This project is funded by the European Union

7th Edition of theINTERNATIONAL BEIRUT ENERGY FORUM

21‐23 September 2016 

Super Esco:Super Esco: New Instrument for accelerating EE in the 

MENA Region

Kawther LIHIDHEBKey Expert MED ENECKey Expert.MED ENEC

www.med-enec.eu

This project is funded by the European UnionOutline

1 I t d ti f MED ENEC1. Introduction of MED‐ENEC2. Potential for Energy Efficiency3 ESCO B i M d l3. ESCO‐Business Model4. Introduction of Super‐ESCO5. Key elements for success

This project is funded by the European Union

MED-ENEC-Project Goal

“To Develop the markets for EE and RE in the Building sector and related industrial and services activities withinsector and related industrial and services activities within

the Mediterranean Partner Countries”

3www.med-enec.eu

This project is funded by the European Union

MED-ENEC Partner Countries

MRC TUNALG

LEBISR

SYR

JORPAL

4www.med-enec.eu

EGY

This project is funded by the European Union

MED-ENEC ‘S Activities

Financing Business Development

Knowledge /

PolicyDevelopment

Management / Curriculum 

Development

Specific Demand

EE Building Codes

EE Building Projects‐ JOR ,  TUN,...

Awareness

www.med‐enec.eu 5

This project is funded by the European Union

Energy EfficiencyEnergy EfficiencyUntappedUntapped Opportunities!!!Opportunities!!!Untapped Untapped Opportunities!!!Opportunities!!!

Global energy efficiency opportunities by sector

> USD 300 BILLION !!

Two thirds of the economic potential to improve energy efficiencyTwo‐thirds of the economic potential to improve energy efficiency remains untapped in the period to 2035 unless policy activity increases

Source: IEA World Energy Outlook 2014

This project is funded by the European Union

Energy saving potential in buildings  Energy saving potential in buildings  Energy savings structure according to IEA 450 scenario

Energy efficiency potential, 2025, MENA region

Largest EE t ti l iEE potential in 

Buildings

This project is funded by the European Union

ESCos ‐ Energy Service Companies 

A market tool to foster Energy Efficiency

8www.med-enec.eu

This project is funded by the European UnionWhat’s an ESCOWhat’s an ESCO? ? 

Energy Service Company « ESCO » is a company thatdelivers an Energy integrated solutions for all the projectdelivers an Energy integrated solutions for all the projectlife cycle (planning, construction and operation &maintenance) with a multidisciplinary support (technical,) p y pp ( ,economical, financial, organizational and legal aspects) tocustomer …..guarantee, the energy savings through Energy SavingsPerformance Contract (EPC)…and accepts some degree of financial risk in so doing.. and accepts some degree of financial risk in so doing.

9 www.med-enec.eu

Source: Energy Efficiency Directive 2006732/EU  Article 3 (i)

This project is funded by the European Union

ESCO Business ModelESCO Business Model

Solution = ESCO :  Identify & design the cost effective measures and Identify & design the cost effective measures andsolutions (Audit of the quality investment, detailedengineering..)

Can contribute to the financing Implement the EE measuresI h i i & ifi i f h l Insure the monitoring & verification of the results(M&V)

Garantee the energy savings through the Garantee the energy savings through the …

Energy Savings Performance Contract (ESPC)10

gy g ( )

This project is funded by the European Union

EnergyEnergy SavingSaving Performance Performance ContractsContracts

Shared Savings model• ESCO finance• Payment based on energy cost savings

• The Customer finance the EE projectsESCO t th i

Guaranteed Saving Model

• ESCO guarantees the savings

Energy Supply Contracting –Chauffage Model• ESCO finance• The customer buys the energy output at an agreed

price

Chauffage Model

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price

This project is funded by the European Union

WhatWhat are the are the benefitsbenefits of of implementingimplementing EE EE throughthrough ESCO? ESCO? 

Making the benefits of EE more visible and tangible by  

p gp g gg

introducing detailed M&V of the  EE improvement

Offering alternative Business models enabling sharing of the financial risk of EE investments between partners

Providing EE Expertise and other related skills  (Management, E i )Economic………….)

It makes it simple and easier to implement EE MeasuresIt makes it simple and easier to implement EE Measures

12www.med-enec.eu

This project is funded by the European Union

ESCO Market —A concept that is spreading

Sub‐saharan Africa :Kenya – Afrique du Sudy qAmerica : Argentine – Brésil – Canada – Chili – Colombie – Jamaïque –Mexique – Uruguay – USAAsia:Asia:Arménie – Australie – Chine – Inde – Indonésie – Japon – Malaisie – Nouvelle Zélande – Philippines – Corée du Sud – Thaïlande –Turquie – VietnamEurope :Europe :Autriche – Belgique – Bulgarie – Croatie – République Tchèque –Danemark – Finlande – France – Allemagne – Hongrie – Irlande –Italie – Pays‐Bas – Norvège – Pologne – Portugal – Roumanie –Russie Slovaquie Slovénie Espagne Suède SuisseRussie – Slovaquie– Slovénie – Espagne – Suède – Suisse –Ukraine – Royaume UnisMENA :Tunisie ‐ Jordanie – Liban – Maroc – Égypte ‐ Dubaï

www.med

-enec

This project is funded by the European Union

Maturity of ESCO business in the MENA Region

Country  Approximate number of ESCOs 

Maturity of ESCO business 

Description 

Algeria  0  non existent Sufficiently mature: ESCOs  are  driven g ff yby  demand  for  energy  efficiency services, activities are mostly financed by clients.  

