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OVERVIEW OF THE EPC POTENTIAL AND MARKET
NATIONAL REPORT FOR ITALY
WP3
COMBINES PROJECT
CENTRAL EUROPE PROGRAMME/4CE499P3
JUNE 2013
MILAN
ii
This document has been prepared within the framework of the
CENTRAL EUROPE Programme co-financed by the ERDF.
AUTHORS:
Giulio Cattarin Lorenzo Pagliano Andrea Roscetti
Politecnico di Milano – gruppo eERG
Via Lambruschini 4, 20156 Milano
Italy
www.polimi.it
iii
DISCLAIMER:
The sole responsibility for the content of this guideline lies with the authors. It does not necessarily reflect the opinion of the European Communities. The European Commission is not
responsible for any use that may be made of the information contained therein.
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CONTENT CONTENT .......................................................................................................................... IV
LIST OF FIGURES AND TABLES .................................................................................. VI
List of Figures .............................................................................................................................................. vi
List of Tables ............................................................................................................................................... vi ABBREVIATIONS ..........................................................................................................VIII
EXECUTIVE SUMMARY .................................................................................................... 1
1. EPC MODELS (TASK 3.1.3) ......................................................................................... 2
2. LEGISLATIVE REQUIREMENTS (TASK 3.1.3) ......................................................... 5
3. RESULTS OF THE EPC SURVEY (TASK 4.2.1) ....................................................... 8
4. BARRIERS (TASK 3.1.3) ............................................................................................. 11
Financial barriers ......................................................................................................................................................... 11
Institutional barriers .................................................................................................................................................... 12
Organizational barriers: ............................................................................................................................................ 13
Communication barriers: .......................................................................................................................................... 14 5. SOLUTIONS (TASK 3.1.3) .......................................................................................... 15
Financial solutions ...................................................................................................................................................... 15
Institutional solutions ................................................................................................................................................. 16
Organizational solutions ........................................................................................................................................... 17
Communication solutions: ....................................................................................................................................... 18 6. NATIONAL ENERGY CONSUMPTIONS (TASK 3.1.2) .......................................... 20
6.1 Natural gas consumption ............................................................................................................... 23
6.2 Electricity consumption .................................................................................................................. 24 7. ENERGY EFFICIENCY ACHIEVEMENTS (TASK 3.1.2) ........................................ 26
8. ESTIMATION OF THE ENERGY EFFICIENCY POTENTIAL (TASK 3.1.2) ......... 28
8.1 Public sector ..................................................................................................................................... 31
8.1.1 Public buildings .......................................................................................................................................... 31
8.1.2 Social housing sector ............................................................................................................................... 33
8.1.3 Street lighting .............................................................................................................................................. 34
8.1.4 Further considerations............................................................................................................................. 35
8.1.5 Interviews with ESCOs – public sector ............................................................................................ 36
8.2 Industry sector .................................................................................................................................. 37
8.2.1 Estimations of energy saving potential in industry ...................................................................... 38
8.2.2 Interviews with ESCOs – industry sector ........................................................................................ 41
8.3 Tertiary sector ................................................................................................................................... 42
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8.4 Residential sector ............................................................................................................................ 44
8.4.1 Energy efficiency interventions in condominiums ........................................................................ 45
8.4.2 Interviews with ESCOs – residential sector ................................................................................... 46 9. ESTIMATION OF THE EPC POTENTIAL (TASK 3.1.3) ......................................... 49
9.1 The ESCO market ............................................................................................................................. 49
9.2 The EPC market potential ............................................................................................................... 50
9.2.1 Public sector ................................................................................................................................................ 51
9.2.2 Industry .......................................................................................................................................................... 52
9.2.3 Residential sector ...................................................................................................................................... 52
9.2.4 Tertiary sector ............................................................................................................................................. 52
9.2.5 Transport sector ......................................................................................................................................... 52
9.3 EPC potential based on EU Data Base on Energy Saving Potentials ..................................... 53
9.3.1 Definition of potentials and methodology (Task 3.1.1) .............................................................. 53
9.3.2 Results ........................................................................................................................................................... 54 10. CURRENT TRENDS IN THE EPC MARKET (TASK 3.1.5) ............................ 57
10.1 Financing ........................................................................................................................................... 57
10.2 Products and Services .................................................................................................................... 57
10.3 Legislative trends ............................................................................................................................. 58 11. CONCLUSIONS .................................................................................................... 59
APPENDIX 1. ASSOCIATIONS, ORDERS AND INSTITUTIONS INVOLVED IN ENERGY EFFICIENCY ..................................................................................................... 61
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LIST OF FIGURES AND TABLES List of Figures Figure 1. Customer segments served by ESCOs ................................................................................... 8 Figure 2. Cumulative total annual investments [Mio€] .......................................................................... 9 Figure 3. Energy services offered and relative importance for the ESCO business ....................... 9 Figure 4. Estimation of the EPC market development in 2013-2020 .................................................. 10 Figure 5. Final energy demand by country, EU27, 2007 ..................................................................... 20 Figure 6. Final energy consumptions in 2011 [Mtoe] ........................................................................... 21 Figure 7. Final energy consumptions from 2000 to 2011 [TWh] ........................................................ 22 Figure 8. Final natural gas consumptions by activity sector from 2006 to 2011 [TWh] ................ 23 Figure 9. Final natural gas consumptions by activity sector in 2011 [TWh] ................................... 23 Figure 10. Electricity consumptions in Italy in 2011 [TWh] ................................................................ 24 Figure 11. Energy savings in different activity sectors in 2011. ....................................................... 26 Figure 12. Energy efficiency gains since 2000 ..................................................................................... 27 Figure 13. Technical energy-saving potentials in Italy, by sector ..................................................... 29 Figure 14. Economic potential for electricity savings in 2020 [TWh/y] ............................................ 30 Figure 15. Economic potential for electricity savings by 2020–public sector [TWh/y] .................. 31 Figure 16. Electricity consumption split into different industrial branches [TWh] ........................ 38 Figure 17. LPI - Total energy savings potential in industry - split by branch [TWh/y] .................. 39 Figure 18. Synoptic view of the potential energy savings/production in industry for each
technical solution ............................................................................................................................... 41 Figure 19. Economic potential for electricity savings by 2020–tertiary sector [TWh/y]................ 43 Figure 20. Residential buildings allocated by date of construction ................................................. 44 Figure 21. Economic potential for electricity savings by 2020–residential sector [TWh/y] ......... 46 Figure 22. Evolution in the period 2005-2010 of accredited and active companies (left) and
distribution on the national territory of active companies (right). ............................................ 49
List of Tables Table 1. Check list for the verification of ESCO capacities .................................................................. 3 Table 2. Minimum contents of an energy service contract (UNI CEI 11352) ..................................... 4 Table 3. Balance of energy in Italy in 2011 [Mtoe]................................................................................. 21 Table 4. Electricity consumptions in Italy in 2010 and 2011 .............................................................. 25 Table 5. Achieved energy savings in 2011 and targets for 2016 ....................................................... 26 Table 6. Technical potential for electricity savings by 2020 [TWh/y] ............................................... 30 Table 7. Schools in Italy ............................................................................................................................ 32 Table 8. Office buildings in Italy .............................................................................................................. 32 Table 9. Energy consumption in schools and office buildings. ........................................................ 32 Table 10. Intervention costs and energy cost reductions [Mio €]: .................................................... 32 Table 11. Public office buildings – expected energy consumption and savings by 2020 ............ 33 Table 12. School buildings – expected energy consumption and savings by 2020 ...................... 33 Table 13. Social housing buildings – expected energy consumption and savings by 2020 ........ 34 Table 14. Expected savings from implementation of street lighting requalification ..................... 35 Table 15. Companies and employees by range of employees and economic sector – 2009. ...... 37 Table 16. Synoptic view of the potential energy savings/production [TWh/y] in industry for each
technical solution .............................................................................................................................. 40 Table 17. Electricity consumption in private tertiary sector [TWh] .................................................. 42 Table 18. Complexes of buildings in Italy .............................................................................................. 42 Table 19. Residential buildings in Italy .................................................................................................. 44
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Table 20. Summary of technological and economic energy saving potential by sector .............. 47 Table 21. Number of buildings in Italy by type of use and geographical position (x 1000) ........... 51 Table 22: EPC potential in Italy ............................................................................................................. 55 Table 23. Natural gas and electricity prices in Italy (November 2012) ............................................. 56 Table 24: Overview on energy saving potentials, the current EPC market and the EPC
potential in 2020 per sector ............................................................................................................. 56
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ABBREVIATIONS EE energy efficiency
ESM energy saving measures
EOI expression of interest
EPC energy performance contracting
ESCO energy service company
ESC energy supply contracting
IPMVP international performance measurement and verification protocol
IRR internal rate of return
M&V measurement and verification
NPV net present value
O&M operations and maintenance
PBP payback period
RES renewable energy sources
RFP request for proposal
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EXECUTIVE SUMMARY The Italian EPC market is still at its first steps and the specific legislation on energy service contracts is rather recent. The Italian standard UNI CEI 11352:2010 – which extends the UNI CEI EN 15900:2010 - has been conceived to qualify the ESCO market and guarantee a proper implementation of EPC projects. The standard defines the general requirements and a check list of requisites for ESCOs that offer energy efficiency services with guaranteed results. The Legislative Decree 115/2008 defines the requirements that energy service contracts must meet.
Italy is the fourth most important energy consumer of whole Europe (final energy consumption: ca. 1560 TWh in 2011) and the biggest one of Southern Europe, and it strongly depends from energy importations. Civil sector is responsible for 34% of all energy consumptions, followed by transport sector (32%) and by industry sector (24%). The yearly energy efficiency achievements have been mainly monitored through the White Certificate Scheme (WCS). In 2011 the energy savings within WCS were about 58 TWh, 69% of which were achieved in the residential sector, while industry, transport and tertiary allowed for 17,9%, 9,6% and 3,5% of total savings. Although Italy results up with the other European countries in residential and industry sectors, tertiary and transport sectors urgently need ad-hoc measures in order to reach their energy reduction targets.
Several energy efficiency potentials for Italy have been calculated in the last years, which can pose the basis for considerations on the EPC potential. The report by Fraunhofer ISI (2012) estimates that the total saving potential sums up to 46 Mtoe by 2030, corresponding to a 31% reduction compared to the baseline. The residential and transport sectors represent one third each, while the remaining third is covered by industry and tertiary sector. A study conducted by eERG for Greenpeace Italia (2007) analyzes the energy saving potentials by 2020 for electric end-uses in industry, household, tertiary and transport on rail. The economic potential is estimated around 83 TWh/y and the largest shares are attributed to industry (47%) and private tertiary sector (29%).
The present report summarizes the main results from previous analysis of energy efficiency potentials, and derives quantitative and qualitative estimations of the EPC potential. The main difficulty when estimating an EPC potential lies in defining the field of applicability of EPC, which strongly depends on the financial support of banks and public institutions, the organizational capacity of creating economically attractive “pools” of private and public subjects, the stability and the quality of the legislative framework, the implementation of information campaigns and so on. Still, it is reasonable assessing that the EPC market will largely benefit from the European and national new regulations and subsidy schemes.
The Business As Usual EPC potential 2020 and the Ambitious EPC potential 2020 have been calculated assuming a share of 2% and 10% of the total Economical Energy Saving Potential 2020 as defined by Fraunhofer Institute et al. (2008).
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1. EPC MODELS (TASK 3.1.3) The Italian EPC market is still at its first steps. However, relevant work has been done so as to prepare a solid ground for the future market development. In particular, the Italian standard UNI CEI 11352:2010 has been conceived to qualify the ESCO market and guarantee a proper implementation of EPC.
Other standards relevant for the energy efficiency market are:
- EN ISO 50001: “Energy management systems - Requirements with guidance for use” with national version UNI CEI EN ISO 50001:2011
- CEI/UNI 11339: “Energy management - Energy managers - General requirement for qualification” with national version UNI CEI 113391
- CEI/TR 11428: “Energy management – Energy audits – General requirements for the energy audit service” with national version UNI CEI/TR 11428
- CEI/EN 16231: “Energy efficiency benchmarking methodology” - UNI CEI EN 16212:2012: “Energy efficiency and savings calculation – Top-down and
Bottom-up Methods”
Standard UNI CEI 11352:2010
The Italian standard UNI CEI 11352:2010 implements and extends the European Standard UNI CEI EN 15900:2010 2 on Energy Efficiency Services. The standard defines the general requirements and a check list of requisites for ESCOs that offer energy efficiency services with guaranteed results. In particular, it defines the minimum requirements of energy efficiency services and the skills (in the areas of organization, diagnosis, design, management, economic and financial) that an ESCO must have to offer the activities described to their clients.
Table 1 reports the check list to verify the capacities of an ESCO.3 The list can be used both by the client – in order to support the decision-making process needed for the selection of an ESCO - and by the ESCO itself as an instrument of self-diagnosis.
1 In 2012 the certified Energy Managers in Italy were 54 (consult complete list at: www.segem.eu) 2 UNI CEI EN 15900:2010 “Energy efficiency services – definitions and requirements” 3 The following information has been summarized and/or translated from UNI CEI 11352:2010 by the authors in order to give to foreign readers tools for comparison with similar standards in their country. It is not intended as an official translation of the original standard.
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Table 1. Check list for the verification of ESCO capacities
Organization • Adoption of a quality management system • Presence of a plan for the training and information of internal personnel • Presence in the organization chart of the economic-financial area - or among the
suppliers - of professionals with adequate capacity/experience in administrative, financial, legal and contractual aspects on contracts with guaranteed results.
• Presence of a plan for the training and information for clients, aiming at the achievement and the maintenance in time of the expected results.
• Presence of a contact for the public relations with the clients.
Diagnosis and design
• Presence in the organization chart of the technical area of a responsible with adequate competence in energy management and in energy market
• Presence in the organization chart of the technical area of a technician with adequate competence in designing in the intervention fields
• Presence of procedures for the management and maintenance of instruments and software for the energy evaluation, measurement, verification and monitoring
• Presence of realized studies and/or projects and/or energy diagnosis • Presence of procedures for the management and the verification of activities
implemented by third parties if applicable • Presence of procedures for the management and the updating of the legislation and
the reference standards and the eventual presence of realized projects for the legislative and standard adjustment
Management • Presence of a list of internal personnel: number, role, qualification • List of suppliers and/or sub-contractors • Presence of procedures for the application of – or the interaction with – an energy
management system by the clients, according to the standard UNI CEI EN 160014 • References of realized and/or managed and monitored interventions, works and
installations in energy sector • List of own technological and instrumental equipment (e.g. machineries, instruments
for monitoring etc.) for the implementation and/or management of interventions, works and installations
Economic and financial capacities
• Presence of procedures for the risk evaluation of the energy efficiency service and for the individuation and application of adequate tools for the risk hedging.
• Presence of a Financial Statement or equivalent declaration and/or presence of references by financial institutions
• Presence of requests for Third Party Financing (TPF) if the TPF is present among the activities offered by the ESCO
4 UNI CEI EN 16001 has been replaced by UNI CEI EN ISO 50001:2011
4
Table 2 reports the minimum criteria that characterize an energy service.5 These criteria aim at improving and simplifying the communication between ESCO and clients, including the contractual aspects.
Table 2. Minimum contents of an energy service contract (UNI CEI 11352)
Object Notes Definition of modalities of Diagnosis and/or Energy Audit
It contains the criteria used to realize the process of diagnosis and/or energy audit
Definition of the reference consumptions (energy baseline)
The energy baseline represents the thermal and/or electric energy and/or primary energy calculated/measured in a time period preceding the proposal for energy efficiency interventions and normalized by means of adjustment coefficients. The energy baseline constitutes the base on which energy savings are calculated/measured.
Definition of adjustment coefficients of reference conditions
Adjustment coefficients are used to normalize the reference conditions with respect to factors and variables that can influence energy consumptions (e.g. climatic conditions, volume, production process, end-use behaviour, etc.)
Definition of the energy efficiency interventions
Expected energy savings in terms of primary energy (toe) and relative methodology of estimation or calculation
Estimated/calculated value of achievable energy savings as a consequence of the implementation of the energy efficiency service with respect to the reference conditions (energy baseline), with explication of the conversion factors in primary energy used according to the legislation
Expected energy savings in terms of Euros and relative methodology of estimation/calculation
Estimated/calculated value of achievable energy savings as a consequence of the implementation of the energy efficiency service with respect to the reference conditions (energy baseline).
