RENOWATT ARM General Assembly May 26, 2016 With the support of: - - PowerPoint PPT Presentation

With the support of:

RENOWATT

ARM General Assembly May 26, 2016

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Agenda

▪ H2020 – Citynvest project ▪ Genesis of the project ▪ Creation of a One Stop Shop ▪ Activities of the one Stop Shop ▪ Tendering procedure ▪ Financing of the project ▪ Key take-aways – challenges so far

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http://www.euregio-mr.com/fr/euregiomr http://www.euregio-mr.com/fr/euregiomr

▪ Located in Wallonia

(one of the 3 Belgian Region)

▪ 1 million inhabitants ▪ Liege province: 84 municipalities ▪ Circuit de Spa Francorchamps (F1) ▪ Located in Wallonia

(one of the 3 Belgian Region)

▪ 1 million inhabitants ▪ Liege province: 84 municipalities ▪ Circuit de Spa Francorchamps (F1) The province of Liege

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GRE Liege – Reconversion economic agency of Liege province ▪ Develop conditions to

create sustainable jobs for the future generations

▪ Created in 2004, following

the announce of Arcelor Mittal closure

▪ Develop conditions to

create sustainable jobs for the future generations

▪ Created in 2004, following

the announce of Arcelor Mittal closure

roupement roupement edéploiement edéploiement conomique conomique

G R E

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Looking to Europe ... If 60% of the buildings in Wallonia are renewed, there is a potential for

▪ 30 billion euro ▪ Maintenance / creation of

500,000 jobs (if everything is done at once), or 16,000 jobs if the investments are spread

• ver the next 30 years

▪ For Liège, maintenance /

creation of more than 4000 jobs

▪ Commitment from the Member States of the

European Union to achieve the 20/20/20 goals: 20% reduction in CO2 emissions, 20% renewable energy and 20% energy savings between now and 2020

▪ In Europe, buildings more than 20 years old

account for 95% of the total stock. In Liège, more than 98% of buildings are at least 20 years old, which results in excessive energy consumption

▪ In Belgium, energy consumption in buildings

accounts for 40% of total energy consumption

▪ Creation of more than 2,000,000 jobs in Europe

to meet the 2020 challenges

▪ 1,000,000 to invest in renewal will create /

maintain 17 jobs … potential to create businesses in Wallonia

SOURCE: DG Energy European Commission; Build Up Skills; IWEPS

Energy renewal offers real potential for the creation of jobs and businesses in the Region

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Agenda

▪ H2020 – Citynvest project ▪ Genesis of the project ▪ Creation of a One Stop Shop ▪ Activities of the one Stop Shop ▪ Tendering procedure ▪ Financing of the project ▪ Key take-aways – challenges so far

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Public Actors / Hospitals / Industrials Public Actors / Hospitals / Industrials Building selection One Stop Shop Finance Tendering procedure Third party financing Subsidised loans Tax incentives Public susbidies

Idea to set up a structure to support beneficiaries (local authorities, hospitals, industrials…) in their urban energetic retrofitting projects

1 Public authorities as a first step –plan to open to hospital and industries

8 SOURCE: EEEF

Objectives Objectives Beneficiaries Beneficiaries Capital Capital Hedging Hedging Types of assistance Types of assistance

▪ PPP intended to halt climate change ▪ Project intended to improve energy efficiency by at least 20% ▪ Technical assistance to prepare the project ▪ Financing (between €5 and €20 million) for infrastructure projects

(minimum €5 million required)

▪ Municipalities ▪ Local and regional authorities ▪ Public or private entities acting on behalf of local and/or regional

authorities (transport companies, social housing, ESCOs, etc.)

▪ Initial capitalisation of the fund: €265 million

(EU, EIB, Cassa Despositi e Prestiti, Deutsche Bank)

▪ Financing of the project preparation costs for 90% of eligible costs

(supplementary costs)

▪ Minimum return factor: 20

Investment program must be finalized by February 2017 Investment program must be finalized by February 2017

European Energy Efficiency Fund was identified to finance the One stop Shop

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Inhabitants Inhabitants + Liège Province: 1.1 million + Liège Province: 1.1 million 200,000 200,000 9,000 9,000 60,000 60,000 24,000 24,000 40,000 40,000 Liege Airport Passengers: 315,293 Cargo: 561,000 Tons Liege Airport Passengers: 315,293 Cargo: 561,000 Tons 56,600 56,600 17,000 17,000 CHRH CHRH 2,541 2,541 15,331 15,331

