energy Saving Company or Energy Service Company) executes  service, which increase energy efficiency at the customer and then participates in the financial benefits resulting from the achieved savings.

Initially, the company carries out an energy audit at the client’s facilities. Together with the customer scope of modernization is agreed, the conditions for the distribution of benefits and the duration of the contract are determined. The company develops documentation of the project, and then executes it. ESCo company comprehensively implement the service improving energy efficiency, and therefore is responsible for the implementation and operation of investment during the term of the contract.

 

Financing models

There are two models of financing projects increasing energy efficiency in the ESCo formula:

  • model of the distribution of savings – ESCo company shall bear the full financial and operational risk,
  • guaranteed savings model – the customer bears the financial risk and the company bears operating risk.

 

Elements of project

Regardless of the specifics of the company or the financing model project can be divided into several stages.

The first is the initial audit. It is based on a preliminary assessment of the feasibility of investments increasing energy efficiency. As part of the audit is carried out:

  • interview with employees,
  • local vision,
  • introduction to the characteristics of the company,
  • introduction to the used technology,
  • analysis of energy bills (electricity, fuel, heat).

On the basis of the initial audit the company presents to the customer the initial proposal of projects that can be realized, and is performed to estimate the scope and profitability of investments. The data collected during the audit are not sufficient to take a decision to carry out the project.

On the basis of the findings of the initial audit an agreement to improve the energy efficiency of the company with ESCo can be signed . After conducting a detailed audit it should be verified. The agreement contains indicators of profitability required for investment (payback period, NPV), the technical specifications of selected projects, implementation schedule, scope of client’s and company obligations, salary of ESCo and its calculation formula, as well as the conditions of the agreement.

The next step is a detailed audit, during which an in-depth analysis of the solutions adopted on the basis of the initial audit is carried out. Additional measurements are provided in order to complete data, more detailed interviews with personnel involved in the operation of equipment are conducted. Energy bills from earlier periods (min. 36 months) are also analyzed. As a result, it is possible to identify the most promising measures to improve energy efficiency. A full range of information allows to make the calculation of indicators of efficiency of investment, and therefore, make a decision to carry out project.

The final stage is the implementation of the project, receipt and guarantee correct operation and monitoring of the effects.

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The benefits from cooperation in ESCo formula

Cooperation with companies in the formula ESCo carries a number of benefits. The most important of these is the division of the risk of failure of the project between the company and the ESCo company (degree of risk depends on the accepted model of financing). In addition, performing the investment is budget neutral for the company, since its cost is covered from savings generated by it. It is worth noting also that the ESCo company earns when energy savings are real, which ensures reliable performance of its services.

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