Guaranteed energy savings in terms of primary energy (toe)
Part of the expected savings that is guaranteed in contractual terms and that is to be achieved by means of an appropriate programme of energy saving measures.
Measurement and verification plan The programme, aiming at the determination of the achieved energy and economic savings, includes: the measurement instruments, the continuity/periodicity of the measurements, the units of measure and/or the specific indices of energy consumption and/or the fuels.
Financing modalities of energy efficiency interventions
It is necessary to highlight the amount of the eventual co-financing by the client
Price of service It contains the modalities of periodic adjustment and the criteria for the share of achieved energy savings.
Contractual duration Reporting frequency The reporting is the modality by which the ESCO
communicates to the client the results of the measurement programme and the achieved energy savings.
5 The following information has been summarized and/or translated from UNI CEI 11352:2010 by the authors in order to give to foreign readers tools for comparison with similar standards in their country. It is not intended as an official translation of the original standard.
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2. LEGISLATIVE REQUIREMENTS (TASK 3.1.3)
Brief summary of Italian legislation on energy efficiency in buildings
The first law on energy performance of buildings6 was introduced in 1976 as a consequence of the energy crisis in 1973 and the strong increase in oil price. The law addresses only the heating demand both posing limits to the installed heating power and by indicating measures for the thermal insulation of the building envelope. The following Law n.10/1991 and the implementing regulations DPR 412/93 and DPR 551/99 extend the requirements by introducing the effect of internal gains and solar gains and by indicating thresholds for the efficiency of the heating system. In Law n.10/91 heat losses are evaluated in detail, with respect to the building (transmission and ventilation losses) and to the heating system (production, distribution, regulation and emission losses). DPR 412/93 indicates the climatic zone as a function of degrees/day, introduces a classification of buildings and lower thresholds for the global performance of the system. In response to the European Directive 2002/91/EC several legislative decrees were implemented, such as the D.Lgs. 192/05, the D.Lgs. 311/06, the D.P.R. 59/09 and the D.M. 26/6/2009. These decrees establish the calculation methodologies and the minimum requirements for the building and heating system performance as concerns the heating demand and the demand for domestic how water. The D.M. 26/6/2009 defines the “Attestato di Certificazione Energetica” (energy performance certificate) which is an informative document that must be drawn up by a third party (“certificatore energetico”).7
The specific legislation on energy service contracts is rather recent. The “contratto servizio energia” (energy service contract) model was firstly introduced by DPR n. 412, 26/8/1993. It was here defined as the contractual act that disciplines the supply of goods and service which are necessary to keep comfort conditions in the target building (according to laws addressing rational energy use, security and environmental protection), allowing at the same time for improvements in transformation and use of energy. A much more detailed description of “contratto servizio energia” has been provided by the Legislative Decree 115/2008, which will now be reported in detail due to its relevance for the present study.8
Legislative Decree 115/2008 “Implementation of Directive 2006/32/EC on energy end-use efficiency and energy services and repeal of Directive 93/76/EEC”
The Legislative Decree 115/2008 defines the requirements that energy service contracts must meet. In particular, a distinction is made between the contratto servizio energia 9 and the contratto servizio energia plus, where the latter one is correspondent to an EPC.10
6 Legge ordinaria del Parlamento n° 373/76 – Norme per il contenimento del consumo energetico per usi termici negli edifici. 7 The legislative decree Dlsg. 192/2005 had already established the “Attestato di Qualificazione Energetica”, which did not require to be drawn up by a third party. 8 The following information has been summarized and/or translated from D.Lgs. 115/2008 by the authors in order to give to foreign readers tools for comparison with similar laws in their country. It is not intended as an official translation of the original decree. 9 “Servizio Energia” is described in article 1, paragraph 1, letter p), of the presidential decree DPR 26.08.1993, no. 412
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The following list summarizes the requirements for the two contractual forms:
Requirements and performance of a contratto servizio energia:
• presence of an energy performance certificate (“Attestato di Certificazione Energetica”) for the target building. In case of multi-family buildings, the certificate must address also the single residential units;
• determination of the primary energy demand for the winter and/or summer energy consumptions and/or for the production of sanitary hot water and/or for other eventual services indicated in the contract, expressed in kWh/m2year or kWh/m3year, conforming to the current local legislation;
• explicit indication of the interventions for reducing the energy consumption, improving the energy performance of the building and its systems or introducing RES, each evaluated in terms of cost-effectiveness;
• contractual revenue based on objective parameters which are independent from the actual energy and electricity consumption, to be paid by means of a periodic fee;
• purchase, transformation and use of the fuels and grid supplies necessary to feed the process of production of the heat-transfer fluid and the delivery of thermal energy to the building;
• preventive indication of specific magnitudes that quantify each of the services provided, to be used as references in the analysis phase;
• determination of the actual degree days for location, as a reference for seasonal adjustments of the annual consumption of thermal energy to demonstrate the effective improvement of energy efficiency;
• measurement and het metering in thermal power stations, or only measurement in the case of individual installations, of the total thermal energy used by each of the users served by the system, with suitable equipment compliant with current legislation;
• an indication of the total amount of the heat that can be supplied during the heating/cooling season (divided for each of the services provided);
• the periodic reporting by the supplier of the energy service contract of the thermal energy used by the users served by the installation; such reporting must be done according to criteria and schedule agreed with the customer (at least annually) in terms of Watt-hour or multiple;
• prior indication that the facilities are in compliance with the law or alternatively an indication of any actions required for the retrofitting of the same systems, and an indication of how the burden is distributed between the parties;
• implementation by the provider of the contract of the interventions necessary to ensure the operation and maintenance of the systems, in compliance with applicable regulations;
• term of the contract, at the end of which the plants are delivered to the customer in compliance with the regulations and in working order, and only subject to normal wear and tear;
• a statement that, at the end of the contract, all the goods and materials supplied or installed to improve the energy performance of the building and equipment, except for
10 According to 2012/27/EU, “energy performance contracting means a contractual arrangement between the beneficiary and the provider of an energy efficiency improvement measure, verified and monitored during the whole term of the contract, where investments (work, supply or service) in that measure are paid for in relation to a contractually agreed level of energy efficiency improvement or other agreed energy performance criterion, such as financial savings.”
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any data processing systems of the supplier of the contract, will remain property of the client;
• individuation by the client, in the case of a public body, of a technical counterpart in charge of monitoring the work state and the correct execution of the tasks under the contract;
• liability of the supplier of the contract to maintain the accuracy and reliability of all measurement equipment eventually installed;
• precise annotation of the operations performed on the system and the amount of thermal energy annually supplied;
• delivery of relevant and adequate technical and administrative documentation, also for other operations performed on the building or on other plants.
Further requirements and performance of a contratto servizio energia plus
• reduction in the primary energy for winter heating by at least 10% compared to the corresponding index shown in the energy performance certificate (“Attestato di Certificazione Energetica”) for the first contract stipulation, through the implementation of structural energy upgrading of plant or the building envelope aimed at improving the process of transformation and use of energy;
• update of energy performance certificates • reduction in the primary energy for winter heating by at least 5% compared to the
corresponding index shown in the energy performance certificate for contract renewals after the first
• installation, where technically possible, of thermoregulation systems or devices for the automatic control of the temperature in individual rooms, suitable to prevent overheating resulting from additional internal or external heat gains.
Access to incentives
The contratto servizio energia plus is considered as a leasing contract as regards the access to incentives for the optimal management and the improvement of energy performance.
Duration
The contratto servizio energia and the contratto servizio energia plus must have a contractual duration between 1 and 10 years. However, the maximum duration of 10 years can be exceeded in case of loans from TPF (where the third party is neither the service supplier nor the client), in case of new and/or additional services and activities or in case of full reconstruction of facilities and/or construction of new facilities and/or interventions on the building envelope for more than 50% of its surface.
Energy audits
ESCOs certified according to UNI CEI 11352 refer to UNI CEI/TR 11428:2011 when performing energy audits.
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3. RESULTS OF THE EPC SURVEY (TASK 4.2.1) A total number of 13 ESCOs were interviewed, ten of which filled in the questionnaire. Most of the questionnaires were filled in during phone calls or face-to-face meetings, so to make sure that all questions were clearly understood. In addition, non-structured interviews with experts and professionals working in public sector (such as representatives from Lombardy and Piedmont regions, from local energy agencies etc) were carried out. The support of national observatories on ESCO market such as FIRE Italia or national ESCO associations such as Federesco helped to reach a broad view of the current national situation.
In this section the results from the EPC survey are presented. Some questions were answered only by some ESCOs due to their limited knowledge on the topic.
All activity sectors are addressed by the interviewed ESCOs (Figure 1), even though with large differences in market volumes. The cumulative total annual investments of interviewed ESCOs is around 70 Mio€ (Figure 2). The largest bulk is given by interventions in industry sector, while residential sector accounts for 23%.
Figure 1. Customer segments served by ESCOs
0
10
20
30
40
50
60
70
80
90
100
Scuole Ospedali Altri edificipubblici
Industria Terziarioprivato
Residenziale
% Customer segments served by ESCOs
9
Figure 2. Cumulative total annual investments [Mio€]
The energy services offered and relative importance for the ESCO business are reported in Figure 3. EPC and technology-specific EPC result core products in only one case each, but they are still considered relevant in three other cases.
Figure 3. Energy services offered and relative importance for the ESCO business
Schools2,153%
Hospitals0,781%
Other public organisations
2,153%
Industry47,2568%
Private tertiary
1,382%
Residential housing
15,723%
13 2 3 31
4 3 22
2 11
3
0
1 224 4
1 21 1 1
0%10%20%30%40%50%60%70%80%90%
100%Energy services offered and relative importance
core product
rilevante
media rilevanza
poco rilevante
non offerto
non risponde
10
It is rather hard to estimate the current EPC market volume, especially due to the confusion in terminology that is still present in the EE market. Some small ESCO representatives claim that large “non pure” ESCOs propose contracts that include only a minor part of revenues which is variable with achieved energy savings, while the large majority of revenues comes from energy supply.
Based on the interviews conducted within the project framework, we estimate an EPC market volume between 80 and 100 Mio€/year.
Correlation between energy price and energy efficiency market development
The energy prices will play a key-role in the energy efficiency (and in particular in the EPC) market, being strictly correlated to the economic savings generated by ESM and to the consequent payback period of interventions. An ESCO representative claimed that if the economic crisis attenuates, the attention paid to energy cost cutting may decrease, with a consequent shrinkage of energy efficiency market.
According to the interviewed ESCO representatives, in the next years the EPC market is expected to grow especially in the public sector, in industry and to a lesser extent in tertiary and residential sector (Figure 4).
Figure 4. Estimation of the EPC market development in 2013-2020
23 3 3
2 2 2
1 1
1 1 11
2
1
21
3
3
1
3
4
23
5
3 3 34
2 2
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
in generale scuole ospedali altri edificipubblici
industria terziarioprivato
residenziale
>10%
da 0 a 10%
0
da 0 a - 10%
< - 10 %
non risponde
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4. BARRIERS (TASK 3.1.3) The collected information and the interviews carried out with ESCOs, representatives of Regions, Municipalities and national associations (such as FIRE) highlighted several financial, institutional, organizational and communication barriers which are claimed to obstacle the development of energy efficiency market. They are here described in order to help decision-makers identify the area of interventions11.
Financial barriers - Long pay-back periods, especially for interventions on the building envelope. As reported
in a study by Fraunhofer ISI (2012): “Up to now the topic of efficiency has been underrepresented on the political agenda despite the cost-effectiveness of most of the technologies involved whose implementation is often hindered due to their up-front investment costs.”12 Considering the current low energy prices and high investment costs involved in comprehensive requalification, energy savings often cannot repay the investments within a reasonable contractual duration: in many cases the owner has to pay an additional fee to the ESCO.
- Delays in payments especially from public administrations, who sometimes pay only after 180/240 days. 13 It can be difficult or impossible for small ESCOs to remain financially exposed for long time spans.
- Financial weakness of small ESCOs, which can hardly access to bank loans. Banks typically require ESCOs to contribute to the investment with a 10-20% of risk capital.
- Scarce economic attractiveness of small projects. It is difficult for small private or public subjects to afford the transaction costs of an ESM. In addition, large ESCOs usually consider only projects with initial investments over 100 k€ ÷200 k€, where optimization strategies and scale effects are applicable.
- Difficult access to bank loans Financial institution still do not apply proper economic instruments to express their position on EE projects. Banks are bound to the classical collaterals (capital stock, mortgages, sureties etc.) and still do not accept the cash flows generated by energy savings as main collaterals, adopting a precautionary behaviour against the risk of fraud or insolvency. In other words “An investment class is substantially missing14” In addition, banks may prefer to finance RES projects compared to EE projects. While the first ones guarantee a cash flow even when the client company is not working due to a lack of orders (e.g electricity production by means of PV panels is not dependent on the energy demand fluctuations of the production processes), energy savings depend on the actual consumptions and the quality of ESM implementation (from design to O&M)
11 An overview of barriers encountered by ESCOs is given in ENEA - UTEE (2012) “Rapporto annuale efficienza energetica 2011”, pag. 76 12 Fraunhofer ISI (June 2012) Policy Report – Contribution of Energy Efficiency Measures to Climate Protection within the European Union until 2050 13 AGESI (2012): “Strategia Energetica Nazionale: per un’energia più competitiva e sostenibile” 14 From an interview with Daniele Forni (FIRE)
12
Quoting the European Directive 2012/27/EU15 (pag. 8), the barriers to the use of EPC and other TPF arrangements “include accounting rules and practices that prevent capital investments and annual financial savings resulting from energy efficiency improvement measures from being adequately reflected in the accounts for the whole life of the investment”.
- Companies’ focus on the core business. A report by the Energy and Strategy Group16 found that energy savings have been rarely considered the main driver for implementing new investments (10%). Companies may be reluctant to outsource the process optimization and the facility management which may negatively interfere with the core business (or even imply a temporary halt to the production), and energy price may need to increase even more to represent a relevant percent of the companies’ costs.
Institutional barriers - Complexity of bureaucratic procedures (e.g. authorizations, connection to the grid)
Interviews with ESCOs reported that projects implementing district heating and geothermal heat pumps receive authorizations years after their presentation. For this reason municipalities and privates usually apply for simple technologies, instead of choosing the most effectives ones in terms of energy savings. European tenders are usually considered too complex to be accessed by small ESCOs.
- Legislative instability which creates a diffuse reluctance in applying for long-term projects (e.g. installations of condensing boilers are preferred to geothermal heat pumps, which require longer bureaucratic procedures and may need several modifications consequent to the amendments in regulations) A critical point of national programmes consists also in the possible interactions between different subsidy schemes, which have sometimes created uncertainties and confusion among the professionals17. Incentives are sometimes bound to the direct beneficiaries (i.e. SMEs and citizens), in this case the intervention of an ESCO in the financial aspects of the contracts 18 is severely limited.
- Limit of 10 years for EPC (Legislative Decree 115/2008); over this threshold the contract becomes a concession
- Scarce diffusion of ESCO certification. Potential clients tend to distrust ESCOs for two main reasons: the calculation of the energy-consumption baseline is considered subject to the ESCO’s discretion and the boundary dividing ESCO’s and client’s risks is not clearly marked. In other words “The trap is hidden between the contractual lines”19 A confusion in terminology may have increased the general disbelieve in ESCOs. The first ambiguity is generated by the expressions “accredited ESCOs” vs. “certified ESCOs”. The first expression indicates “companies operating in the sector of energy services” which have successfully applied for at least one project in the WCS, while the second one indicates that the ESCO has been certified according to UNI CEI 11352. This distinction is still not clear in the customers’ minds.
15 At present date no national implementation of 2012/27/EU is available. 16 See www.energystrategy.it 17 See “Certificati Bianchi e Titoli di Efficienza Energetica: l’AEEG traccia un resoconto e un prospetto per il futuro” by Marcella Pavan (AEEG), Gestione Energia 1/2011, ISSN 1972-697X 18 From interviews with regional representatives of Valle d’Aosta and Piedmont. 19 From an interview with Andrea Mutti (Finlombarda)
13
In addition, in the industrial world ESCOs are informally divided into “ESCO with iron” and “ESCOs without iron”, where the first ones indicate companies that have internal resources responsible for all stages of EPC (including installation, management and maintenance), while the second ones need to outsource the “physical” aspects of EPC. It may be recommendable to officially distinguish these two broad categories of ESCO.
- Little financial autonomy of public subjects. It has been often reported20 that even when municipalities could afford investments in ESM, the constraints acted by the Stability Pact prevented them from doing so. In some cases, small municipalities had to renounce to grants covering 80% of eligible costs due to the strict control over their financial budgets.
