Energy Performance Contracting EPC Vic Government EPCs since

Energy Performance Contracting (EPC)

Vic Government EPCs since 2009 29 projects covering 745 buildings saving 37% (average GHG saving) and $418 million (net over life) and savings are guaranteed

Federation Square EPC $6. 85 million 55% greenhouse gas saving

Government office buildings EPC $11. 8 million 30% greenhouse gas savings

Melbourne Sports and Aquatic Centre EPC $4. 1 million 31% savings guaranteed

South West TAFE EPC $1. 8 m 32% greenhouse gas saving

Parks Victoria EPC (46 parks) $2. 8 million 28% energy saving

RMIT EPC $99 million 36% greenhouse gas saving

Melbourne Cricket Ground EPC Scope being finalised

Museums Victoria EPC Scope being finalised

City of Yarra EPC $3. 4 million 45% greenhouse gas saving

Frequently asked questions

What is an EPC?

An integrated process with a savings guarantee Request for Proposal DFSA Detailed Facility Study Install solutions EPC M&V

Why EPC? Why not just do it ourselves?

More savings Guarantee reduces risk Low risk supports financing Doesn’t require customer to be an expert

How can anyone guarantee the savings?

Careful application of the M&V protocol: A. B. C. D. Data logging systems/equipment New meters on relevant circuits Annual site bills Modelling

EPC measurement & verification Request for Proposal As per blue box in upper right corner DFSA Detailed Facility Study Install solutions M&V EPC Initial M&V outline Some pre-install (for pricing) measurements Ongoing M&V reporting: Post-install measurements Reporting Making good Financial reimbursement IPMVP Options: A: Partly measured retrofit isolation B: Fully measured retrofit isolation C: Whole of site D: Simulated Calibration Methodology agreed (option, sample, timing & duration) Baseline agreed Some measurements taken (e. g. option A ‘before’) Comprehensive MVP developed Measurement and verification of savings. This text box not really necessary, but has been added to deliberately make the page look overly busy… for visual effect and nothing else really. • Annual M&V reports • One off M&V reports (e. g. option A solutions) • Annual commissioni ng requirements

Do we have to install everything they recommend?

No

Do we have to share the savings?

No

Does the ESCO take over our electricity bills?

No

What about maintenance contracts?

No

Do we lose flexibility in use of our buildings?

No

Are we big enough?

If you spend over $200 K per year on utilities

How do we pay for it?

1. Cash 2. Debt finance 3. Finance Lease

Doesn’t it cost a lot to measure and verify?

It will cost more if you don’t.

Did you get what you paid for?

How much will an EPC cost? . . and save?

Hypothetical Local Government EPC Project scope Civic centres Aquatic centres Libraries Depots Other facilities Annual utility expenditure = $800, 000 37% savings = $288, 000 Capital investment (year 1 debt impact) = $2 million Annual operating statement impact = $153, 600 Avoided capital (asset replacement) = $604, 000

What will my chief finance officer think?

They should support this.

Accounting treatment of energy efficiency investments For projects funded with cash OR debt where the payback period is less than the investment life. BALANCE SHEET – Increased liabilities or less cash – Improved asset value of buildings zero, OPERATING STATEMENT – Depreciation expense (~1/15 th of investment) – Annual cost savings (~1/7 th of investment) – Savings more than double the expense NET DEBT (liabilities – cash) – – Increased liabilities or less cash Increased net debt by value of investment in year 1 Impact reduces to zero over term of the payback period Positive impact thereafter then +ve - ve +ve for payback term, then

How do I get started?

Call me Sam Burke 0408 554 413

Further information www. procurement. vic. gov. au, Select ‘EPC’ under ‘State Purchase Contracts’