Periodic Reporting for period 2 - NOVICE (New Buildings Energy Renovation Business Models incorporating dual energy services)
Reporting period: 2018-12-01 to 2020-05-31
NOVICE aimed to develop and demonstrate an innovative new business model that combines both EE and DR into a single service offering and allows ESCO to work together with demand response aggregators to provide a holistic package of energy services, enhancing the business case for renovation projects and driving up renovation rates across Europe.
The main objectives of NOVICE were to:
• Engage and train new actors and stakeholders (aggregators, ESCOs, technology providers, FMs, engineering consultants) to implement the proposed augmented building renovation process
• Address regulatory, market, technological and financial barriers to the implementation of dual energy services business model in building renovation
• Prescribe the building energy renovation technologies that increase both demand response flexibility and energy efficiency of participating buildings
• Develop an innovative business model and a new Energy Performance Contracting template for providing dual energy services.
• Demonstrate the effectiveness and advantages of the NOVICE innovative business model for dual energy services in building retrofitting projects.
The NOVICE dual services approach of combining EE with DR via an EPC becomes more viable as more of the following conditions are met:
• The right equipment: The building must include energy assets that can be used in a flexible way such as industrial equipment, HVAC equipment, refrigeration equipment, energy generation, battery storage, renewable energy generation with battery storage and a Building Management System. The more types of equipment on site, the more DR markets the site can participate in, therefore the greater the value of flexibility.
• The right building type: Buildings more than 20 years old, that have not yet undergone a refurbishment often have lots of opportunity for energy saving. Buildings with a large annual energy consumption, where energy is a significant cost to the building owner are more likely to take up EPC. Buildings with a wider range of acceptable operating parameters have a bigger opportunity for flexibility revenues. Large hotels, large offices, hospitals, and large retail premises appear to be the most suited to NOVICE.
• The right market: NOVICE will be most successful in a country with both a mature EPC market and a mature DR market. Building owners and ESCOs must accept the EPC model as an acceptable and trusted method of achieving improved energy performance. Aggregation must be allowed. Energy assets must be allowed to participate in a range of DR programmes, rather than having commit to only one.
• The right contractual models: Standard EPC contractual templates are needed to minimise the legal and administrative burden and cost of procuring dual services EPCs, particularly because these are likely to be more complex than standard EPCs. ESCOs must be willing and able to sell, finance, and operate an EPC. ESCOs and aggregators must be willing to work together and must find suitable contractual approaches to managing the relationship between them including: client management; roles and responsibilities; distribution of revenue streams.
• The right finance: In order to drive up building renovation rates in Europe, the barrier of access to finance for EE projects must be overcome. Due to the uncertainty over revenues from DR, most third party investors would not consider a dual services EPC to be any more bankable than a standard EPC. Standardisation of contracts and processes, and bundling of similar projects will increase the attractiveness to investors.