- Short-term thinking by public institutions. There are several reasons for this wide-spread behaviour. First, public establishments are aware of the legislative instability and want to avoid long and tortuous bureaucratic procedures. Second, authorities want achievements to be visible within their mandate (while long-term investments would provide their benefits in the following mandate, when the opposition may be in power). Third, there is a general tendency to look for “easy money” (such as grants), while more long and complex projects are considered too risky. Another case of “short-term thinking” is that of building administrators, whose mandate is generally shorter (2-3 years) than the pay-back period required by global interventions (5-7 years).
- Consip contractual conditions. Consip S.p.A.21 is a public stock company owned by Italy’s Ministry of the Economy and Finance (MEF), whose mission is that of managing and developing the Ministry’s information systems, providing technological, organizational and process know-how. The company also manages the Program for the Rationalization of Public Purchases. An ESCO representative claimed that Consip contractual conditions for ESM in public structures are too standardized and too challenging, so that ESCOs are tempted to cheat on their public clients (e.g. at the moment of the definition of the energy baseline) taking advantage of their greater knowledge on EE.
Organizational barriers: - Lack of a common, standardized MVP. Additional problems are represented by the costs
due to the MV interventions and the lack of reliable data on energy consumption and metering equipment in SMEs.22
- Lack of common correction coefficients, taking into account eventual climatic variations, changes in occupants’ behaviours etc.
- “split incentive” barrier (also referred to as “principal/agent” problem), occurring especially in social housing sector, where occupants may profit from reduced energy bills. Social Housing Operators (SHO) generally cannot raise rents to balance their investments for ESM, nor they can charge an additional service for EE, even when the overall bill after refurbishment is lower than before. SHO can recoup 100% of energy savings from tenants only if all tenants give their agreement.23
20 From interviews with Valentina Sachero (Lombardy), Andrea Mutti (Finlombarda) and other public institutions representatives 21 Consip S.p.A.: www.eng.consip.it 22 The latter issue is reported in IEE - (Ex)BESS project– Expanding the Benchmarking and Energy management Schemes in SMEs to more Member States and candidate countries (2009) 23 See IEE-FRESH project: www.fresh-projects.eu
14
Communication barriers: - Lack of legal and technical knowledge on EPC from public administrations. This
represents a major difficulty for small municipalities, which cannot afford the costs of external consultancy when preparing tenders.
- Scarcity of data on actual energy consumption in public and private sectors.. - Poor/inaccurate information for small consumers. Partially as a consequence of the
previous point, also citizens and associations are totally ignorant about the potential economic benefits that can result from an EPC and still perceive as intangible the incomes generated by ESM. The increasing awareness of energy issues still needs time to develop, as “Ms. Maria still cannot read the bill”
- “Moral hazard”, which lies in the information asymmetry between user and supplier. Potential customers may be diffident to engage with an ESCO right due to the company’s clearer vision of the potential economic benefits.
- Scarce available information on finished projects. Companies are often “jealous” of their energy consumption data, and ESM detailed plans are usually considered business secrets. This makes it more difficult for ESCOs to make a cost-benefit comparison of EPC vs. Energy Supply Contracts.
- Lack of a Life Cycle Assessment (LCA) approach. SMEs usually consider the sole initial cost of a machinery, without considering energy consumption and maintenance costs. In other words, “The Negawatt hour still doesn’t exist”.24 Considering that energy bills reach up 5÷6% of a SME’s turnover, a cost-benefit analysis using a LCA approach can have an appreciable effect on spending retrenchment.
24 “Negawatt hour” can be defined as the “Megawatt hour” not consumed thanks to ESM.
15
5. SOLUTIONS (TASK 3.1.3) The future development of EPC market depends on financial, institutional and organizational issues which long for simple and reproducible solutions. Basing on previous studies and opinions gathered through interviews with public and private subjects, several possible solutions are here suggested, such as the creation of revolving and guarantee funds, information and education campaigns, simplification of the regulations and a more stringent certification process of ESCOs.
Solutions that can be implemented in order to overcome the abovementioned barriers are:
Financial solutions - creation of revolving funds
Revolving funds with national or supranational guarantees are probably one of the most effective tools to stimulate energy efficiency investments and EPC market development as they allow banks to finance also smaller projects with longer contract terms. Loans could be related to performance indices, following a meritocratic logic.25 This would also enhance competition in the EES market, leveling up small pure ESCOs and large non pure ESCOs. Access to financial resources would no longer prevent small pure ESCOs from working with large EE projects and would foster a competition based on skills, competences and experience rather than financial strength. NB: Some experts believe that the revolving fund should be accessed only by certified ESCOs, following a “rights and obligations” logic. In this way, opportunistic behaviours observed in the areas of wind power and PV should be avoided. Experts and ESCO professionals26 agree on considering revolving funds a more valuable financial tool compared to grants, which easily create conditions for speculation and “dope the market”. Grants can still be useful in the case of small interventions in SMEs.
- creation of guarantee funds A guarantee fund could protect financial institutions and/or ESCOs from delays in payments, from the insolvency of the clients or from the relocation of productive facilities (with consequent drop of energy demand in the facilities subject to the EPC). Although insolvency is a rare event, it can be very harmful for small ESCOs, and discourage small companies from entering the EPC market. The guarantee fund could address in particular interventions with medium to long payback periods (> 6-7 years)
- Co-financing by the customer, when the ESCO alone cannot afford the financial risk of the project. This would enable small ESCOs to work on more projects at the same time, and minimize the technical risk by focusing the internal resources on technical aspects. However, it has been claimed that customers “look for an ESCO just to access to a bank”. This indicates that the participation of customers in the financial risk may be difficult to realize. Two ESCO representatives reported that sometimes customers prefer to fully finance the ESM in order to maintain the property of the installations, while in other cases clients do not want to be financially involved and “distracted” from their core business.
25 From interviews with ESCOs and from ENEA (2011) – Quaderno – L’efficienza energetica nel settore civile 26 Opinions collected during interviews with Daniele Forni (FIRE), Andrea Mutti (Finlombarda) and Ettore Piantoni (Heat and Power SpA); see also “Soluzioni regolatorie per le barriere non-economiche alla diffusione dell’efficienza energetica in Italia nell’uso dell’elettricità” FIRE – 2011, available at http://www.fire-italia.it; Changebest (2009) Task2.1: “National report on the energy efficiency service business in Italy”
16
- Economic savings as a function of energy price volatility. Increasing energy prices can reduce unexpectedly the pay-back period (e.g. for interventions on the building envelope), while protecting the energy supplier from sudden changes in the energy market.
- Management of a large portfolio of ESM, comprehending both short-term (substitution of heaters and fixtures) and long-term (building envelope insulation) interventions. This could help overcome the logic focused only on the most profitable contracts
- Energy taxation: The internalization of external costs is needed to take into account damage incurred by the use of energy carriers27
- Incentives based on socio-economic parameters28. The subsidy programmes could also take into account social issues, distributing incentives according to geographical area, economic sectors and economic categories of beneficiaries. Tax credits could help families with medium-low incomes or small companies. This proposal is in line with the “20-20-20 Energy and Climate” guidelines, where it is suggested that the revenues coming from the auctioning process of Emission Trading Scheme should be partially committed to help “the less well-off to invest in energy efficiency”.29
Institutional solutions - Simplification of regulations, preparation of standards and guide lines for the
preparation of calls for tender.30 This process needs a close and continuous support of technical/economical institutions (e.g. ENEA, FIRE, CTI, RSE etc.) who should be addressed for preliminary analysis of market potential and policy impact on the market. A example on the national level is the Legislative Decree n. 115/2008, which defines energy service contracts (Contratto Servizio Energia and Contratto Servizio Energia Plus, where the second one corresponds to an EPC)
- Enhancement of ESCO certification on EU level. The ESCO market needs qualification in order to gain trust from financial institutions and offer more effective and clear proposals for potential customers. The standard EN 15900 and the Italian standard UNI CEI 11352 started a process that needs to achieve a deeper and broader level of awareness of ESCOs’ rights and obligations. At present date, only 28 ESCOs obtained the certification in accordance with the requirements in UNI CEI 1135231. The certification process should be at the same time stringent and inexpensive, in order to permit the entry of small virtuous ESCOs.
- Enhancement of EPC model via WCS 32 . The valorisation of EPC model could be fostered by the WCS, by using higher coefficients for integrated actions performed by an EPC, and lower coefficients for single-technology interventions. This would reward long-term actions and an optimal management of the facilities for the whole duration of the contract.
27 Ecofys (2012): “The benefits of Energy efficiency – Why wait?” 28 This proposal can be found in ENEA - UTEE (2012) “Rapporto annuale efficienza energetica 2011” , pag. 103 29 Commission of the European Community (2008) “Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions” – 20 20 by 2020 – Europe’s climate change opportunity. 30 Confindustria: Proposte di Confindustria per il Piano Straordinario di Efficienza Energetica 2010 31 See http://www.fire-italia.it/ 32 AGESI (2012): “Strategia Energetica Nazionale: per un’energia più competitive e sostenibile”
17
- Public-Private Partnerships (PPPs), which are characterized by relatively long and reliable relationships, the facilitated integration of public funds and private resources and the distribution of risks between the two partners. This mixed model can help overcoming the financial barriers encountered in the process of energy efficiency improvement. Furthermore, the public party can take responsibility for the aggregation of demand in the local territory (most likely municipal or regional) while the private party would be in charge of managing the ESM.33 In the last years, many PPPs have started to administer public services such as waste management or water and energy distribution. ESM can thus fall within the areas of intervention of PPPs and generate relevant benefits for public establishments.
- Financial autonomy of public administrations for investments in ESM (side channel which is not subjected to the constraints of the Stability Pact)
- Promotion of standardized energy audits (e.g. according to UNI TR 11428 and EN 16247). The new European Directive 2012/27/EU34 requires that large companies (annual turnover >49Mio€ and more than 250 employees) carry out energy audits every four years. SMEs are excluded from these obligations. It is worth saying that a well-done energy audit behalves the effort of an eventual contractual procedure, since it highlights the most profitable interventions to be implemented and the approximate costs and revenues.
- Binding targets for multinational companies. Some experts consider that a deep and rapid renovation of the existing industry and building stock can be reached only through obligations and binding targets on energy consumption, which should be first applied to multinational companies (in particular, energy intensive users) due to their impact and their financial strength. A “softer” measure would be applying rewards for large companies implementing ESM after the mandatory energy audit.
Organizational solutions - Creation of simple economic tools. All market stakeholders, starting from financial
institutions, need to receive clear indications and simple tools in order to quantify potential cash flows (in terms of avoided costs) resulting from energy savings and decide whether an EPC results economically sound or not. The cost-effectiveness analysis depends on various factors, such as climate, local labour costs, initial level of energy performance, energy inflation. The partnership with a bank could actually help ESCOs to study the client’s current and forecasted financial situation and the potential market developments.
- Adoption of a common MV protocol (such as IPMVP or IEEFP). The MV tools must be a trade-off between costs and accuracy. The transnational project PERMANENT 35 - implemented within the Intelligent Energy Europe framework – addressed the diffused disbelief in energy savings by developing and testing an integrated MV protocol, educating energy end users, financiers and energy services suppliers on performance risk measurement and management techniques and by creating trained instructors on the realized MV protocol.
- Support to local authorities in the preparation of action plans and tenders. The project PARIDE (Teramo) shows how a multi-governance model can reach capillary diffusion on
33 Changebest (2009) Task 2.1: National Report on the Energy Efficiency Service Business in Italy. 34 At present date no national implementation of 2012/27/EU is available. 35 http://www.permanent-project.eu
18
the territory, mobilizing knowledge and organization skills from the trans-national level down to small hamlets. Another useful tool for local authorities would be the legal assistance of a consultancy for the eventual management of disputes with the EPC provider.
- Creation of scale effects, e.g. by pooling together neighbor municipalities so to reach a “critical mass” which creates an economic interest in companies and financial institutions. The project PARIDE (Teramo) is a clear example of such a strategy. The decision-makers planning the evolution of urban areas in a “smart city” approach must customize EPC model so to apply it to pooled, small-sized realities.
- creation of Third Party Financing Operators playing a role as skill assemblers: their responsibility would be to assess the feasibility for an EPC, structure the financing and bear the risk of the contract, whose operational components would be outsourced to the relevant stakeholders: construction companies, operators etc. This would lower the expenses associated with the creation of consortium and project vehicles and facilitate the entrance of SMEs to EPC subcontracting markets36
- as regards the “split incentive” barrier in social housing sector, FRESH project has identified different solutions, such as the recoupment of energy savings from tenants even without the official agreement of all tenants, the payment of a comprehensive total fee for rent and energy charges (thus enabling the SHO to transfer energy costs to rents after an energy retrofitting), the contractual connection of energy bills (and thus energy savings) with price volatility.
Communication solutions: - Information and education campaigns which can spread knowledge among companies,
public administrations, associations and citizens, and can boost the participation of the building occupants in the daily management of the building performance. These campaigns could be managed by large public institutions, chambers of commerce, freelancers and universities, and concern useful criteria for technological choices, clarifications on the frequently changing legislation, quality guarantees on products and processes.37 Experts also underline the need for a common ground where ESCOs, financial institutes and potential clients (public administrations, private citizens, companies, associations etc.) can discuss on ESM, so that concepts as “saved energy” will gain their due consistency and value just as “produced energy”. As regards SMEs, the European project (Ex)Bess 38 highlights that: “SMEs are triggered by energy efficiency in relation to cost reduction and by the possibility to benchmark. Consequently, promotion of energy efficiency aiming at management of SMEs needs business like terminology (in terms of Euros, sales profitability and internal rate of interest).” Further on: “SMEs are best approached for EE by known, close and familiar institutions”
- Creation of a “best practice” database, where publicly available information on EPC experiences can be shared and become a source of inspiration for the next contracts. Documentation of pilot projects and model contracts from different EU countries should be
36 See IEE-FRESH projects in social housing sector: www.fresh-projects.eu 37 ENEA (2011) – Quaderno – L’efficienza energetica nel settore civile, pag. 11. 38 (Ex)BESS – Expanding the Benchmarking and Energy management Schemes in SMEs to more Member States and candidate countries (2009)
19
translated and adapted to the local framework conditions. Intensive networking with other public administrations will foster the exchange of already available know-how.39, 40
- Deeper analysis of the mature ESCO market in USA, which can provide useful inspiration for the developing European market41.
39 Changebest project (2009) “Overall analysis and documentation of ChangeBest field tests of new energy efficiency services developed and introduced into the market in 6 EU Member States” 40 ENEA (2011) – Quaderno – L’efficienza energetica nel settore civile 41 Changebest (2009) Task 2.1: National Report on the Energy Efficiency Service Business in Italy.
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6. NATIONAL ENERGY CONSUMPTIONS (TASK 3.1.2)
Italy results to be a major energy consumer (Figure 5).
According to Fraunhofer (2012) 42 “Italy reported a final energy demand of 130 Mtoe in 2007 [...] Compared to the total final energy demand of the European Union, Italy accounts for a share of 11%. It is the fourth most important energy consumer of whole Europe and the biggest one of Southern Europe (including Spain and Greece, excluding Turkey).”
Figure 5. Final energy demand by country, EU27, 200743
The final energy demand of 184 Mtoe has been covered for 82% by fossil fuels (oil: 38%, natural gas: 35%, coal and other solid fuels: 9%), and for the remaining part by RES and importation of electrical energy (13% and 5% respectively) (Table 3). The strong dependence from energy importations poses a serious problem on security of energy supplies.
The final energy consumptions by sector are represented in Figure 6. Civil sector is responsible for 34% of all energy consumptions, followed by transport sector (32%) and by industry sector (24%). Agriculture has a minimum impact, with a share of 2%, while non-energy use (e.g. production of plastic from oil, lubrication, dry cleaning, degreasing etc.) represent 6,9% and bunkering 3%.
