|Metropolitan City of Torino||Italy|
Energy Performance Contractings
Total investment of more than 12.5 M€ and 22,050 MWh of primary energy saved
Support small municipalities to implement energy efficiency measures in public buildings and street lighting.
In the last decade the Metropolitan City of Torino created a pathway to make the city and its neighbouring area smarter and more sustainable. The adhesion to the Covenant of Mayors represents a milestone in this path and, through the development of SECAPs, provides a framework to translate this ambition into concrete actions.
Within this context, the 2020TOGETHER - TOrino is GEtting THERe - project is a well-developed example of the actions that can be implemented to achieve energy efficiency thus by reducing cities impact on the urban environment. The core of the project is the collaboration across municipalities to aggregate their needs for energy refurbishment in public building and street lighting. This collaboration is ensured by the Metropolitan City of Torino, which plays a pivotal role in the project by providing support both as coordinator and as contracting authority.
Different initiatives were undertaken by the Metropolitan City of Torino to achieve the effective engagement of municipalities. The first was the organization of meetings to disseminate the content of the project to the local municipalities. The meetings were followed by the direct involvement of cities, which were asked to identify those public buildings and street lighting that could be included in the tender. Finally, their commitment was witnessed by the signature of a Formal Agreement, approved by the city council, between them and the Metropolitan City of Torino.
Several energy audits were carried out during the project implementation. They were in fact essential for the development of an appealing tender that would make the entire project feasible. In this regard, a preliminary technical analysis was performed to identify for each Municipality the buildings (or public lighting systems) mostly in need of efficiency retrofitting actions. This analysis was then followed by a more in deep energy audit that led to the creation of an energy simulation model. This model was useful to compare the theoretical energy requirement with the real consumption. The creation of a baseline for energy consumption and costs was the final step of the technical part of the project, its creation was crucial to identifying existing critical issues and potential opportunities for savings and investments.
The financing scheme of the project is based on Third-Party Financing, these are the main steps of the scheme:
- The ESCo makes the capital available (as equity and/or be financed by a third party institution).
- The ESCo underwrites individual performance contracts with the Municipalities, by doing that it is committed to:
- make investments in each of the buildings concerned.
- provide the Municipalities with the guarantee that all their buildings will benefit from actual energy retrofitting measures (and not only from cost savings resulting from improved energy management).
- hire a professional, appointed by the Contracting Authority (the Metropolitan City of Torino), to take part in the works of the Performance Monitoring and Verification Commission
- Unlike the assessment of the investments made for each building, performance assessment is made globally for each Municipality. The Municipalities will pay to the ESCo a fee that is proportional to the actual achievement of performance goals.
In order to guarantee the successful realization of the project, the tender development requires a clear definition of the rights and obligations between all the stakeholders involved. These are some of the documents that need to be included in the tender:
- Call for tender
- Tender specifications and relevant attachments for the preparation of technical-financial bids
- Affidavit forms required to be admitted in the procedure
- Contract templates (framework contract and performance contracts)
- Tender service specifications templates
- Performance monitoring and verification plan.
TECHNICAL & FINANCIAL DETAILS
Energy Performance Contracting (EPC) - ESCO
KEY SUCCESS FACTORS (REPLICATION POTENTIAL)
The experience acquired has brought about some considerations and recommendations:
- Need for strong political commitment of contracting authority and of the Municipalities for sustainable energy;
- The central contracting authority and the Municipalities must be capable of mutual influence to ensure that the project does not run aground when problems arise: compelling agreements, binding the parties and including penalties for noncompliance;
- Technical -administrative support and training of Municipalities are vital;
- Efficacy of energy pre-check for identifying the most suitable building;
- Need for the utmost transparency and involvement of Municipalities in all phases of the project;
- Need for accurate and detailed information for the preparation of tenders by the ESCOs;
- Efficacy of communication and discussion with ESCOs potentially interested in EPC market.
- Higher efficiency through the reduction of the number of calls for tenders: each call for tenders applies the same procedure with the same timing; however, the scope of the tender must be carefully evaluated to ensure the participation of the largest possible number of bidders.
- Proposing and discussing successful experiments already implemented in similar conditions is useful to avoid any mistrust among Municipalities.