Represents 50% of the building stock

• f the province

Represents 50% of the building stock

• f the province

So far, 11 entities have joined the project (3 are paying entities)

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▪ Structuring of the

approach for the hospitals

▪ Expanding the

services to all public authorities

▪ Launch and

structuring of the talks for the industrialists

▪ The services of the

One Stop Shop are subsidised

▪ Creation of the One-

Stop-Shop

▪ Provision of services

to the public authorities in the province of Liège

▪ Subsidised services ▪ Launch of the talks for

the hospitals

2014 2015 2016 2017

▪ Opening of the One

Stop Shop’s services for hospitals1

▪ Opening of the One

Stop Shop’s services for industrialists1

▪ The One Stop Shop’s

services are charged to the public authorities, and subsidised for hospitals and industrialists

▪ Opening of the One

Stop Shop Window’s services to all sectors

▪ A fee is charged for

the One Stop Shop services

1 If a subsidy for hospitals and industrialists is provided in 2015, the activities will more than likely not be able to start before the beginning of 2016

The One Stop Shop will be set up Step by Step

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Agenda

▪ H2020 – Citynvest project ▪ Genesis of the project ▪ Creation of a One Stop Shop ▪ Activities of the one Stop Shop ▪ Tendering procedure ▪ Financing of the project ▪ Key take-aways – challenges so far

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Three basic principles to which the 10 public authorities will subscribe

Work according to Energy Performance Contracts (EPCs) Grouping the buildings into batches / pools of buildings Time dedication to the project 1 2 3

13 SOURCE: Pierre-Alain Kreutschy_SI Genève (Suisse)

Traditional model EPC model Financing Financing Financier / Banker Energy Suppliers Financier / Banker Energy Suppliers Insurers Maintenance Building Owners Installers Manufacturers Insurers Maintenance Building Owners Installers Manufacturers Price of heat / Electricity Price of heat / Electricity Energy Supplier Energy Supplier Decrease of Energy consumption Gas supply contract Client Client Building Owners Building Owners Enterprises Enterprises Maintenance Maintenance Insurers Insurers Manufacturers Manufacturers Installers Installers Building Owners Building Owners Insurers Insurers Bank Bank Heat / Electricity Heat / Electricity Price

• f gas

Price

• f gas

Gas Gas Energy Service Company (ESCO) Energy Service Company (ESCO) Client Client

1 Giving priority to the EPCs

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▪ Grouping multiple buildings,

depending on the potential energy savings within a single project

▪ The buildings may belong to a

single public body or to multiple public bodies

▪ Achieving an adequate size for

the EPC

▪ Diversifying the risk for financiers

(and obtaining more attractive financing conditions)

▪ Reducing the number of

contracts (and transaction costs) 2 Grouping buildings into different pools / lots comprising multiple

buildings

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Feb 2015 1 June 2015 1 Feb 2016 Municipalities subscription to the tendering central Start of the ESCO procedure selection for the 4 terndering procedures Launh of the tendering central Selection of the candidates 31 oct – 31 jan 2017 7 sep 2015 Launch technical specificities for the 4 tenders Attribution 25 mar 2015 4 Feb 2016

RenoWatt key dates

July 7 - Sep 30 2016

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Building selection Building selection

▪ Estimation of the energy saving potential ▪ Meeting with each of the municipalities to select the buildings

based on the savings

▪ Building selection by municipalities (municipal council)

1 Tendering procedure Tendering procedure

▪ Publication of the 4 tendering procedure (schools, sport,

miscellaneous and hospital) – candidate selection

▪ Selection of candidates ▪ Publication of the 4 technical specifications

2 Financing of the 40 million euros Financing of the 40 million euros

▪ How to deconsolidate this type of investments ▪ Funds or debt

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Activities realized so far

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▪ 65,5 million €

investment

▪ 20,7 million €

maintenance

▪ 428,000 m2

heated floor

▪ 38,9 million € (45,2

with options) investissements

▪ 10,5 € (12 with avec

• ptions) maintenance

▪ 255,000 m2 heated

floor

Fiche 2 133 sites 231 buildings Quick Scans 122 sites 211 buildings Builidind selection 81 sites 151 buildings Fiche 1 148 sites 250 buildings

Historique de la sélection des bâtiments

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64% of investment is insulation 64% of investment is insulation

1 Split of the investment by work type

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▪ Investment:

Minimum of 38,9millions (option excl.)

▪ Maintenance:

Minimum of 10 millions d’euros over 15 years (option excl.)