42 Fraunhofer ISI (March 2012), “Concrete Paths of the European Union to the 2°C Scenario: Achieving the Climate Protection Targets of the EU by 2050 through Structural Change, Energy Savings and Energy Efficiency Technologies” Accompanying scientific report – Contribution of energy efficiency measures to climate protection within the European union until 2050
43 Fraunhofer ISI (March 2012), op cit., page 178
21
Table 3. Balance of energy in Italy in 2011 [Mtoe]44
Solid Natural gas Oil RES Electricity Total 1. Production 0,7 6,9 5,3 22,6 0,0 35,5 2. Imports 15,5 57,6 89,9 2,2 10,5 175,7 3. Exports 0,2 0,1 26,7 0,2 0,4 27,6 4. Changes in energy stocks -0,6 0,6 -0,6 0,0 - -0,6 5. Gross internal demand (1+2+3+4) 16,6 63,8 69,2 24,6 10,1 184,2 6. Consumption and losses in energy sector -0,3 -1,5 -5,5 0,0 -42,0 -49,3 7. Transformation in electrical energy -11,8 -23,1 -3,3 -19,7 57,9 0,0 8. Total final consumption (5+6+7) 4,5 39,2 60,4 4,9 26,0 134,9
Industry 4,4 12,7 4,8 0,3 10,5 32,7 transport 0,0 0,7 39,5 1,3 0,9 42,5 civil 0,0 25,2 4,0 3,2 14,0 46,5 agriculture - 0,1 2,2 0,1 0,5 3,0 non-energy use 0,1 0,4 6,4 0,0 - 6,9 bunkering - - 3,4 - - 3,4
Figure 6. Final energy consumptions in 2011 [Mtoe]45
44 Elaboration from: Ministery for the Economic Development – Bilancio energetico nazionale 2011 45 Elaboration from: Ministery for the Economic Development – Bilancio energetico nazionale 2011
Industry32,724%
transport42,532%
civil46,534%
agriculture3,02%
non-energy use6,95%
bunkering3,43%
22
Figure 7 presents the final energy consumptions in Italy from 2000 to 2011 (including solid fuels, natural gas and oil products, electricity, RES).
The effect of the economic turndown is evident in the industry sector, where a decrease from 477 (in 2006) to 372 TWh (in 2011) can be observed (Figure 7). In the same years, however, the consumptions for civil uses slightly increased, while the consumptions in transport, agriculture and bunkering sectors maintained rather stable.
Figure 7. Final energy consumptions from 2000 to 2011 [TWh]46
46 Data from ISTAT (2012) *Civil uses include residential sector, tertiary (trade and service) and public sector; ** Data from 2011 are provisional
1450
1500
1550
1600
1650
1700
1750
0
100
200
300
400
500
600
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 **
TWhTWh
Total final uses
Civil uses *
Transport
Industry
Non-energetic uses
Agriculture
Bunkering
23
6.1 Natural gas consumption In 2011 the total natural gas consumption was 80,6 Mio m3, corresponding to 846 TWh (conversion: 1 m3 of natural gas = 10,5 kWh47).
Figure 8 presents the final natural gas consumptions by activity sector from 2006 to 2011. The total final natural gas consumption and the consumption attributed to the different activity sectors reported yearly variations, with a slight decreasing trend of electricity generation.
Figure 8. Final natural gas consumptions by activity sector from 2006 to 2011 [TWh]48
Figure 9 reports the final natural gas consumptions by activity sector in 2011. Both industry and residential sectors contributed for 25% of the total, while tertiary accounted for 8%. Electricity generation required 26% of the total natural gas consumption, and self-consumption contributed for 16%.
Figure 9. Final natural gas consumptions by activity sector in 2011 [TWh]49
47 www.eni.com 48 Elaboration from AEEG (2012) http://www.autorita.energia.it/it
650
700
750
800
850
900
950
0
50
100
150
200
250
300
2006 2007 2008 2009 2010 2011
TWhTWh
Total
Residential
Trade and service
Industry
Electricity generation
Self-consumption
Residential177 21%
Residential MFB34 4%
Trade and service69 8%
Industry211 25%
Electricity generation
224 26%
self-consumption132 16%
24
6.2 Electricity consumption Figure 9 reports the final electricity consumptions by activity sector in 2011. Industry sector is responsible for 45% of all electricity consumptions, followed by private tertiary sector (25%) and by residential sector (22%). Public tertiary sector has a share of 6%, while agriculture has a minimum impact (2%).
Figure 10. Electricity consumptions in Italy in 2011 [TWh]
Table 1 (next page) reports the electricity consumptions in 2010 and 2011 split by activity sector and relative branches.
49 Elaboration from AEEG (2012) http://www.autorita.energia.it/it
AGRICULTURE5,92%
INDUSTRY140,045%
TERTIARY -Private services
77,425%
TERTIARY -Public services
20,36%
RESIDENTIAL70,122%
25
Table 4. Electricity consumptions in Italy in 2010 and 201150
Type of activity 2010 [TWh] 2011 [TWh] var [%] AGRICULTURE 5,6 5,9 5,3 INDUSTRY 138,4 140,0 1,2
Basic manifacturing 61,3 62,3 1,6 Iron metallurgy 18,7 20,6 10,5 Non-ferrous metals 4,6 4,6 1,2 Chemical 15,5 15,1 -2,9 Building materials 12,7 12,3 -3,2 Paper industry 9,8 9,6 -1,7
Non-basic manufacturing 58,6 57,9 -1,2 Food 12,8 12,6 -1,3 Textiles, garments and footwear 6,3 6,1 -4,3 Mechanics 21,3 21,6 1,2 Transport 3,8 3,6 -3,8 Plastic and rubber machining 8,8 8,4 -3,9 Wood and furniture 3,9 3,6 -7,9 Other manufacturing 1,7 1,9 16
Construction 1,8 1,6 -6,4 Energy and water 16,8 18,2 8,5
Extraction of fuels 0,4 0,4 -13,3 Refining and coking 6,0 6,1 1,4 Electricity and Gas 4,1 5,5 33,3 Aqueducts 6,2 6,3 0,7
TERTIARY 96,3 97,7 1,5 Private services 75,8 77,4 2,1
Transport 10,7 10,7 0,5 Communication 4,2 4,2 -1,2 Trade 24,1 23,9 -0,8 Hotels, restaurants and bars 12,4 12,5 0,2 Credit and insurance 2,6 2,5 -2,8 Other private services 21,8 23,6 8,5
Public services 20,5 20,3 -0,9 Public administration 4,6 4,7 2 Street lighting 6,4 6,2 -2,6 Other public services 9,5 9,4 -1,2
RESIDENTIAL 69,6 70,1 0,8 TOTAL 309,9 313,8 1,3
50 Terna S.p.A. - Rete Elettrica Nazionale (2011). Terna is the Italian electricity transmission system operator.
26
7. ENERGY EFFICIENCY ACHIEVEMENTS (TASK 3.1.2)
Table 5 shows the yearly energy savings achieved in 2011 within White Certificate Scheme vs. the targets of 2016. The last column highlights that tertiary and transport sectors urgently need ad-hoc measures in order to reach their energy reduction targets.
Table 5. Achieved energy savings in 2011 and targets for 201651
sector
Energy savings
in 2011
Energy savings
2016 targets Percent of 2016 targets
[TWh/year] [TWh/year] [%]
Residential 40,1 60,0 67
Tertiary 2,0 24,6 8
Industry 10,1 20,1 50
Transport 5,4 21,8 25
Total 57,6 126,5 46
In 2011 the residential sector provided 69% of all energy savings, while industry, transport and tertiary allowed for 17,9%, 9,6% and 3,5% of total savings52 (Figure 11).
Figure 11. Energy savings in different activity sectors in 2011.
51 Data from ENEA - UTEE (2012) “Rapporto annuale efficienza energetica 2011” , pag. 59 52 Ibidem, pag. 60
69%
18%
10%
3%
household
industry
transport
tertiary
27
The ODEX indicators provided by Odyssee-MURE project reflect the energy efficiency gains in Italy from 2000 (Figure 12). For each sector, the ODEX index is calculated as a weighted average of sub-sectoral indices of energy efficiency progress. The sub-sectoral indices are calculated from variations of unit consumption indicators, measured in physical units and selected so as to provide the best “proxy” of energy efficiency progress, from a policy evaluation viewpoint (e.g. for households the indicators are: large electrical appliances (kWh/year/appliance), heating (koe/m2), water heating and cooking (tep/dwelling)). The sectoral index is calculated by aggregation of sub-sectoral indices on the basis of the relative weight of sub-sectors in the sector’s energy consumption.53 Tertiary sector is excluded because of lack of reliable data. Although Italy results up with the other European countries in residential and industry sectors, transport sector is still far from reaching its energy efficiency targets. This is probably due to the average car size and horsepower and the share of diesel.54 An additional cause lies in the intensive road freight transport, which is less efficient than rail and water freight traffic.
Overall (residential, industry, transport)
Residential
Industry
Transport
Figure 12. Energy efficiency gains since 200055
53 Enerdata (2010): Definition of ODEX indicators in ODYSSEE data base 54 Enerdata (2010): Energy Efficiency Trends in the EU – Lessons from the ODYSSEE MURE project 55 Odyssee Database on Energy Indicators (www.odyssee-indicators.org)
0123456789
10111213
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
%
Italy
EU 27
0123456789
1011121314151617
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
%
Italy
EU 27
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1011121314
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
%
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EU 27
0
1
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4
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%
Italy
EU 27
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8. ESTIMATION OF THE ENERGY EFFICIENCY POTENTIAL (TASK 3.1.2)
Several energy efficiency potentials for Italy have been calculated in the last years, either following a top-down or a bottom-up approach. This section will present a selection of the available studies, which can pose the basis for further considerations on the EPC potential.
A report by Fraunhofer Institute (2012)56 – supporting the preparation of proposals for an EU Energy Roadmap 2050 - analysed the Final Energy Demand (FED) of EU 27 Member States and estimated the potential savings by sector of intervention. The evaluation was based on the bottom-up MURE simulation tool, using as data sources Eurostat, Odyssee, PRIMES 2007 (with later adjustments due to the economic crisis, using PRIMES 2009 scenario) and numerous technical information for end-uses. The study takes a conservative approach since it considers that energy efficiency is usually not a driver for investment cycles. Additional dynamic factors have been taken into account, such as the competition over time between different technologies and the learning and scale effects which lead to a cost decrease of energy efficient technologies over time. An overview of potentials in Germany, France, Italy, Spain and Poland has been drawn. The technical energy-saving potential in Italy divided by sector is represented in Figure 13.
It was estimated that “the overall saving potential of Italy sums up to 46 Mtoe by 2030, which translates to a 31% reduction compared to the baseline, reducing the FED from 146 Mtoe to 100 Mtoe. The household as well as the transport sector represent one third each, while the remaining third is covered by industry and tertiary sector. Compared to the pre-crises level of 2007 (131 Mtoe), the reduced FED will be 24 % lower.”
56 Frunhofer ISI (March 2012) “Concrete Paths of the European Union to the 2°C Scenario: Achieving the Climate Protection Targets of the EU by 2050 through Structural Change, Energy Savings and Energy Efficiency Technologies” Accompanying scientific report – Contribution of energy efficiency measures to climate protection within the European union until 2050
29
Figure 13. Technical energy-saving potentials in Italy, by sector57
The household sector presents a strong energy-saving potential. In the household sector, a further increase in energy demand up to 36 Mtoe is assumed [...], which is mainly related to rising cooling demand. Thus the energy saving potential of 16 Mtoe by 2030 leads to a 44% reduction compared to the baseline and to a 20% reduction compared to the 2008 level (26 Mtoe). Two thirds of the saving potential (10,6 Mtoe) result from efficiency improvements in existing buildings (comprising insulation, heating systems). Another 12% are linked to the construction of energy efficient new buildings and the installation of efficient sanitary hot water supply, respectively. The remaining share arises from efficiency improvements in electric appliances, mainly lighting, TVs, refrigerators and desktops.
About the industry sector, it is reported that “The exploitation of the technical saving potential of nearly 9 Mtoe would diminish the 2030 FED by 19%. Slightly more than one third of all savings are related to efficient heat generation. Another third results from efficient electric cross-cutting technologies (particularly e-drive system optimization measures, accounting for 3 Mtoe) and the last quarter arises from process-specific technologies, essentially from refineries and the iron and steel industry.”
According to PRIMES58, the FED of the tertiary sector will further increase. The relative saving potential in the tertiary sector is comparable to the transport sector, leading to a 32% FED decrease in comparison with the baseline by 2030. In absolute figures, the actual saving potential is quite smaller, accounting for 6 Mtoe. 4,4 Mtoe result from building related efficiency measures (building envelope, heating, cooling) of existing (3,9) and new dwellings (0,5 Mtoe). The remaining share is on the one hand linked to efficiency improvements in air-conditioning, fans and commercial refrigeration and on the other hand to office lighting.
Finally, the transport sector would represent a large share of the total EE potential: “The realization of the saving potential of 15 Mtoe would reduce the FED by 32% to 31 Mtoe by 2030. 9 Mtoe are resulting from savings in passenger transport […]. Efficiency improvements in air traffic account for 1,7 Mtoe and in motorcycles for 0,5 Mtoe. The latter is a singularity of the Italian transport sector compared to other European countries.”
57 FRAUNHOFER ISI (March 2012), op cit., page 187 58 PRIMES/GAINS 2009
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In 2007, a study conducted by eERG for Greenpeace Italia 59 analyzed the energy saving potentials by 2020 for electric end-uses in industry, household, tertiary and transport on rail. Conservative hypothesis are taken into account: the calculations consider only appliances with well-known energy demands60; the Technical Potential (TP) is based on existing technologies and their costs in 2006; the electricity cost is assumed to be decreasing with time. Baseline consumptions refer to data from 1999 to 2005. The following definitions have been adopted: - Technical Potential: energy saving potential under the scenario of a capillary diffusion of the
most efficient technologies available, without limits on the economic convenience - Potential by 2020: estimated fraction of the TP that can be reached my means of a series of
programmes and policies - Economic potential: energy savings achievable by the capillary diffusion of the most efficient
available technologies, considering a minimum cost criteria which considers both initial investment costs and operation costs (e.g. maintenance and energy consumption).
Table 6. Technical potential for electricity savings by 2020 [TWh/y]
Sector Total Residential Tertiary (private)
Tertiary (public)
Industry
Lighting 45,4 4,5 20,7 4,7 15,5 Electric motors 39,4 1,1 10,7 1,0 26,6 Appliances 7,5 7,5 0,0 0,0 0,0 Other 10,7 0,0 5,9 1,6 3,2 Total 103,0 13,1 37,2 7,3 45,3
The main economic potential lies in industry sector (47%) and private tertiary (29%). The specific interventions that present highest energy savings are discussed in the relative sections.
Figure 14. Economic potential for electricity savings in 2020 [TWh/y]61
59 Greenpeace (2007) “La rivoluzione dell’efficienza” 60 Building envelope improvement, passive cooling technologies and HVAC optimization have not been addressed due to a scarcity of available data. 61 Data from Greenpeace (2007) “La rivoluzione dell’efficienza” and from eERG – Politecnico di Milano
Residential13%
Industry47%
Tertiary -Commercial
service29%
Tertiary - Public service
11%
31
8.1 Public sector The public sector is the first target for EPC, since it has two concordant goals: the first is regulating and facilitating the access to subsidies schemes and the second is improving the energy performance of its own structures according to the national and international energy saving targets. Public bodies can thus give the example to companies and citizens on the path of a sustainable development.
The following sections will focus on potentials for public buildings and public street lighting. Further considerations derived from interviews with ESCOs will be reported.
The analysis conducted by eERG (2007)62 offers a first comprehensive glance on the electricity potential by 2020 in public sector (Figure 15). It must be kept in mind that the study did not consider ventilation/air conditioning potential due to a scarcity of available data. Under this assumption, indoor and outdoor lighting play the most relevant roles, contributing with 43% and 29% to the total potential, respectively. Relevant contributions come from Information and Communication Technologies (ICT), office machineries, motors and refrigeration systems.
Figure 15. Economic potential for electricity savings by 2020–public sector [TWh/y]
8.1.1 Public buildings The data availability on public buildings is strongly dependent on the use destination63. A study by RSE-ENEA (2009) based on CRESME data and addressing schools and office buildings is here reported. Only buildings totally belonging to public administrations have been considered. Structures such as universities, hospitals and jails have been excluded from the study for their non-homogeneity in use and heating system characteristics. School sector present a relatively abundant amount of data. Table 7 reports the number of schools in three geographical macro-regions, with the specification of buildings constructed before and after the first law on energy performance in buildings (Law n. 373/1976). The schools built before 1976 (and never refurbished) are therefore an ideal target for ESM, since their energy demand can exceed 250 kWh/m2 year.
