International ESCO Case Studies Dr Alex Westlake Consultant

International ESCO Case Studies Dr Alex Westlake, Consultant to the REEEP East Asia Secretariat at CREIA Rebecca Gunning, IT Power Industrial Case Studies Courtesy of the World Bank EMC Project

Agenda • International ESCO Case Studies – Public buildings – Residential and district heating – Industry • Additional Financing Mechanisms – Clean Development Mechanism of the Kyoto Protocol (CDM) – A Cement Sector example • Useful resources

Public Buildings • • Hospitals and medical centres Schools and colleges Government buildings Case studies: – Bulovkia Hospital, Czech Republic – Aururia Higher Education College, USA – Hemel Hempstead Hospital, UK (tomorrow) – Michigan Prison Service, USA (tomorrow)

Aururia Higher Education Centre, Denver, USA • Three colleges and 33, 000 year-round students. • Lighting in 19 campus buildings was old and inefficient • Aging cooling equipment not meeting needs

Energy efficiency measures • • • Two chillers replaced Upgrading of cooling towers Retrofitted 10, 000 light fittings New energy management control system New laboratory fume hoods New heat recovery system

Costs and contract • Total Cost: USD 450, 000 • Annual savings: USD 285, 000 • Simple payback: 1. 6 years • 9 year performance contract • Exceeded energy saving predictions

Other side benefits • improved lighting quality for a better learning environment; • greater occupant comfort through improved room temperature control; • elimination of the use of CFCs in the chiller plant; and • improved air quality and safety in fume hood areas.

Bulovka Teaching Hospital, Czech Republic • 19 buildings • 80, 000 m 2 • 1640 beds • Central steam plant • Energy bills: USD 2. 5 – 3 million / year • 53% - steam generation, 27% - electricity and 20% - hot water generation

Energy efficiency measures • Switching central steam system to local district heating system • Implementing a new energy management system • Installation of new air handling recovery units • Converting and upgrading to new high efficiency gas boilers

Savings • Total cost: USD 2. 7 million • Annual savings: USD 700, 000 • Simple payback: 4 years • New equipment all owned by the hospital

Contracts and Finance • Performance contract between EPS (the ESCO) and the hospital • Term of contract includes construction time and 8 year amortisation period. • Hospital guaranteed that savings will cover all debt service payments. • Financed with 100% debt. • Financing was difficult taking about a year to arrange. Was secured with a corporate guarantee.

District Heating and Residential buildings • • • US public housing Poland District Heating Lithuania District Heating Czech District Heating Case study: – Portsmouth Housing Authority, USA

Portsmouth Metropolitan Housing Authority, Portsmouth, Ohio, USA Source: PMHA

Portsmouth Metropolitan Housing Authority n 140 Buildings n 887 Units n 79, 000 m 2 n Building Types: n n Townhouse: 82 Buildings/587 Units High Rise: 3 Buildings/245 Units Single Family Home: 53 Buildings/Units Administration/Warehouse: 2 Buildings/Units

Energy Conservation Concerns • Overheating and Minimal Control of Heating Distribution Systems • Resident Concerns With Domestic Hot Water Supply • High Water Consumption and Aging Fixtures • Significant Infiltration and Building Envelope Loss • Ductwork and air quality Concerns • Energy Awareness and Resident Involvement

Performance Contracting • Performance contracting allows housing authorities to partner with an ESCO to make capital improvements to residence units, finance all associated costs through a private source, and have a guarantee that the resulting energy savings will cover the debt service

Energy Efficiency Measures • Heating and DHW System Upgrades – Install Primary/Secondary Loop - 13 Boiler Rooms – Upgrade Domestic Water Distribution Loop – Installation of Boiler System Controls • Mechanical Upgrades – – Replacement of Rooftop AHU’s Replacement of Central Furnaces Reconfigure Filter/Air Intakes Install Air Conditioning

Energy Efficiency Measures(continued) • Water Conservation Measures – Upgrade or Replacement of Existing Fixtures – Replacement of Toilets – Upgrade or Replacement of Existing Showerheads and Aerators • Building Shell Measures – – – Air Seal Attic Space Duct Sealing High Density Cellulose Insulation Attic Insulation Weather Stripping

Energy Efficiency Measures (continued) n General Site Measures n n Reconfigure Filter/Air Intakes Replace Thermostats Reduce Excess Exhaust Fan Runtime Training and Education n Peer Energy-Education Program O&M Training Community Awareness

