How to unlock the secrets of decarbonised buildings - what's holding you up? Annual EAUC Conference, March 2010

Who we are Self Energy UK UK’s first decentralised Energy Services Company (ESCO) Leader in decentralised energy delivery Reducing energy costs, carbon emissions and increase the security of energy supplies. E.ON Sustainable Energy Created in 2007 Low carbon, decentralised energy advice and solutions Cost effective response to meet new regulations in carbon reduction Over 350 people dedicated to delivery Working together with complementary skills and resources to deliver across the UK

Decarbonisation of buildings What does this mean? –Reduce carbon intensive energy (Energy Efficiency) –Reduce carbon in the energy (Energy Generation) Energy hierarchy Opportunities and constraints for taking carbon out of buildings Introduce a business model and how it could function Energy hierarchy Use less Use efficiently Use renewably Use (fossil fuels) cleanly

This is what you’ve told us…. That’s what is holding you up! No capital or the fear of it running out Procurement process takes ages We understand the technology We’re flat out just keeping it going New regulations are coming in thick and fast Which suppliers are the better ones? Which are dodgy? Hundreds of new entrants into the technology market We’d love to do loads of energy reduction, we need to do loads of energy reduction

What’s happening out there? Pressure to reduce costs; budgets are reducing Carbon Reduction Commitment Energy Efficiency scheme – more data, more compliance European Performance of Buildings Directive – DECs for larger buildings Green League – pressure to compete? HEFCE funding – linking of capital to carbon Important to balance the energy ‘trilemma’

What is an Energy Performance Guarantee (EPG)? Means by which a contractor designs an energy reduction solution for a building or portfolio of buildings he selects the equipment, installs it and maintains it, subject to complexity. Key features include: –Monitoring and verification, taking into account variables –Contractor acts as single point of contact for whole scheme –Contractor takes risk by underwriting the selection and performance of the equipment Two key variants: –University takes responsibility for funding –Contractor funds the solution

The Energy Performance Guarantee Total Energy savings University Contractor BeforeDuring partnership Beyond the end of Performance Guarantee University Total Energy Consumption (current) Fixed term partnership period Savings shared during the partnership Total Energy Consumption (post implementation) Contractor only paid by % of net savings KNOWLEDGE FINANCE RISK MITIGATION

Process of engagement Energy Performance Guarantee Energy & Carbon Improvemen t Analysis Full Feasibility for Investment Grade Proposal Design, Procurement & Implementatio n Operate & Maintain, Monitor & Verify Initial conversation

Recent Case study Large listed building surrounded by administration and accommodation buildings Knowledgeable customer but inexperienced; firmly pro some technologies, anti-others Wanted to make a statement, keep ahead of peers Use opportunity to improve e.g. LED streetlights Some active technologies (CHP), some passive, PV and insulation. Behaviour? Some constraints on environmental conditions c£500k investment, 5 year payback, client to decide on preferred model (see graph)

Summary Positive developments supply side; incentives bringing new technology to UK ‘Pay As You Save’ (PAYS) is the model of the moment, see ‘Green Deal’ Energy Performance Guarantee brings good balance of risk transfer yet agreed process and technology selection Energy reduction is a journey not a project Universities and colleges are perfect subjects due to variety and number of co- located buildings; age, function, complexity So, what’s holding you up?

Thank you Paul Lewis CEO, Self Energy UK Mark Saunders Senior Client Partner, E.ON Sustainable Energy