62 Data from Greenpeace (2007) “La rivoluzione dell’efficienza” and from eERG – Politecnico di Milano 63 Data derived from RSE-ENEA (2009): “Indagine sui consumi degli edifici pubblici (direzionale e scuole) e potenzialità degli interventi di efficienza energetica”
Public Lighting
2,629%
Lighting3,8
43%
Refrigerator0,56%
Motor / drivers
0,910%
ICT / office machinery
1,112%
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Table 7. Schools in Italy
North Centre South Total Ante Law n. 373/1976 11400 6400 11000 28800 Post Law n. 373/1976 5600 3100 5500 14200 Total 17000 9500 16500 43000
The available data on office buildings are reported in Table 8. The total floor area is above 23 million m2. It is remarkable that 50% of the total surface area is concentrated in the biggest 16 provinces, while 14% of buildings are located in Rome, Turin, Naples and Milan.
Table 8. Office buildings in Italy
number Floor area [m2] Public administration 9550 16.811.119 Education 2025 2.594.456 Health 508 2.285.834 R&D 247 491.701 Energy and water 129 100.312 Real estate and construction 128 189.469 Other 993 955.683 Total 13580 23.428.574
The estimated total final consumptions for schools and office buildings are summarized in Table 9. Schools represent the major contribution of the total consumption (81%), and electricity consumption has a much larger share in office buildings (84%) than in schools (15%).
Table 9. Energy consumption in schools and office buildings.
Thermal energy [TWh]
Electrical energy – HVAC [TWh]
Electrical energy – illumination [TWh]
Total [TWh]
Schools 12,6 1,9 14,5 Offices 1,9 0,6 1,0 3,5 Total 14,5 3,5 18
The study simulated comprehensive interventions on 35% of schools and office buildings, deriving the intervention costs and energy cost reductions (Table 10). The annual thermal and electric energy savings would be 18% and 23% respectively.
Table 10. Intervention costs and energy cost reductions [Mio €]:
Schools Offices Total
Intervention costs 6.486 1.757 8.243
Cost reductions [Mio €/y] 328 91 419
A later study by ENEA (2011)64 estimated the potential for energy efficiency interventions in public offices by 2020. The eligible stock of buildings was 80% of the total number, (i.e. 11000 buildings), while the remaining 20% has been assumed non cost-effective or subject to particular architectural constraints. Table 11 shows the expected energy consumption after the interventions and the percent energy reductions.
64 ENEA (2011) – Quaderno – L’efficienza energetica nel settore civile, pag. 8-9
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Table 11. Public office buildings – expected energy consumption and savings by 2020
n=11.000 Actual consumption [TWh]
Post-intervention consumption [TWh]
Total savings by 2020 [TWh]
% of savings on total consumption
Heat 3,8 2,6 1,4 17,5% Lighting 0,8 0,5 0,2 3,3% Other electricity 3,0 2,6 0,2 2,4% Total 7,7 5,6 1,9 23,3%
As regards school sector, ENEA estimates that 57% of school buildings (30000 of a total of 53000) should be refurbished by 2020 (Table 12).
Table 12. School buildings – expected energy consumption and savings by 2020
n=30.000 Actual consumption [TWh]
Post-intervention consumption [TWh]
Total savings by 2020 [TWh]
% of savings on total consumption
Heat 12,2 7,9 4,3 31,3% Electricity 1,4 0,8 0,2 1,4% Total 13,6 8,7 4,5 33,4%
The scenario presented in the latter study is probably too optimistic, since refurbishing 80% of public offices and social housing structures and 57% of schools would require a massive mobilization of funds. Even if ESM may not be the major driver for requalification, the following point is to be considered.
When analyzing the cost-benefits of ESM interventions, it is good to keep in mind that energy requalification usually accompanies the comprehensive refurbishment necessary due to building obsolescence. This fact drastically contributes to reduce the extra-cost of ESM and to shorten the payback period.
It is finally essential to mention that ESM are strongly connected to improvements in indoor climate, which in return causes higher performance of building occupants. In fact, several studies have investigated the negative effect of thermal discomfort on labour productivity.65,66
Even considering their simplified approach, it is reasonable to think that the presented studies can be adopted in a national strategy for the development of EPC market. The 35% ratio of schools and office buildings assumed in ENEA (2009) could represent the eligible stock for EPC, representing the buildings with the highest margins of energy savings.
8.1.2 Social housing sector Social housing sector is estimated to include about 90.000 buildings67, and it is considered a relevant target group due to the general poor building performance, with energy consumption exceeding 240 kWh/m2 year in the colder climatic zones.
65 Niemela R, Hannula M, Rautio S, Reijula K & Railio J. The effect of air temperature on labour productivity in call centres – a case study. Energy and Buildings 34 (2002), 759-764. 66 Kosonen R & Tan F. Assessment of productivity loss in air-conditioned buildings using PMV index. Energy and Buildings 36 (2004), 987-993. 67 ENEA (2011) – Quaderno – L’efficienza energetica nel settore civile, pag. 8-9
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Social Housing Operators (SHOs) are public bodies usually owned by provinces. They manage a housing stock which is mostly owned by municipalities, who allocate the dwellings and define the investment policies. SHOs therefore have little decision power on the maintenance and refurbishment of the housing stock. Rents are based on the income of households and do not reflect the real cost of housing.
The European cooperation project FRESH – supported by the IEE programme- addressed the development and promotion of EPC to finance comprehensive refurbishment operations in the social housing sector.
It is reported68 that Social Housing Operators “are the only institutional players specialized on housing management [...]. They have a much better decision-making capacity than condominiums, even though they may be limited by financial resources and local governance problems. They manage in the long term (30-50 years) the housing they build, which is an incentive to reduce future O&M costs. […] Through a limited number of SHOs, it is possible to reach quickly a very large number of dwellings. The replication potential for energy retrofitting is therefore quite high if the financial mechanisms are appropriate.”
According to ENEA (2011)69, 80% of the buildings shall be eligible of ESM, with energy savings summarized in Table 13.
Table 13. Social housing buildings – expected energy consumption and savings by 2020
n=70.000 Actual consumption [TWh]
Post-intervention consumption [TWh]
Total savings by 2020 [TWh]
% of savings on total consumption
Heat 11,9 7,1 4,8 39,5% Electricity 0,2 0,2 0,0 0,3% Total 12,1 7,3 4,8 39,7%
8.1.3 Street lighting Public street lighting contributes for 31% (6,2 TWh/year) of all electricity consumption in public tertiary70, and often represents the main part (up to 70%) of electricity bills of small municipalities.
For this reason, in 2010 ENEA started the project “Lumière” for promoting efficient street lighting and energy management in Italian municipalities. At present date 256 municipalities have joined the project. A software has been implemented in order to estimate economic savings and C02 reductions resulting from ESM in street lighting. The collection of data on 111 municipalities permitted to estimate current energy and maintenance costs, potential interventions costs (including the creation of an action plan and the requalification of the existing system) and expected savings and C02 reductions. The calculated results are reported in Table 14.
68 FRESH (2011): Energy retrofitting of Social Housing through Energy Performance Contracts. A feedback from the FRESH project: France, Italy, United Kingdom and Bulgaria. 69 ENEA (2011) – Quaderno – L’efficienza energetica nel settore civile, pag. 8-9 70 Terna S.p.A. - Rete Elettrica Nazionale (2011).
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Table 14. Expected savings from implementation of street lighting requalification71
Range of inhabitants
municipalities Current
costs Total
investment Yearly savings
Payback period
IRR (20
years)
NPV (20
years)
% C02 reduction
# # k€ k€ k€ years % k€ % <5000 33 1610 7418 732 10 8 1699 55
5001-15000 53 7457 31322 3820 8 11 16286 57 15001-50000
21 8680 31905 4354 7 12 22355 61
50001- 100000
4 3763 11257 1929 6 16 12783 63
Total 111 21510 81902 10835 - - 53123 -
A total investment of around 82 Mio € would generate yearly energy and maintenance savings for 10,8 Mio€, keeping the payback time within 10 years and allowing for C02 reductions between 55 and 63%.
8.1.4 Further considerations Structures such as universities, hospitals and jails have been excluded from the studies reported for their non-homogeneity in use and heating system characteristics. These structures are yet intensive energy users, which should be tackled by national market potential analysis in order to plan a harmonized renovation strategy. Energy efficiency services in healthcare have mainly consisted of heating services: co-generation plants were usually installed in hospitals by way of “chauffage” contracts (Servizio Energia) and only to a small extent via EPC projects.
Primary and secondary schools in Italy belong to municipalities and provinces so there is a “split incentive” issue due to the fact that school managers are not responsible for energy consumptions. This is not the case for universities, which are more aware of their energy consumption and expenses. In addition, schools have a small load factor since they close every afternoon, every Sunday and for three months every summer.72
The financial problems due to the scarce economic attractiveness of small municipalities can be smoothed by pooling together neighbor realities in consortia and associations. This allows for increasing total investments, sharing transaction costs and increasing the leverage factor (defined as the ratio between total investments and subsidized incentive).
The Convenant of Mayors 73 represents a precious tool for overcoming the technical and financial problems of local administrations. At present date, over 1200 Italian municipalities signed the pact, with over 1000 having submitted their Sustainable Energy Action Plan. However, when looking at benchmarks of excellence, it is evident that only few municipalities engaged themselves in relevant EE projects.
71 Data derived from RSE-ENEA (2012): “Progetto Lumière – Un’opportunità per gli Enti Locali di migliorare il servizio di pubblica illuminazione” 72 Changebest (2009) Task 2.1: National Report on the Energy Efficiency Service Business in Italy. 73 See http://www.eumayors.eu
36
The national implementation of the new European Directive 2012/27/EU74 should foster the implementation of ESM through the intervention of ESCOs. In fact, the Directive requires that “from 1st January 2014, 3% of the total floor area of heated and/or cooled buildings [...] is renovated each year to meet at least the minimum energy performance requirements that it has set in application of Article 4 of Directive 2010/31/EU”. The directive applies to public buildings with a total floor area over 500m2, and the threshold will be lowered to 250 m2 in 2015. Further in the document (pag.14), it is reported that “Member States shall encourage public bodies, including at regional and local level, and social housing bodies governed by public law, [...] to [...] use, where appropriate, energy service companies, and energy performance contracting to finance renovations and implement plans to maintain or improve energy efficiency in the long term.”
8.1.5 Interviews with ESCOs – public sector
Interviews with ESCO representatives highlighted that public street lighting (including public parks) is one of the most profitable interventions, allowing for energy savings around 30-40% and payback periods of about 3 years.
Energy saving measures on the heating system (replacement of existing boilers, replacement of pumps, fitting of the regulation system etc.) are also considered attractive, providing energy savings around 15-20% and payback periods between 5 and 7 years. The installation of a CHP plant becomes profitable in case of a large heat demand, such as in the case of public swimming pools.
Interventions on the building envelope (wall insulation, replacement of fixtures, insulation of hot water ducts concealed in walls) are usually not economically sustainable, presenting payback periods longer than 12 years (often too high for small ESCOs). An affordable solution is that of creating a package of ESM (including short and long-term interventions) which has a lower “average” payback period.
The minimum investment that can trigger an EPC largely depends on the customer loyalty and the ESCO’s activity portfolio at the moment of the request for ESM. ESCO representatives usually indicated minimum total investments of 200-300 k€/year as lower thresholds to be applied to new clients. Trusted clients can benefit from a continuative collaboration, with the possibility of renewing the first contract for further improvements.
Subsidy programmes have been indicated as factors that can both extend the acceptable payback period and lower the minimum investments required for an EPC.
The contractual duration either coincides with the payback period of new installations or it can include the energy supply and O&M for a longer term.75
It is debated whether or not public institutions are trusted clients. While some ESCOs prefer to relate only with the public sector, which guarantees a regular use of the refurbished buildings and does not present risk of insolvency, others claim that public institutions often pay late (even after 180-240 days), an issue that becomes crucial for small, financially weak ESCOs.
For administrative reasons (budgets management), public administrations usually prefer little variability of incomes deriving from EPC. For this reason, usually contracts do not present a strong dependence on actual energy savings (given that minimum savings are reached). However, it is often necessary to establish a margin of variation of ESCO’s incomes depending on the
74 At present date no national implementation of 2012/27/EU is available. 75 See also the contractual limits posed by Legislative Decree n. 115/2008
37
energy price volatility. Rising energy prices actually shorten the payback period, with benefits for the client.
It is broadly agreed that the energy supply often represents a major part of the incomes resulting from an EPC. On the one hand this facility allows ESCOs to obtain an extra-cash flow that can create the financial base for future investments. On the other hand small ESCOs claim that the percent of incomes deriving from energy savings should be the main part of the total EPC incomes, so that efficiency improvements become the real focus of the ESCO interventions.
8.2 Industry sector The Italian industrial scenario is composed by little less than 4,5 million of companies, for a total number of ca. 17,5 millions of workers. There is a strong presence of micro-companies: those with less than 10 employees are 95% of the total number, and correspond to 47% of employees. About 21% of employees work in small companies, while 12,4% work in medium size enterprises (50 to 249 employees). Large companies are only 3718 companies (0,08%), but they absorb 20% of the total number of employees (Table 15).
Table 15. Companies and employees by range of employees and economic sector – 2009.76
Range of empl.
Economic sector * Total
Industry Construction Trade, hotels, transport Other services
# comp. # empl. # comp. # empl. # comp. # empl. # comp. # empl. #
comp. # empl.
X 1000 X 1000 X 1000 X 1000 X 1000 X 1000 X 1000 X 1000 X 1000 X 1000 1 146,5 147,6 342,4 344,6 832,4 835,2 1.273,4 1.272,6 2.594,7 2.600,1 2-9 223,6 896,2 249,2 872,8 708,3 2.361,7 465,8 1.446,0 1.646,9 5.576,7 10-19 48,2 644,8 23,4 301,8 49,6 641,4 25,0 327,9 146,2 1.915,9 20-49 23,2 699,3 6,8 197,5 15,8 465,4 10,8 328,3 56,8 1.690,4 50-249 9,9 966,9 1,5 132,2 5,3 504,9 5,7 575,3 22,5 2.179,2 ≥ 250 1,5 1.107,8 0,1 54,2 0,9 1.078,2 1,2 1.308,6 3,7 3.548,7 Totale 453,0 4.462,6 623,4 1.903,0 1.612,4 5.886,8 1.782,0 5.258,6 4.470,7 17.511,0
* Economic sectors: Industry: Mineral extraction; manufacturing; energy, steam and air conditioning supply; water supply, sewage and waste management. Construction: self-defining. Trade, hotels and transport: large and small-scale trade, vehicles repairing, transport and storage, activities in hotels and restaurants. Other services: ICT service, financial and insurance; real estate activities; professional/scientific/technical activities, rental, travel agencies, support to companies; education; health and social assistance; art, sport, entertainment and others. Industry is responsible for about 211 TWh of natural gas consumption and 140 TWh of electricity consumption. The sector is a relevant target for ESM for its interest in cost cutting and efficient production. The EPC business model needs to be tailored to the specific needs of the company, according to its activity branch, its size and its financial condition.
Scale effects and process-specific technologies can be applied to intensive energy users, such as industries operating in iron metallurgy, mechanics, and chemical sectors (Figure 16).
76 ISTAT (2011): “Struttura e dimensione delle imprese – Archivio statistico delle imprese attive (Asia)- anno 2009”
38
Figure 16. Electricity consumption split into different industrial branches [TWh]77
8.2.1 Estimations of energy saving potential in industry A database on energy saving potential under the coordination of Fraunhofer ISI and based on MURE simulation tool 78 identifies relevant energy saving potentials in metal manufacturing, chemical industry and paper and printing industry (Figure 17). The total energy saving potential in case of a Low Policy Intensity scenario (LPI) was estimated around 28,4 TWh/year.
77 Terna S.p.A. - Rete Elettrica Nazionale (2011). 78 See: database and “Study on the Energy Savings Potential in EU Member States, Candidate Countries and EEA Countries – Final Report” available at www.eepotential.eu
Iron metallurgy20,615%
Non-ferrous metals4,63%
Chemical15,111%
Building materials12,39%
Paper industry9,67%Food
12,69%Textiles, garments and
footwear6,14%
Mechanics21,615%
Automotive3,63%
Plastic and rubber machining
8,46%
Wood and furniture 3,63%
Other manufacturing1,91%
Construction1,61%
Energy and water18,213%
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Figure 17. LPI - Total energy savings potential in industry - split by branch [TWh/y]
The Energy & Strategy Group (2012)79 estimated the national potential for EE and RES in industry sector.