Project Costs • Total Project Costs: USD 3, 575, 122 – Capital Funds: USD 1, 622, 000 ($400, 000 PMHA funds used to buy down capital funds) – Financed Portion (ESCO): USD 1, 953, 122 – Annual Debt Payment: USD 236, 410 (PC Finance Payment – 12 years) USD 448, 587 (Capital Funds Finance Payment – 4 Years)

Savings • Savings: USD 2, 888, 357 (Over 12 Year Contract Term) – Construction Period Savings: $66, 596 – Annual Guaranteed Savings: USD 208, 047 (Energy & Water Savings) – Annual Savings Predicted: USD 234, 061 (Includes Savings From Bulk Gas Purchase)

Long Term Benefits • Major Infrastructure Improvements • Staff and Resident Education/Training • Lower Utility Cost • Improve Resident Comfort • Lower Maintenance Cost • Community Involvement • Use Local Contractors • Improved Operating Safety • Guaranteed Results

Typical Timeline • RFP Process: 1 -2 Months • Complete Energy Audit: 3 -4 Months • Negotiating & Financing: 1 -3 Months • Note this period can be up to 2 years in some countries. • Construction Period: 6 -18 Months

Performance Contracting Benefits Housing Authorities • Keep 100% of Savings for up to 12 Years • Pay for Capital Improvements Out of the Savings • Private Funding • Leverage Capital Funds • Capture Savings Typically Lost Using Capital Funds

Housing authority - Summary Performance Contracting Offers housing authorities: • Capital improvements without capital expense • Guaranteed savings • Comprehensive and attainable solutions • Jointly developed solutions

Energy Efficiency in Industry • Successful approaches to EE standards • Case Studies – – – – – Hebei Zhuo. Zhou Xing Thermal power Qiqihar Brewery Beijing Dongfang Chemical Factory Jinan Huangtai Power Plant Variable Speed Drive (VSD) Anqing Copper Mine VSD Static Power Compensation Distribution Transformer Upgrade Low frequency heating in Ningxia Iron alloy company Kunming Steelworks Power Plant Jimen Hotel Air-conditioning Energy Efficiency Improvements

Top-runner program in Japan constantly raises the bar - Manufacturers can produce below the standard but on average must exceed it - Carrot & stick approach

Combustion System Upgrade • Implemented by: Beijing EMCo • Client: Hebei Zhuozhou Xinxing Heating Power Ltd. • Project: Upgrade coal pulverization system of 3 x 75 t/h pulverized coal boilers, use energy saving burners, etc. • Investment: 5. 88 million RMB • Energy saving result: yearly energy saving of 30786 tce, and profit of 5. 59 million RMB.

Combustion System Upgrade • Title: Energy conservation upgrade of chain-grate boiler combined with burning of pulverized coal • Client: Qiqihar Brewery • Project: 10 t/h chain-grate boiler; output 6 t/h; efficiency 65%. After upgrade with this technique, boilers can use different types of coal, with output of 14 -15 t/h and thermal efficiency of 75%. • Investment: 450, 000 RMB • Energy saving result: yearly coal saving of 1758 t, and power saving of 150 MWh; payback period: 1. 2 years.

Recovery of Condensation Water • Implemented by: Beijing EMCo • Client: Beijing Dongfang Chemical Plant • Project: use 7 units of condensation water collectors, and send the collected condensation water back into boiler’s de-aerator. • Investment: 3. 08 million RMB • Energy saving result: yearly energy saving of 11340 tce, and yearly profit of 3. 69 million RMB; payback period less than 1 year.

Speed Control (Chopping Inward-feed Speed Control Technique) • Case Title: Jinan Huangtai Power Plant • Implemented by: Beijing Yiren Haitai Energy Technology Ltd. • Technological points: frequency speed control regulates input end (stator), and chopping inward-feed regulates output end (rotor). Investment is ½ of that of frequency speed control. • Project: 2 x 6 k. V 800 k. W boiler induced draft fans, 2 x 710 k. W boiler air blowers. • Total investment: 3 million RMB. Payback period: 18 months.

Speed Control (Liquid Resistor Speed Control) • • Title: Liquid resistor speed controller for fans Client: Anqing Copper Mine Implemented by: Xiangfan Dali Industrial Control Ltd. Project: Axial flow fan is driven by 800 k. W coiling motor; the actual power under full speed is 602 k. W; air volume can be adjusted in over 4000 hours. By using this technique, the speed control time accounts for 45% of the operation time, with a range of 70 -90%, and with obvious energy saving. • Payback period: 10 months

Reactive Power Compensation • • Implemented by: Beijing EMCo Client: Hohhot City Power Bureau Investment: 1. 66 million RMB Energy saving result: yearly energy saving of 1090 tce, and yearly profit of 1. 17 million RMB.