▪ Number of sites ▪ and buildings:

81 sites et 151 buildings

▪ Energy savings:

34%

▪ Average ROI:

21 years

Some figures

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Agenda

▪ H2020 – Citynvest project ▪ Genesis of the project ▪ Creation of a One Stop Shop ▪ Activities of the one Stop Shop ▪ Tendering procedure ▪ Financing of the project ▪ Key take-aways – challenges so far

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European negotiated procedure with publication ▪ Nature of services and pitfalls

‒ Does not allow prior determination of an overall price ‒ Market specifications cannot be established precisely enough to make it possible to award contracts through an invitation to tender process

▪ New and complex tendering process (long-term collaboration,

large number of buildings and BAPs, overall package of supplies and services from a private partner, energy savings guaranteed for the duration of the contract by the private provider)

▪ Offers from tenderers will depend on preliminary audits and

studies carried out by the tenderers themselves. Renowatt is currently only carrying out estimates of potential

▪ Negotiations with tenderers on payment terms, work done,

technical aspects of the tender etc.

▪ No competitive dialogue because the negotiations are about the

tenders, not the solutions, even if these are identifiable

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Strict compliance with the framework of European law and current Belgian legislation To promote local employment and combat social dumping

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Creation of a working group to reflect on the social and ethical clauses that need to be included in the contract documents

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▪ Cross-sector policies promoted by Directive 2014/24 on

public tendering ‒ Environmental, social and ethical clauses + access to SMEs ‒ Object of the contract: energy renewal with a view to socio- professional reintegration

▪ Functionality savings

‒ Inclusion of a clause on giving priority to new economic models and pushing suppliers to change the range of goods and services they offer

Results of the working group

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▪ Qualitative selection

‒ Focus on development in the region ‒ List of subcontractors once the applications have been received ‒ Certificates in relation to administrative fines, in coordination with the competent administrative body.

▪ Award criteria (currently under consideration)

‒ Score for the share of subcontracting with local SMEs? (cf. French law) ‒ Scores for environmental and social aspects ( maintenance plan, recycling, CO2 emissions etc.)

▪ Conditions for implementation

‒ Limitation of extent of subcontracting ‒ Social implementation clauses ‒ Conditions for maintenance ‒ Reminders on minimum working conditions

Results of the working group

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Agenda

▪ H2020 – Citynvest project ▪ Genesis of the project ▪ Creation of a One Stop Shop ▪ Activities of the one Stop Shop ▪ Tendering procedure ▪ Financing of the project ▪ Key take-aways – challenges so far

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Financing of the project

Deconsolidation Debt or third party investment Cost of the project 1 2 3

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Agenda

▪ H2020 – Citynvest project ▪ Genesis of the project ▪ Creation of a One Stop Shop ▪ Activities of the one Stop Shop ▪ Tendering procedure ▪ Financing of the project ▪ Key take-aways – challenges so far

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Advantage for a public authority to join the tendering central

Subsidies

▪ Subsidy negotiation on behalf of the municipalities

Out of the budget boundary for municipalities Tendering procedure

▪ Set up of all the tendring procedure ▪ Negotiation with the ESCOs ▪ Dedicated budget for legal advisors ▪ Permanent contact with municipalities

Financing reflexion

▪ Accession of finacing opportunities that one public authoritise could not access ▪ ROI analysis of the project ▪ Tendering procedure for the project financing

Technical analysis

▪ All technical feasibility studies outsourced to RenoWatt

Neutral and public facilitator

▪ RenoWatt is public, neutral and non for profit, working for the benefit of municipalities and not the private

sector

▪ Knowledge of the way of working of the municipalities ▪ No need for municipalities to go through public tendering procedure to work with RenoWatt

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Lessons learned by GRE-Liege … So far

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Public body is needed to gather the different public authorities

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Local authorities (average size) do not have the time to conceive such project and need to be guided by a non-for- profit facilitator

▪

Local authorities need to have time to dedicate to the project

▪

Key to work with professional who knows the ESCO market to guide in the full process

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Preparing such type of tender procedures is expensive…technical assistance is a great help

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Think about the execution – EPC are difficult to manage

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EPC is not the unique solution – check the type of retrofit

▪

Political commitment

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Prepare the ground for the decision

▪

Take into consideration in your planning the decision process of municipalities

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Technical assistance helps to keep the timing

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Communication, communication and communication, at all level of the municipalities

With the support of:

RENOWATT

ARM General Assembly May 26, 2016