The analyzed technologies are:
- High-efficiency electric motor - Inverter - High-efficiency Uninterruptible Power Supply (UPS) - Air-compressed system - Cooling system - Combined Heat and Power (CHP) - Organic Rankine Cycle (ORC) - Photovoltaic (PV) - Mini wind-power (between 20 and 200 kW)
Table 16 summarizes the technical and the expected (by 2020) potentials for each technical solution. The potentials consider interventions on the existing technology stock and on future installations (considering both future ESM and a growing energy demand).
Since the calculations do not consider the real economic feasibility nor the existence of ad-hoc regulations or subsidy schemes, the analysis includes an estimate of the market penetration of each technology by 2020. These estimates were based on considerations over the evolution of economic feasibility and on the opinions of over 150 experts.
The market penetration by 2020 of CHP technology is expected to reach 30-40% thanks to European (2012/27/EU) and national regulations (incentives for high-efficiency CHP and fiscal incentives for energy vector used by CHP plants).
79 Energy & Strategy Group (School of Management, Politecnico di Milano) Energy Efficiency Report (2012) – L’efficienza energetica in impresa: soluzioni tecnologiche, fattibilità economica e potenziale di mercato.
iron and steel4,416%
non ferrous metals
0,83%
chemical industry5,519%
non-metallic mineral products
2,69%
paper and printing
5,218%
food, drink and tobacco
3,613%
engineering and other metal
6,322%
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Table 16. Synoptic view of the potential energy savings/production [TWh/y] in industry for each technical solution
* In case of heat recovery ** Interventions on air compressed and cooling systems include both “hardware” actions (e.g. adoption of high efficiency motors and inverters, maintenance) and management actions (e.g. regulation and control over operating parameters). The relative estimates are affected by the complexity of the scenario.
The same data are organized in a more readable format in Figure 18. The horizontal axis reports the technical potential energy savings/production for each technical solution, the vertical axis measures the expected market penetration by 2020, while the “bubble” diameter indicates the expected contribution in terms of energy savings.
The technologies that present the highest potential are CHP systems, high-efficiency electric motors and inverters. Subsidy schemes and legislation should incentive technical solutions in proportion to their potential, focusing in particular on CPH. If CPH systems could reach a market penetration of 50%, it would be possible to add almost 2 TWh (0,2 Mtoe) to the global energy savings by 2020.81
The replacement of old electric motors is another highly rewarding measure: a IEE-supported study82 addressing ESM for SMEs estimated that the energy costs of electric motors account for 81% of the total costs, the investment costs account only for 14% and the maintenance costs 5%. In general, industry sector needs ad-hoc solutions, which can include cross-cutting technologies (e.g. high efficiency motors and pumps, efficient lighting, air-compressed and
80 The market penetration of ORC technology by 2020 is expected rather low due to the lack of specific, high-impact policies. 81 Energy & Strategy Group, Energy Efficiency Report (2012), pag. 130. 82 IEE - (Ex)BESS project– Expanding the Benchmarking and Energy management Schemes in SMEs to more Member States and candidate countries (2009)
Technical solution form of energy
Potential
technical [TWh/y]
expected by 2020 [TWh/y]
expected market penetration by 2020 [%]
High-efficiency electric motor electric 7,2 2,8 35-40
Inverter electric 11,2 3 25-30 High-efficiency UPS electric 0,05 0,03 40-50 Air-compressed system**
electric (+ thermal*) 3,9 - 4,4 0,8 - 1,3 20-30
Cooling system** electric (+ thermal*) 1,7 0,2 - 0,5 15-30
CHP electric (+ thermal) 16,5 (43,6) 5,3 - 7,5 (13,9 - 20,3) 30-40
ORC80 electric 4 0,4 - 0,9 10-20 PV electric 12,8 0,8 - 1,4 6-11 Mini-wind power electric 6,4 0,2 - 0,6 3-8 Total - 64 16,1 -
41
ventilation systems) and process-specific technologies (e.g. electric arc furnace in iron and steel industry).83
Figure 18. Synoptic view of the potential energy savings/production in industry for each technical solution
8.2.2 Interviews with ESCOs – industry sector ESCO representatives report that the main interventions in large companies and SMEs have concerned the substitution of electric motors, the installation of heat recovery systems and CHP plants. The payback period of an electric motor strongly depends on its yearly operating hours, with PBP ranging from 2 to 20 years. It has been reported that usually SMEs’ entrepreneurs often prefer to fully finance the replacement of new machineries in order to maintain the property of the installations. Heat recovery systems usually have a short PBP, ranging between 1 and 4 years.
Like in the case of public sector, the minimum investment that can trigger an EPC largely depends on the customer loyalty and the ESCO’s activity portfolio at the moment of the request for ESM. The analysis is thus not strictly economic, involving other aspects of the company strategy.
The main target groups are the intensive energy-users, such as iron and steel, plastic and paper industries, which can benefit from the installation of high efficiency CHP plants and reach energy savings around 20-30%. The total investments reported by ESCOs range from 4 to 12 Mio€.
The acceptable PBP for interventions in SMEs have been reported to be around 3 years, due to the instability of the current market situation. Longer PBP (up to 6-7 years) are usually accepted in case of interventions in solid, large companies. A positive credit rating and analysis of the potential clients may move forward the threshold of acceptable PBP.
83 Fraunhofer ISI (March 2012), op cit., pag 150-151
CHP
PVMini-wind power
Electric engines
Compressed air
Cooling
Estim
ated
pene
trat
ion
rate
[%]
Technical yearly potential [TWh]
42
8.3 Tertiary sector Private tertiary sector is responsible for 69 TWh of natural gas consumption and 77,4 TWh of electricity consumption. The allocation of electricity consumption in the different activity sub-sectors is shown in Table 17.
Table 17. Electricity consumption in private tertiary sector [TWh]84
Type of activity 2011 [TWh] 2011 [%]
Transport 10,7 13,8
Communication 4,2 5,4
Trade 23,9 30,9
Hotels, restaurants and cafés 12,5 16,1
Credit and insurance 2,5 3,3
Other private services 23,6 30,5
Total 77,4 100
Private tertiary sector is rather articulated, with different needs and characterizations which make it hard to define common lines for ESM. Scale effects can be applied limitedly to intensive energy users, such as department stores, hotels, large office buildings and multiplex cinemas. Cafés, single shops and similar structures do not seem economically attractive for ESM and in particular for EPC.
In 2001 ISTAT 85 counted the complexes of buildings, defined as pools of non-residential constructions located in a limited area, and under the exclusive or main activity of one organism, company or cohabitation (e.g. hospitals, office buildings etc.). Almost 38400 complexes were found, 53,5% of which are located in North Italy (Table 18). These constructions are the focus target for ESM interventions, since they allow for scale effects and amortization of transaction costs.
Table 18. Complexes of buildings in Italy
Geographical position Complexes of buildings %
North-West 12.617 32,9 North-East 7.896 20,6 Centre 8.148 21,2 South 6.429 16,7 Isles 3.307 8,6 Italy 38.397 100
Figure 19 shows the economic potential for electricity savings by 2020 in residential sector according to eERG (2007) 86 . It must be kept in mind that the study did not consider ventilation/air conditioning and office machinery due to a scarcity of available data.
84 Terna S.p.A. - Rete Elettrica Nazionale (2011). 85 ISTAT: Censimento 2001 86 Data from Greenpeace (2007) “La rivoluzione dell’efficienza” and from eERG – Politecnico di Milano
43
Figure 19. Economic potential for electricity savings by 2020–tertiary sector [TWh/y]87
The penetration of air conditioning cooling systems boosted over the last decades, mainly due an increase of individual thermal comfort needs. However, thanks to the efficiency improvements of air conditioners (+30% of efficiency in 2009 than in 2002), the electricity consumption growth was lower than the progression in air conditioning ownership.88
Overview of EE technologies
Cogeneration market is likely to keep growing – thanks to its economic viability - where there is a significant load factor, such as in airports and train stations. As concerns cooling appliances used in supermarkets, restaurants, hotels or cafés, providers of ESM can choose among a wide range of technologies, such as electronically commutated motors (ECM), evaporator fans, use of argon gas in glass doors, high efficient lighting and increased heat exchanger surface. Ventilation efficiency can be optimized by acting on the aerodynamic profile of the blades, the use of V-belt transmission and induction motors. Further energy savings can be obtained in other motor appliances (e.g. lifts, conveyors, pumps, compressed air systems) by using high efficiency motors, variable speed drives, improved demand-related control systems etc.89
87 Data from Greenpeace (2007) “La rivoluzione dell’efficienza” and from eERG – Politecnico di Milano 88 Enerdata (2010): Energy Efficiency Trends in the EU – Lessons from the ODYSSEE MURE project 89 Fraunhofer ISI (March 2012), op cit., page 148.
Lighting14,159%
Refrigerator0,42%
Motor / drivers9,339%
44
8.4 Residential sector The census held by ISTAT in 2001 found that the total number of residential buildings in Italy exceeds 11 million, while the average floor area is around 92 m2 (Table 19).
Table 19. Residential buildings in Italy90
Geographical position Residential buildings [x1000] Average floor area [m2]
North-West 2.503 88,53 North-East 2.162 99,33 Centre 1.862 92,21 South 2.881 89,74 Isles 1.818 91,56 Italy 11.227 91,88
In 2011 the residential sector provided 69% of all energy savings, while industry, transport and tertiary allowed for 17,9; 9,6 and 3,5% of total savings91. However, the process of refurbishment and requalification of the existing building stock is still at its first steps, considering that about 50% of the residential stock consists in constructions built before 1970 (Figure 20) and that the annual increment is below 2%92.
Figure 20. Residential buildings allocated by date of construction93
The interviewed ESCOs operating in residential sector direct their actions on condominiums, since they allow for scale effects and amortization of transaction costs. The remaining part of the sector is considered very fragmented, and single houses are usually not an attractive target for EPC.
90 ISTAT: Censimento 2001 91 Data from ENEA - UTEE (2012) “Rapporto annuale efficienza energetica 2011” , pag. 60 92 Data from ENEA - UTEE (2012) “Rapporto annuale efficienza energetica 2011” , pag. 79 and 82 93 I-Com data processing on Istat data. Adapted from ENEA - UTEE (2012) op cit., pag 82
20 %
befo
re19
19
1919
÷19
45
1946
÷19
61
1962
÷19
71
1972
÷19
81
1982
÷19
91
1991
÷20
01
2001
÷20
11
25 %
15 %
10 %
5 %
0 %
45
8.4.1 Energy efficiency interventions in condominiums On the basis of the census in 2001, in Italy there are about 930.000 condominiums, for a total number of 9,4 Mio of families.94 According to AEEG95, in 2011 residential multi-family buildings contributed for 4% (34 TWh) of the total natural gas consumption.
Studies conducted by Censis Servizi – ANACI96 found that energy costs are the higher item of expenditure, with a share of 26,8% of total costs of an average condominium. The ordinary maintenance accounted for 12,9%. On a sample of 46 condominiums, only 21 had a centralized heating system, and only 6 presented a heat metering system. The first intervention suggested was the installation of a heat metering system in all condominiums with centralized heat generation, which allows for sharing the total costs according to the effective use by the single apartments. A case study on a condominium of 140 units showed that the introduction of a heat metering system resulted in a reduction by 40% of oil gas consumption in 6 years, with a cost reduction of 20%.97
At present date the greatest part of energy savings has derived from small interventions (e.g. substitution of incandescent bulbs with CFLs, installation of low-flow showerheads and faucet aerators) and from medium interventions such as the substitution of fixtures, boilers and electrical appliances. This means that there is still a great potential in “structural” interventions such as the insulation of the building envelope, the installation of so-called geothermal heat pumps (where actually the ground works as heat storage), the introduction of micro combined heat and power plant (mCHP) or the centralization of heating plants through coupling with district heating.
According to Fraunhofer ISI (2012), final energy demand for heating and cooling in the residential and tertiary sector can be reduced by more than 42% in 2030 compared to PRIMES 2009 baseline by acting on the building envelope. It is also indicated that the exploitation of the saving potential relies mainly on the refurbishment of existing buildings.98 The improvement of building performance can be achieved through a set of different actions, including walls and roof insulation (e.g. by means of wool glass and polystyrene), installation of double-glazed or triple-glazed windows, installation of a porch to provide shading. For residential lighting, incandescent light bulbs should be replaced with more efficient compact fluorescent lamps (CFLs) or light-emitting diodes (LEDs)99.
Figure 21 shows the economic potential for electricity savings by 2020 in residential sector according to eERG (2007) 100. It must be kept in mind that the study did not consider water heating by means of electric boilers due to a scarcity of available data.
94 ANACI – Censis Servizi “Il pianeta condominio”: un’economia da scoprire (2006), on ISTAT data 95 AEEG (2012) http://www.autorita.energia.it/it 96 See ANACI – Censis Servizi “Il pianeta condominio”: un’economia da scoprire (2006) & La vita nei condomini: litigiosità e risparmio energetico (2009) 97 ANACI – Censis Servizi La vita nei condomini: litigiosità e risparmio energetico (2009) 98 Fraunhofer ISI (March 2012), op cit., page 53. 99 Fraunhofer ISI (March 2012), op cit., page 59-60. 100 Data from Greenpeace (2007) “La rivoluzione dell’efficienza” and from eERG – Politecnico di Milano
46
Figure 21. Economic potential for electricity savings by 2020–residential sector [TWh/y]101
8.4.2 Interviews with ESCOs – residential sector One of the most profitable interventions is the installation of thermostatic valves and a heat metering system, which – by influencing the occupants’ behaviour - can generate energy savings up to 20% in front of an investment of just 100€/room. The PBP is very short (below two year). The replacement of the centralized boiler is another common ESM in condominiums. The substitution of the boiler can generate large economic savings (15-30% passing from a traditional boiler to a condensing natural-gas boiler, up to 55% passing form a gas oil boiler to a condensing boiler, due to the high price of gas oil) and large CO2 savings (up to 50-55%). The investment costs required for a typical boiler for a 30 units condominium ranges between 70 and 100 k€ (higher costs in case of a complete package including energy performance certification, fire protection measures according to legislation etc.).
The building envelope insulation is usually considered not economically feasible, having payback periods over 12 years. However, the same consideration mentioned for public buildings can be applied for residential buildings: energy requalification usually accompanies the comprehensive refurbishment necessary due to building obsolescence. This fact drastically contributes to reduce the extra-cost of ESM and to shorten the payback period. An ESCO representative estimated that the investment cost for the refurbishment of a condominium of 50-60 units is around 500-700 k€ (depending on the walls’ starting condition), where the extra-cost for the insulation would be around 20-25%. The insulation of the envelope can result in large energy savings, ranging from 15 to 25% of initial energy consumption depending on the baseline.
The contractual duration largely depends on the type of interventions, the customer loyalty and the modality of payment that is agreed by the two contractual parties: the larger the energy savings guaranteed to the client during the contractual period (typically ranging from 5 to 10%), the longer the payback period.
Several barriers still curb the development of EPC market in this sector. Differently from industries, condominiums present a much higher complexity of the decision-making process, since the property owner has to mediate and meet the needs of all (or the large majority of) occupants. Usually property owners lack the willingness to commit themselves to such a complex process.