Distribution Transformer • Case Title: Application of S 9 energy-saving distribution transformer • Client: Huangshi City Power Bureau • Project: Install 1 unit of S 9 Model 315 k. VA energy-saving transformer, with good energy saving result. Currently, 61 units have been installed, with 19215 k. VA. • Payback period: 0. 8 year

Application of Low-frequency Electric Smelting Furnace in Metallurgical Industry • Client: Ningxia Helanshan Ferroalloy Ltd. • Project: Low-frequency electric smelting furnace is cross between power frequency smelting furnace and direct current smelting furnace, with an operating frequency of 0 -3 Hz. It saves energy, reduces consumption, increases output, lowers noise, increases metal recovery rate, and improves environment. Install 1 unit of 3200 k. VA low-frequency smelting furnace and 1 unit of 6300 k. VA low -frequency smelting furnace. • Total investment: 1. 65 million RMB • Energy saving result: yearly power saving of 3520 MWh, and power cost saving of 1. 06 million RMB. Payback period: 1. 63 years.

Turbogenerating Device Using Recovered Waste Pressure of Blast Furnace Gas • Client: Kunming Steelworks, Power Plant • Project: The plant’s No. 6 Blast Furnace (2000 m 3) has a gas pressure of 0. 15 MPa. Build 1 unit of turbo-generating device using recovered waste pressure of blast furnace gas. This provides approx 30% of the power used by blast furnace’s air blower. • Total investment: 29. 72 million RMB. • Energy saving result: yearly power generation of 40, 980 MWh, and power cost saving of 12. 29 million RMB.

Energy Conservation Upgrade of Buildings’ Heating and Refrigeration Systems • Client: Beijing Jimen Hotel • Implemented by: Beijing EMCo • Project: use land-thermal water-source heat pump to provide heating and living hot water in winter (replacing coal-fired boilers), and to provide refrigeration (replacing piston-type water chilling units) and hot water (replacing oil furnaces) in summer. • Investment: 2. 19 million RMB • Energy saving result: yearly energy saving of 512 tce, and yearly profit of 1. 28 million RMB

Agenda • International ESCO Case Studies – Public buildings – Residential and district heating – Industry • Additional Financing Mechanisms – Clean Development Mechanism of the Kyoto Protocol (CDM) – A Cement Sector example • Useful resources

Introduction to the CDM • In 1997, the Kyoto Protocol introduced legally binding GHG emission reduction objectives • The signatories of the Protocol (Annex B countries) committed to reduce the GHG emissions by 5. 2% in the period 2008 -2012 relative to 1990 levels • 3 flexible mechanisms were established to promote cost-effective emissions reductions worldwide: Emissions trading (ET), Joint Implementation (JI) and the Clean Development Mechanism (CDM).

Features of the CDM • The CDM is the only mechanism that allows Annex B countries to finance project in non-Annex B countries to acquire Certified Emissions Reductions (CERs) that will be credited towards their Kyoto targets • The CDM provides a practical link between Annex B countries and developing countries • Developing countries gain the capacity, technology and financing for greenhouse gas (GHG) abatement, and achieve sustainable development through CDM projects

CDM Case Study Waste Heat Recovery Project • Location: Shandong Province, China • Total capacity: 13. 2 MW • Project cycle: 10 years, 2006 -2015 • Price of CER: USD 5 -6 per tonne CO 2 • Total CERs: 1. 42 million • Total potential finance from CER sales: USD 7. 1 million

Agenda • International ESCO Case Studies – Public buildings – Residential and district heating – Industry • Additional Financing Mechanisms – Clean Development Mechanism of the Kyoto Protocol (CDM) – A Cement Sector example • Useful resources

Some useful international web links • ESCO Associations: – – China – www. emca. cn Japan – www. jaesco. gr. jp and http: //www. eccj. or. jp/index_e. html US – www. naesco. org and Alliance to save energy – www. ase. org UK – www. esta. org. uk • Resources: – – – Technology - www. caddet. org Networks - www. reeep. org China/India/Brazil - http: //3 countryee. org/publications. htm EU - http: //europa. eu. int/scadplus/leg/en/s 14000. htm#EFFICACITÉ Econoler resource library (one of the first ESCOs) http: //econolerint. com/English/lectures_publications_e. html • CDM – UNFCCC website - www. unfccc. int – CDM website – http: //cdm. unfccc. int

Summary • A wealth of positive ESCO experience exists now globally • Key sectors are public buildings, industry commercial and residential • Ideally EE is tackled by better upfront standards and design, but as technology advances and installations age there always opportunities for ESCOs to take advantage