Bahrain  0  non existent 

Egypt  10  nearly non existent 

Iraq  0  non existent Immature:  ESCOs  exist mostly  due  to support of donor institutions.  Nearly  non‐existent:  ESCOs  exist 

Jordan  1  nearly non existent 

Lebanon  15  immature 

Libya  0  non existent M 0 i mostly  due  to  support  of  donor 

institutions and  compared  to  the  size of the market are almost non‐existent  

Morocco  0  non existent

Palestine  0  non existent 

Syria  1  nearly non existent Sudan 0 non existent Non‐existent: No real ESCO business is 

present 

Sudan  0  non existent

Tunisia  10  immature Yemen  0  non existent Italy  1847 with  mature   

turnover of EUR 520 mill in 2010 

 Source: RCREEE

This project is funded by the European Union

ESCO ESCO BarriersBarriers in the MENA in the MENA RegionRegion

ESCO market doesn’t emerge naturally

Barriers explain why the market doesn’t work Barriers explain why the market doesn t work as it should and needs nudging in the right direction through policy measures g p y

Understanding the barriers is a key to devising remedial policiesp

15 www.med-enec.eu

This project is funded by the European Union

ESCO ESCO BarriersBarriers in the MENA in the MENA RegionRegion

Culture of origin of the current ESCOs and lack of ownership ofthe spirit of this new business model

Under capitalization of the current ESCOs financialvulnerability

Low capacity to raise bank financing

Inability of the current ESCOs to play the role of third‐partyinvestorsinvestors

Skimming the market by ESCOs: selection of low‐risk and noninnovative projects :what’s the added value for the Client?p j

Expertise of current ESCOs are limited to technical and lack ofskills in the financial and legal fields.

16ESCO less credible to customers and financial sector

This project is funded by the European Union

Super ESCOSuper ESCOTo remove certain barriers, a new player appears

The business model is different than the traditional ESCO

Son modèle d’affaire est très différent d’une• Son modèle d’affaire est très différent d’une17www.med-enec.eu

This project is funded by the European Union

Super ESCOSuper ESCO

Super ESCO  is the interface between the customer

(sites owner) and the ESCOs on the market.

ESCO 1

ESCO 2Customer

public / privateSuper ESCO

ESCO 2

ESCO 3ESCO 3

ESCO n

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ESCO n

This project is funded by the European Union

WhatWhat isis expectedexpected fromfrom thetheSuperSuper‐‐ESCOESCO

To accelerate EE programmes in the different economicsectors focusing especially in the public sector ( Street

SuperSuper‐‐ESCOESCO

g p y p (lighting, Hospitals, schools…)

To propose & implement concrete measures to removep p pthe barriers to the development of the ESCO market(Starting by the Public Sector)

To stimulate and facilitate the emergence of specializedESCOs and EPCs.

To ensure the guaranteed savings and the quality ofservice provided to the customer.

This project is funded by the European Union

Super ESCO  Super ESCO  MainMain CaracteristicsCaracteristics of the Businessof the Business

Sign the contract with customer

Main Main CaracteristicsCaracteristics of the Business of the Business ModelModel

g A credible entity for the owner (utility, national corporation, Public Private Patnership)

Knows the ESPCs Can educate site / system owner

Understand the reality of small ESCOs Can help consolidating the market supplyp g pp yManages bids for the selection of different ESCOs in the market.ESCOs in the market.

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This project is funded by the European Union

Super ESCO  Super ESCO  MainMain CCaracteristicsaracteristics of the Businessof the BusinessMain Main CCaracteristicsaracteristics of the Business of the Business 

ModelModel

Sell the project

Project management, M&V(ESCO training)p j

contract standardization, 

(ESCO training)

financing agreement, manufacturing agreement

ESCO SelectionESCO SelectionQuality Check

This project is funded by the European Union

ConclusionConclusion

ESCO business model “ESPC” a concept that isspreading around the world and contributes to a realchange of the global EE market.

Succeeding in introducing this new business model canhelp boost energy efficiency technologies, services andapplications in the MENA region.

Super ESCO can play a major role to facilitate thepenetration of ESCOs to the market and improve theircredibility.

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This project is funded by the European Union

Key Elements For SuccessKey Elements For Success

A coherent and Clear EE policy package andGovernment support to address Market Failure.

Set up legislative provision endorsing Energy SavingPerformance Contracting “ESPC” with leading role ofPublic Sector

Develop an appropriate incentive and financialMechanism to support ESPCs (guarantee mechanisms,investment funds to support the ESCO’s Equity, EE Fund,Fiscal incentives,…)

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This project is funded by the European Union

Key Elements For SuccessKey Elements For Success

Promote Public‐Private Partnership strategy andp gyactions to accelerate EE.

Need to professionalize the ESCO services to build aptrust relationship with customers and banks: Capacitybuilding required, certification and accreditationscheme, pilot project especially in public sector….

Communication and awareness raising activities arecrucial to the success of ESCO promotion

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This project is funded by the European Union

THANK YOUTHANK YOUFOR YOUR ATTENTIONFOR YOUR ATTENTIONFOR YOUR ATTENTIONFOR YOUR ATTENTION

www.med‐enec.euKawther LihidhebMED‐ENEC Key Expert Business development & Financing 

giz International ServicesMED‐ENEC Project Office7 Tag El Din El Soubky Street7 Tag El‐Din El‐Soubky Street11631 Heliopolis, Cairo, EgyptPhone: +20 (0) 2 24 18 15 78 / 9 (Ext.107) Mobile: +20 128 340 7670

www.med-enec.eu

Mobile: +20 128 340 7670 klihidheb@gmail.com;kaouther.lahidheb@giz.de: Email