101 Data from Greenpeace (2007) “La rivoluzione dell’efficienza” and from eERG – Politecnico di Milano
Lighting4,5
42%High Efficiency
Motors1,09%
Electrical appliances
1,313%
Refrigeration3,8
36%
47
A summary of the discussed technological and economic energy saving potentials by sector is presented in Errore. L'autoriferimento non è valido per un segnalibro.. It is worth reminding that each study was based on specific assumptions, which are to be consulted in the correspondent reports. Table 20. Summary of technological and economic energy saving potential by sector
Sector study Actual consumption [TWh]
Technical potential energy savings
[TWh]
Economic potential energy savings by 2020 [TWh]
Investment costs
[Mio€]
Economic savings
[Mio€/y] Heat Electricity Heat Electricity Heat Electricity
Public
Schools
ENEA 2011102 12,2 1,4 - - 4,3 0,2 - -
RSE-ENEA 2009103
12,6 1,9 - -
2,7 0,8
6500 328
Offices
RSE-ENEA
2009 1,9 1,6 - -
1800 91
ENEA 2011 3,8 3,8 - - 1,4 0,4 - -
Street lighting RSE-
ENEA 2012104
- 6,2* - - - - 81,9 10,8
Social housing ENEA 2011 11,9 0,2 - - 4,8 0 - -
102 ENEA (2011) – Quaderno – L’efficienza energetica nel settore civile, pag. 8-9: data on 11000 public office buildings (80% of stock), 30000 schools (57%), 70.000 social housing (80%) 103 RSE-ENEA (2009): “Indagine sui consumi degli edifici pubblici (direzionale e scuole) e potenzialità degli interventi di efficienza energetica” 104 RSE-ENEA (2012): “Progetto Lumière – Un’opportunità per gli Enti Locali di migliorare il servizio di pubblica illuminazione”. Estimates of investment costs and annual economic savings are referred to a sample of 111 municipalities
48
Public tertiary GP-
EERG 2007105
- 18,2** - 7,3 - 8,9 250-800 Mio€/y 6,0-9,2
Private tertiary GP-
EERG 2007
- 65,6** - 37,2 - 23,7 1250-3900
Mio€/y 16,3-27,6
Tertiary EEpot106 76,9 84,6 29,7 15 10,8-15,9 14,7 - -
Industry
GP-EERG
2007 - 153,7** - 45,3 - 39,3
1550-3000 Mio€/y 16,9-40,6
EEpot 380 151,1 18,8 27,7 9,5÷12,6 26÷26,7 - -
ESG 2012107 - - 64 16,1 - -
Residential
GP-EERG
2007 - 66,9** - 13,1 - 10,6
590-900 Mio€/y 6,8-10,6
EEpot 250,1 66,7 75,5 9,1 18,6÷43,1 3,6÷7,4 - - Transport EEpot 520,9 - 113,6 - 79,8÷99,5 - - -
* Terna S.p.A. - Rete Elettrica Nazionale (2011). Terna is the Italian electricity transmission system operator
** Terna S.p.A. - Rete Elettrica Nazionale (2005).
105 Greenpeace (2007) “La rivoluzione dell’efficienza”. Ventilation/air conditioning and office machinery are excluded from the analysis. Minimum and maximum investment costs and annual economic savings are here reported for the period 2012-2020. 106 www.eepotential.eu and “Study on the Energy Savings Potential in EU Member States, Candidate Countries and EEA Countries – Final Report”. Consumption values are 2012 estimates based on 2004 data. Tertiary sector comprises: “educational, health care, shopping and leisure as well as office buildings” (both private and public structures) 107 Energy & Strategy Group (2012) (School of Management, Politecnico di Milano) “Energy Efficiency Report (2012) – L’efficienza energetica in impresa: soluzioni tecnologiche, fattibilità economica e potenziale di mercato”. The potential includes implementation of ESM, CHP technologies and RES.
49
9. ESTIMATION OF THE EPC POTENTIAL (TASK 3.1.3)
This section is to be considered a first approach to the problem of estimating EPC potential. Further developments, verifications and integrations must be implemented. The exposed results are an evaluation of the order of magnitude of the problem and the potential that can be exploited. This chapter provides a brief description of the ESCO market based on the last ENEA-UTEE Energy Efficiency Report and on a previous study conducted by eERG within IEE-Changebest project (2009). The methodology for the estimation of EPC potential is then described.
9.1 The ESCO market It is rather difficult to estimate the number of ESCOs existing in Italy. The AEEG annual report on WCS monitors the number of companies accredited as ESCO under Law EEN 9/11 ("Companies operating in the energy service sector”). Figure 22 (left) provides a first estimate of the ESCO market development, by indicating both accredited companies and active companies (i.e. having obtained WC emission). Figure 22 (right) shows the distribution on the national territory of active companies, which result to be more concentrated in the northern and central regions. ESCOs operating in South Italy are more active in RES installations than in ESM. At present date (February 2013) AEEG indicates 371 subjects having obtained at least one approval of verification and certification of energy savings (within the WCS). A more stringent definition of ESCO is given by Standard UNI CEI 11352:2010 (see Chapter 1). The ESCOs that obtained certification according to this standard are 36, but only few of them are currently managing EPC projects due to several financial, institutional, organizational and communicational barriers (see WP4 for a detailed analysis of these barriers).
Figure 22. Evolution in the period 2005-2010 of accredited and active companies (left) and distribution on the national territory of active companies (right).108
108 Elaboration from AEEG (2012): Sesto Rapporto Annuale sul meccanismo dei Titoli di efficienza energetica
577
919
1169
1375
1719
1913
56 106 140 196 231297
0
2
4
6
8
10
12
14
16
18
0
200
400
600
800
1000
1200
1400
1600
1800
2000
until
31
.05.
06
until
31
.05.
07
until
31
.05.
08
until
31
.05.
09
until
31
.05.
10
until
31
.05.
11
%accredited companies
active companies
% active/accredited
50
In 2010 the global ESCOs’ market volume was over 3,5 Bil€, while in 2011 it reached 4,2 Bil€109. The increasing trend represents a comforting sign of the evolution of EE market and the formation of new professionals. A national overview conducted within IEE-Changebest project found that the EE market is characterized by large and small stakeholders: the first group constituted by “large multi utility companies, energy distributors, retail energy sale companies, consulting companies and others, whose core business is rarely that of Energy Efficiency Services per se” (e.g. SIRAM, COFATECH SERVIZI, FENICE, SIME ENERGIA etc.), the other group formed by “small “pure” ESCOs (whose core business is Energy Efficiency Service) ”. These “pure” ESCOs are normally more recent (2000’s) and have been developing during the energy market liberalization. This group includes AZZERO CO2, SOLGEN, EVOLVE, CSE etc. While “pure” ESCOs tend to work in the private sector, large companies favour the public sector, due to the fact that “large companies (commonly non pure ESCOs) hold greater chances of winning tender procurements from local and national governments, while they face difficulties in customizing and rendering profitable the implementation of small and medium projects of energy efficiency”.110 ESCOs deriving from multinational companies or multi-utility groups can benefit from greater visibility, a large consumer base and larger financial resources.
A number of associations and networks support ESCOs. AGESI (founded in 1984 as ASSOCALOR), Associazione Imprese di Facility Management ed Energia, covers nearly 90% (approx. 30 companies) of the ESCO offerings in the public sector. ASSOESCO and Federesco, are two younger associations with promotional and informative targets. Federesco also offers legal, technical, fiscal and strategic consulting services to ESCOs.
In 1999 the national network ReNAEL111 - grouping local energy agencies - was established with the support of the European SAVE programme in order to promote contacts and collaboration with other national institutions, to build a critical mass and to encourage the exchange of experiences and good practices among members. It valorises the role of the agencies and local authorities, pressing for co-operation of all actors that operate in energy management at community, national and local level.
9.2 The EPC market potential A first remark is that at present date no reliable calculations on EPC potential in Italy are available. The main reason lies in the difficulty to define the field of applicability of EPC, which strongly depends on the financial support of banks and public institutions, the organizational capacity of creating economically attractive “pools” of private and public subjects, the stability and the quality of the legislative framework, the implementation of information campaigns and so on. Still, it is reasonable assessing that the EPC market will largely benefit from the European and national new regulations and subsidy schemes.
The economic crisis may enhance the development of EPC market, on the one hand by forcing companies to focus on their core business and outsourcing ESM, on the other hand by increasing the energy price to a point where ESM become undoubtedly attractive. Considering the studies
109 See ENEA - UTEE (2012) op cit., pag. 75 110 Changebest (2009) Task 2.1: National Report on the Energy Efficiency Service Business in Italy. 111 http://www.renael.net/ENG/
51
on energy efficiency reported in the previous sections, first rough estimates of EPC potentials will be derived.112
The composition of the national building stock in 2001 is reported in Table 21.113 The number of residential buildings represent more than 90% of the total, and the ratio of not-used buildings is ca. 6% of the total.
Table 21. Number of buildings in Italy by type of use and geographical position (x 1000)
Geographical position
Type of use Used
Not used Total Residential
Hotels, offices, trade, industry, communication,
transport
Other use Total used buildings
(x 1000) (x 1000) (x 1000) (x 1000) (x 1000) (x 1000)
North-West 2.503 121 89 2.714 135 2.848 North-East 2.162 105 65 2.332 98 2.430 Centre 1.862 77 69 2.009 87 2.096 South 2.881 77 109 3.067 235 3.303 Isles 1.818 44 70 1.932 166 2.097 Italy 11.227 425 402 12.053 721 12.774
9.2.1 Public sector Schools and public office buildings often present poor structural and environmental conditions (as regards thermal comfort, indoor air quality, visual and acoustic comfort etc.) due to outdated methods of construction and an insufficient O&M process. Since public buildings are in a chronic lack of financial resources, they could easily become a target group for EPC projects through TPF. The energy saving potential derived in RSE-ENEA (2009)114 seems reasonably applicable to EPC potential, for it assumes to refurbish 35% of school and public office buildings.
Public street lighting can consistently contribute to the development of EPC market, for it can be approached using standardized procedures and technologies, it results in striking energy savings (which can be around 30-40%) and it guarantees a regular and predictable use of infrastructures. Social housing sector can relevantly contribute to the market share, since through a limited number of Social Housing Operators it is possible to refurbish a great number of constructions.
Other target groups are government institutions (such as universities, libraries, administrative buildings, prisons, military units etc) and regional or local institutions (such as hospitals, health centres, pools, sport and cultural centres etc.). Health care sector has been reported as one of the most advanced in efficient energy management, though the most implemented contracts are “chauffage” contracts (Servizio Energia) and not integrated EPC.115
112 See also Clearcontract - Potentials for Energy Performance Contracting and Delivery Contracting projects in Public Buildings 113 ISTAT: Censimento 2001 114 RSE-ENEA (2009): “Indagine sui consumi degli edifici pubblici (direzionale e scuole) e potenzialità degli interventi di efficienza energetica” 115 Changebest (2009) Task2.1: “National report on the energy efficiency service business in Italy”
52
9.2.2 Industry Both SMEs and large industries can be widely approached by EPC market. SMEs often cannot afford the initial investments of ESM and need a TPF instruments: a survey conducted in Cyprus, Greece, Italy and France found that almost 35% of small investors require financial support for ESM.116 SMEs represent a huge untapped market potential and allow for specialization and EPC customization.117 Large companies increasingly outsource the energy management (in stores, production plants, offices, canteens etc) in order to focus on their core business. The new European Directive 2012/27/EU118 requires that large companies (annual turnover >49 Mio€ and more than 250 employees) carry out energy audits every four years. Energy audits will likely become a trampoline for ESM, and in particular for the large diffusion of EPC model. Referring to the studies eERG for Greenpeace (2007), Energy & Strategy Group (2012) and to the database created by Fraunhofer ISI and partners (2009), it is possible to estimate an energy potential for EE market of approximately 10 TWh of heat and 30 TWh of electricity.
The national overview by eERG conducted within IEE-Changebest project119 found that the general problem in industry lies in the vertical fragmentation of the spinnerets, which curbs the implementation of integrated management strategies.
9.2.3 Residential sector As discussed in the relative section, ESCOs operating in residential sector direct their actions on condominiums, since they allow for scale effects and amortization of transaction costs. The remaining part of the sector is considered very fragmented, and single houses are usually not an attractive target for EPC.
9.2.4 Tertiary sector Tertiary sector presents very differentiated needs in terms of energy demand, comfort requirements, legal characterization etc. Only intensive energy-users such as department stores, hotels, office buildings and cinemas are expected to be addressed by EPC suppliers.
Other target groups can be religious institutions, which manage - in addition to churches - also a large number of public canteens, clinics and other care facilities.
9.2.5 Transport sector Transport sector has not been addressed by the present analysis, since private citizen transport does not present the necessary features (in terms of size and contract management) for implementing EPC projects. However, urban transport infrastructures, public fleets (including public bodies’ vehicles, buses, subways, trams, ferry boats etc.) and large companies fleets can be addressed by an EPC.
116 FINA-RET: Financial support for sustainable energy (2009) 117 Changebest (2009) Task 2.1: National Report on the Energy Efficiency Service Business in Italy. 118 At present date no national implementation of 2012/27/EU is available. 119 Changebest (2009) Task 2.1: National Report on the Energy Efficiency Service Business in Italy.
53
An example is offered by the EPC project “Energy Efficiency Milan Convenant of Mayors”, which will comprehend interventions in the urban transport sector (e.g. introduction of hybrid or electric buses, investments to facilitate the introduction of electric cars, improvements in freight logistics) and the local infrastructure (e.g. refuelling infrastructure for alternative fuel vehicles).
As one can notice, many stakeholders are included in the energy efficiency spinneret. As regards the Italian scenario, a key-role is played by associations, orders and institutions reported in Appendix 1.
9.3 EPC potential based on EU Data Base on Energy Saving Potentials
This section offers an estimate of EPC potential by 2020 in Italy based on the results of the study by the Fraunhofer Institute et al. (2008) presented in the EU Data Base on Energy Saving Potentials. 120
9.3.1 Definition of potentials and methodology (Task 3.1.1) The estimation of energy saving potential follows a clear distinction between the general technical potential and the economic potential. Definitions for different potentials are the following121:
Technical potential: The theoretical maximum amount of energy use that could be displaced by efficiency, disregarding all non-engineering constraints such as cost-effectiveness and the willingness of end-users to adopt the efficiency measures
Economic potential: Refers to the subset of the technical potential that is economically cost-effective as compared to conventional supply-side energy resources
After estimating the technical and economic energy savings potential, both potentials have been multiplied with average prices for the final consumers in order to provide an estimate of the market volume.
First the technical potential has been assessed, from which an economic potential has been derived. Both potentials have been estimated based on the results of the study by the Fraunhofer Institute et al. (2008) presented in the EU Data Base on Energy Saving Potentials.
In this study, as a source of economic potential the estimated energy savings potential available in the EU Data Base on Energy Saving Potentials was used. In particular the economic potential used refers to the Low Policy Intensity (LPI) scenario by Fraunhofer Institute et al. (2008), which is defined as follows:
Low Policy Intensity (LPI) scenario characterised by low policy intensity, i.e. by considering an additional technology diffusion of Best Available energy saving Technologies beyond autonomous diffusion only to a realistic level driven by increases in market energy prices and comparatively low level energy efficiency policy measures as in the past in many EU countries. In
120 Energy saving potential is available at http://www.eepotential.eu/potentials.php 121 Source: National Action Plan for Energy Efficiency (2007): Guide for Conducting Energy Efficiency Potential Studies. Prepared by Philip Mosenthal and Jeffrey Loiter, Optimal Energy, Inc.; http://www.epa.gov/cleanenergy/documents/suca/potential_guide.pdf
54
this case it is rather likely that consumer decisions will be motivated by cost-effectiveness criteria based on usual market conditions. Barriers to energy efficiency persist.
From the economic potential, the EPC potential is further derived reflecting the existing barriers to realisation of the existing economic energy saving potential in two scenarios:
1. Business as usual (BAU) EPC potential 2020, defined as extrapolation of the historical market development to the future development until the year 2020.
2. Ambitious EPC potential 2020 defined as EPC potentials in 2020 under the assumption of changing of the framework (changes in legal framework, knowledge, model documents and effects of combining EPC with national subsidy/support programs)
EPC potential is estimated as a share of economic potential, which is realistic to realise under the BAU conditions or the changes which could occur in the ambitious scenario.
Since the available data do not allow to precisely estimate the EPC market volume at present and its evolution in the last years, the BAU EPC potential 2020 has been derived by assuming an annual 0,5% share of EPC market of the total Economical Energy Saving Potential 2020. As regards the Ambitious EPC potential 2020, an EPC share of 5% of the total Economical Energy Saving Potential 2020 has been assumed.
9.3.2 Results Considering only the most likely EPC targets (large existing buildings in tertiary, existing buildings in households etc.), the BAU EPC potential results around 0,4 TWh, while the Ambitious EPC potential is around 3,8 TWh.
In order to estimate the economic saving potential deriving from the reduced energy consumption, the energy prices reported in Europe’s Energy Portal122 for November 2012 have been used (Table 23). For industry sector a 10% VAT has been added to the VAT-free values reported in Europe’s Energy Portal. For tertiary sector (including public sector) a 0,80 coefficient has been applied to the prices applied to households, considering that public structures and intensive energy users benefit from reduced energy prices.
The simplifying assumption is that all heat demand is covered by natural gas, so excluding the contribution of oil, coal, wood, RES and any other energy source.
