Energy Performance Contracting

Energy efficiency improvements in commercial buildings - opportunities

and challenges in New Zealand

Energy Performance Contracting • Energy Performance Contracting (EPC) is a

method of implementing energy efficiency improvements projects based on guaranteed savings

• Capital outlay is recovered from energy savings during time of contract

• Any shortfall of predicted savings is made up by the contractor

• Types of EPC: shared savings or guaranteed savings contract

EPC in New Zealand

• EPC has first appeared in New Zealand about 20 years ago

• Shaky start

• Australasian Energy Performance Contracting Association in 1998

• Current EPC - Honeywell NZ with government support

Commercial Buildings in NZ

• Commercial and industrial buildings account for 8% of total New Zealand energy use

• Centre of Advanced Engineering in University of Canterbury has found in 1996 further 20-30% improvements were possible in existing building stock

• EECA research suggests productivity gains 5-15%

Case Study Building

Case Study Building Energy Savings Potential

Case study

ChCh (Enercon Data)

EECA Data 1996

NZS 4220 1982

BETARG data 1980(s)

Meridian Building

Tenants 182 50Landlord 85 148Total 267 198 175 200 125 80Savings 26% 34% 25% 53% 70%

Energy (kWh/m2/year)

25% savings = $50000/year

70% savings = $140000/year

Barriers to EPC

• Lack of interest in the project from building management company (no obvious gain)

• No knowledge of energy management (and EPC) among both tenants and building manager

• Energy Use Indices hard to find

• ESCO numbers limited in NZ

• Energy Services Contractors see EPC as costly

• Australasian EPC Association focus on Australia only

• Promotion by EECA limited to big projects with Honeywell

Overseas Experience

• EPC in US since conception

• Estimated revenues of this industry were $3.6 billions in 2006

• Initiall subsidies helpfull

• Active Association

• EPC Facilitators

Overseas Experience

• Gradual move from simple to more comprehensive projects

• States policies allowing longer paybacks• Enron collapse – loss of customer confidence• Energy supply companies still active in EPC but

scaled down• Private buildings 18% of projects• Renegotiating Lease Agreements

Overseas Experience

• Europe main activity federal buildings

• 2003 directive on Energy Performance of Buildings

• Energy Performance Certificates for all buildings from 2009

• Eurocontract

• White Certificates Scheme

Overseas Experience

• Australia

• Association 1998

• Subsidies and policies

• Green Lease

• Australian Building Greenhouse Rating

Stages of EPC Market Development

• Government support

• Association of EPC companies

• Facilitators and M&V

• Altered Lease agreements

• Market demand development

• Energy Performance Certificates for buildings

What Is Missing in NZ

1. ESCO (Energy Services Company)

2. Association

3. Government support

4. Altered lease agreements

5. Create market demand