122 http://www.energy.eu/
55
Table 22: EPC potential in Italy 123
Sector
Fina
l Ene
rgy
Con
sum
ptio
n in
201
0 in
TW
h
Tech
nica
l Ene
rgy
Savi
ng
Pote
ntia
l in
TWh
in 2
020
Eco
mic
al E
nerg
y Sa
ving
Po
tent
ial i
n TW
h in
202
0
Ass
essm
ent o
f Im
plem
enta
tion
with
in
EPC
EPC
pot
entia
l -B
AU
in
TW
h Sa
ving
s
Am
bitio
us E
PC
pote
ntia
l in
TW
h Sa
ving
s
Industry (total) 507,4 46,5 35,6 0,2 1,6
Heat generation 368,6* 11,3 7,2 + 0,0 0,4
Electricity 138,8 25 24 + 0,1 1,2
Industrial processes n.a. 10,2 4,4 - - -
Tertiary (including public sector) 154,9 44,7 25,6 0,1 0,9
Heating (total) 73,3 29,7 10,8 + 0,0 0,2
small existing buildings n.a. 15,9 6,6 - - -
large existing buildings n.a. 9,2 4,1 + 0,0 0,2
small new buildings n.a. 3 0,1 - - -
large new buildings n.a. 1,6 0 - - -
Electricity (total) 81,6 15 14,7 0,1 0,7
Street lighting n.a. 1,4 1,4 + 0,0 0,1
Lighting n.a. 2,5 2,5 + 0,0 0,1
Computers and monitors n.a. 0,6 0,6 - - -
Copying and printing n.a. 0,2 0,2 - - -
Servers n.a. 0,3 0,3 - - -
Commercial refrigeration and freezing n.a. 1,4 1,3 -/+ 0,0 0,1
Ventilation n.a. 1,6 1,6 + 0,0 0,1
Air conditioning n.a. 6,1 6,1 + 0,0 0,3
Other electric motors n.a. 0,8 0,7 -/+ 0,0 0,0
Households (total) 316 84,6 22,2 0,13 1,3
Heating (total) 251,8* 64,9 17 + 0,13 1,3
existing buildings (total) n.a. 53,4 13,6 + 0,1 0,7
from refurbishment (excl. heating system) n.a. 36,8 9,4 + 0,0 0,5
new buildings (total) n.a. 11,5 3,4 - - - Water Heating n.a. 11,7 3,2 + 0,0 0,2
Electrical Appliances 64,2 8 2 -
Total 978,3 175,8 83,4 0,4 3,8
* total heat consumption (including water heating)
123 The data in the first three columns have been exported from http://www.eepotential.eu/potentials.php
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Table 23. Natural gas and electricity prices in Italy (November 2012)
Natural gas [€/kWh]
Electricity [€/kWh]
Households 0,07257 124 0,21707 125 Industry 0,04170 126 0,14438 127
Table 24 shows that - under the reported assumptions – the BAU EPC potential 2020 is ca. 44 Mio€ while the Ambitious EPC potential 2020 is around 439 Mio€. Industry sector would provide the greatest bulk of savings (47%), while tertiary (including public administration) and households would contribute with 36% and 17% respectively.
Table 24: Overview on energy saving potentials, the current EPC market and the EPC potential in 2020 per sector
Sector
Ene
rgy
pric
e [€
/kW
h]
Fina
l Ene
rgy
Cos
ts in
201
0 in
M
io. €
Tech
nica
l Ene
rgy
Savi
ng
Pote
ntia
l in
Mio
. € in
202
0
Eco
nom
ical
Ene
rgy
Savi
ng
Pote
ntia
l in
Mio
. € in
202
0
EPC
pot
entia
l (B
AU
) in
Mio
. € s
avin
gs in
202
0
EPC
pot
entia
l (am
bitio
us)
in M
io. €
sav
ings
in 2
020
BAU
EPC
pot
entia
l in
% o
f Fi
nal E
nerg
y C
osts
in 2
010
Am
bitio
us E
PC p
oten
tial i
n %
of
Fin
al E
nerg
y C
osts
in 2
010
Industry (total) 38.952 4.489 4.142 21 207 0,05 0,53 Heat generation 0,046 16.908 518 330 2 17 0,01 0,10 Electrical appliances 0,159 22.044 3.970 3.812 19 191 0,09 0,86 Tertiary Sector (total) 18.426 4.329 3.180 16 159 0,09 0,86 Heating (total) 0,058 4.256 1.724 627 3 31 0,07 0,74 Electricity (total) 0,174 14.170 2.605 2.553 13 128 0,09 0,90 Households (total) 32.209 7.295 1.900 7 73 0,02 0,23 Heating (total)* 0,073 18.273 4.710 1.234 6 62 0,03 0,34 Water Heating 0,073 849 232 1 12 Electrical Appliances 0,217 13.936 1.737 434 Total 89.586 16.113 9.222 44 439 0,05 0,49
* total heat consumption (including water heating) 124 Consumption: 30 MWh/year, or approx. 2,800 m3; consumption band is ± 30%; EU Average Gross Calorific Value: 38.48 (MJ/m3); prices include: market price, transport through main and local networks, administrative charges and all taxes 125 Consumption: 3.5 MWh/year; consumption band is ± 25%; prices include: market price, transmission through main and local networks, administrative charges and all taxes 126 Consumption: 10 GWh/year, or approx. 0.93 million m3; consumption band is ± 50%; EU Average Gross Calorific Value 38.48 (MJ/m3); prices include: market price, transport through main and local networks, administrative charges, non-recoverable taxes and duties; prices exclude: recoverable taxes and duties (e.g. VAT) 127 Consumption: 2 GWh/year; consumption band is ± 25%; prices include: market price, transmission through main and local networks, administrative charges, non-recoverable taxes and duties; prices exclude: recoverable taxes and duties (e.g. VAT).
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10. CURRENT TRENDS IN THE EPC MARKET (TASK 3.1.5)
The collected information and the interviews with ESCOs, public bodies and associations highlighted some potential trends for EPC market, which are summarized in the following points.
10.1 Financing • Public-Private Partnerships (PPPs) and other forms of financial partnership
PPPs are characterized by relatively long and reliable relationships, the facilitated integration of public funds and private resources and the distribution of risks between the two partners. This mixed model can help overcoming the financial barriers encountered in the process of energy efficiency improvement. In the last years, many PPPs have started to administer public services such as waste management or water and energy distribution, as a consequence of the current financial and political situation.
• Public subsidies Some ESCOs foresee that the increasing autonomy of energy efficiency market implies a decreasing need of leaning on public subsidies. The persistence of the economic crisis could fatigue the public resources, causing a drop of public co-financing. Other experts believe that the increased awareness of environmental and energy issues - along with the binding “20 20 20” targets – will foster the creation of effective public subsidy schemes in support to ESM in all economic sectors.
10.2 Products and Services • Energy audit
The new European Directive 2012/27/EU 128 requires that large companies (annual turnover >49Mio€ and more than 250 employees) carry out energy audits every four years. SMEs are excluded from these obligations.
• Refurbishment of public structures According to the new European Directive 2012/27/EU, the central government of each Member State will be required to annually renovate 3% of the total floor area of its building stock to cost optimal levels. The 3% rate is calculated on the total floor area of buildings with a total useful floor area over 500 m2, and the threshold will be lowered to 250 m2 in July 2015.
• Public street lighting As discussed in the section on public sector, interviews with ESCO representatives highlighted that public street lighting (including public parks) is one of the most profitable
128 At present date no national implementation of 2012/27/EU is available.
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interventions, allowing for energy savings around 30-40% and payback periods of about 3 years.
• Refurbishment of existing buildings As discussed in the section on residential sector, the process of refurbishment and requalification of the existing building stock is still at its first steps, considering that about 50% of the residential stock consists in constructions built before 1970 and that the annual increment of the building stock is below 2%. Refurbishment will substantially contribute to EPC market for the coming decades.
• Increasing competition in EPC market In Italy, few ESCOs are currently managing EPC projects, and most ESCOs certified UNI CEI 11352 are still waiting for a proper legislative framework before getting involved in EPC. The scenario is likely to change in the next years, due to the increasing energy prices and the international concern on energy supplying, climate change and political instability. EPC market will address these problems and create a solid, self-sustaining business.
• Contract tailoring EPC model is a very flexible tool that can meet the needs of different stakeholders in all activity sectors. As the market becomes more competitive and differentiated, EPC projects will offer a broader set of possible interventions, financing modalities and contractual conditions.
• Creation of EPC models for transport In Italy energy efficiency market in transport sector is by far under-exploited. Urban transport infrastructures, public fleets (including public bodies’ vehicles, buses, subways, trams, ferry boats etc.) and large companies fleets can be addressed by an EPC.
10.3 Legislative trends • Energy management system
The implementation of an energy management system (according to ISO 50001:2011) will become more and more attractive for energy intensive users which plan to reduce their consumptions in order to meet their obligations (in terms of energy saving and greenhouse gas emissions) and become more competitive on the market.
• ESCO certification The ESCO market needs qualification in order to gain trust from financial institutions and offer more effective and clear proposals for potential customers. The standard EN 15900 and the Italian standard UNI CEI 11352 started a process that needs to achieve a deeper and broader level of awareness of ESCOs’ rights and obligations. At present date, only 36 ESCOs obtained the certification in accordance with the requirements in UNI CEI 11352129, but the process is expected to reach a large diffusion as the legislative framework will establish targets and obligations to public and private bodies.
129 See http://www.fire-italia.it/
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11. CONCLUSIONS It is rather difficult to estimate the number of ESCOs existing in Italy. AEEG indicates 371 subjects having obtained at least one approval of verification and certification of energy savings (within the WCS). The ESCOs that obtained certification according to Standard UNI CEI 11352:2010 are 36, but only few of them are currently managing EPC projects due to several financial, institutional, organizational and communicational barriers. The national EPC market volume can be estimated between 80 and 100 Mio€/year.
The Italian EPC market is still at its first steps and the specific legislation on energy service contracts is rather recent. However, relevant work has been done so as to prepare a solid ground for the future market development. In particular, the Italian standard UNI CEI 11352:2010 – which extends the UNI CEI EN 15900:2010 - has been conceived to qualify the ESCO market and guarantee a proper implementation of EPC. The standard defines the general requirements and a check list of requisites for ESCOs that offer energy efficiency services with guaranteed results. The Legislative Decree 115/2008 defines the requirements that energy service contracts must meet. In particular, a distinction is made between the contratto servizio energia and the contratto servizio energia plus, where the latter one is correspondent to an EPC.
The public sector is the first target for EPC, since it has two concordant goals: the first is regulating and facilitating the access to subsidies schemes and the second is improving the energy performance of its own structures according to the national and international energy saving targets. A study by RSE-ENEA (2009) simulates comprehensive interventions on 35% of schools and office buildings, deriving the intervention costs, the energy savings and the energy cost reductions. A later study by ENEA (2011) considers to refurbish 80% of office buildings and 57% of schools. Although ESM may not be the major driver for requalification, it is good to keep in mind that energy requalification usually accompanies the comprehensive refurbishment necessary due to building obsolescence. This fact drastically contributes to reduce the extra-cost of ESM and to shorten the payback period. Additional relevant energy savings can be obtained in social housing sector, which is mostly characterized by poor building performance, and other intensive energy users such as universities, hospitals and jails. In 2010 ENEA started the project “Lumière” for promoting efficient street lighting and energy management in Italian municipalities. Interviews with ESCO representatives confirmed that public street lighting is one of the most profitable interventions, allowing for energy savings around 30-40% and payback periods of about 3 years. Since public buildings are in a chronic lack of financial resources, they could easily become a target group for EPC projects through TPF. Other economically attractive interventions are replacements of heating systems (energy savings ca. 15-20% and PBP of 5 to 7 years), whereas interventions on the building envelope are usually not economically sustainable, presenting payback periods longer than 12 years (often too high for small ESCOs). An affordable solution is that of creating a package of ESM (including short and long-term interventions) which has a lower “average” payback period. Industry sector is a relevant target for ESM for its interest in cost cutting and efficient production and its need of TPF. A study by Energy & Strategy Group (2012) estimates the national potential for EE and RES in industry sector, and concludes that the greatest achievements can be reached with CHP systems, high-efficiency electric motors and inverters. It was suggested that subsidy schemes and legislation should incentive technical solutions in proportion to their potential, focusing in particular on CPH. ESCO representatives report that the main interventions in large companies and SMEs have concerned the substitution of electric motors, the installation of heat recovery systems and CHP plants, with PBP strongly depending on the yearly operating hours. The main target groups are the intensive energy-users, such as iron
60
and steel, plastic and paper industries, which can reach energy savings around 20-30%. The EPC business model needs to be tailored to the specific needs of the company, according to its activity branch, its size and its financial condition. Private tertiary sector is rather articulated, with different needs and characterizations which make it hard to define common lines for ESM. Scale effects can be applied limitedly to intensive energy users, such as department stores, hotels, large office buildings and multiplex cinemas. The process of refurbishment and requalification of the existing residential stock is still at its first steps, considering that about 50% of the stock consists in constructions built before 1970 and that the annual increment is below 2%. The interviewed ESCOs operating in residential sector direct their actions on condominiums, since they allow for scale effects and amortization of transaction costs. The remaining part of the sector is considered very fragmented, and single houses are usually not an attractive target for EPC. At present date the greatest part of energy savings has derived from small and medium interventions such as the substitution of light bulbs, fixtures, boilers and electrical appliances, while there is still a great potential in “structural” interventions such as the insulation of the building envelope. One of the most profitable interventions is the installation of thermostatic valves and a heat metering system, which – by influencing the occupants’ behaviour - can generate energy savings up to 20% in front of an investment of just 100€/room. The replacement of the centralized boiler can generate large economic and CO2 savings, with investment costs typically between 70 and 100 k€. Transport sector has not been addressed by the present analysis, since private citizen transport does not present the necessary features (in terms of size and contract management) for implementing EPC projects. However, urban transport infrastructures, public fleets and large companies fleets can be addressed by an EPC.
The main difficulty when estimating an EPC potential lies in defining the field of applicability of EPC, which strongly depends on the financial support of banks and public institutions, the organizational capacity of creating economically attractive “pools” of private and public subjects, the stability and the quality of the legislative framework, the implementation of information campaigns and so on. Still, it is reasonable assessing that the EPC market will largely benefit from the European and national new regulations and subsidy schemes.
The Business As Usual EPC potential 2020 has been calculated assuming an annual 2% share of EPC market of the total Economical Energy Saving Potential 2020. As regards the Ambitious EPC potential 2020, an EPC share of 10% was assumed. Considering only the most likely EPC targets, the BAU EPC potential results around 1,5 TWh/y, while the Ambitious EPC potential is around 7,0 TWh/y. In economic terms, the BAU EPC potential 2020 exceeds 190 Mio€ while the Ambitious EPC potential 2020 is over 960 Mio€. Industry sector would provide the greatest bulk of savings (43%), while tertiary (including public administration) and households would contribute with 37% and 20% respectively.
Several trends for EPC market have been identified through the collected information and the interviews with ESCOs, public bodies and associations. The most relevant are the development of Public-Private Partnerships, the increasing implementation of energy audits and ESM in public buildings (trends dictated by the new European Directive 2012/27/EU), the diffusion of ESCO certification and energy management systems and the increasing competition in energy efficiency (and EPC) market. According to the interviewed ESCO representatives, in the next years the EPC market is expected to grow especially in the public sector, in industry and to a lesser extent in tertiary and residential sector. Subsidy programmes have been indicated as factors that can both extend the acceptable payback period and lower the minimum investments required for an EPC.
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APPENDIX 1. ASSOCIATIONS, ORDERS AND INSTITUTIONS INVOLVED IN ENERGY EFFICIENCY Selezione di associazioni, ordini, collegi e istituzioni coinvolte nella filiera dell'efficienza energetica130
• Consumatori: ADICONSUM, CNCU, Federconsumatori, SUNIA, ecc. • Associazioni gestori agenti immobili: ASSOIMMOBILIARE, ATER, FEDERCASA,
Confedilizia, ICIC, ABI, FIAIP, FIMAA, ecc. • Istituzionali: ANCI, UPPI, Conferenza Stato Regioni, ITACA, Comunità Montane,
Ministeri, Regioni ecc. • Associazioni di categoria: ANCE, ABI, AIRU, AITE, ANDIL, ANIMA, ANIT, ANPE,
ASSISTES, ASSISTAL, Assocalor, ASSOIMMOBILIARE, ASSOTERMICA, ASSOVETRO, CNA, CONF. CERAMICA, FEDERCHIMICA, FEDERESCo, FEDERLEGNO, FINCO, FEDERELETTRICA, UNCCSAL, ecc.
• Ordini e collegi: CNA Ingegneri, CNA Architetti, Collegio Periti, Collegio Geometri, ecc.
130 ENEA (2011) – Quaderno – L’efficienza energetica nel settore civile, pag. 10
