1. Energy Performance Contracting (EPC)

2. Vic Government EPCs since 2009
29 projects
covering
745 buildings
saving
37% (average GHG saving)
and
$418 million (net over life)
savings are guaranteed

3. Federation Square EPC
$6.85 million
55% greenhouse gas saving

4. Government office buildings EPC
$11.8 million
30% greenhouse gas savings

5. Melbourne Sports and Aquatic Centre EPC
$4.1 million
31% savings guaranteed

6. South West TAFE EPC $1.8m 32% greenhouse gas saving
9 higher-ed projects makes them the most subscribed segment:
SW TAFE
Kangan TAFE
RMIT (dual sector)
Box Hill TAFE
Sunraysia TAFE
Holmesglen TAFE
Latrobe Uni
Ballarat Uni (dual sector)
NMIT
Monash
Chisholm
Vic Uni (dual sector)

7. Parks Victoria EPC (46 parks)
A good example of a distributed project involving a large number of small sites
$2.8 million
28% energy saving

8. RMIT EPC
$99 million
36% greenhouse gas saving
* Except for Vietnam

9. Melbourne Cricket Ground EPC
Scope being finalised

10. Museums Victoria EPC
Scope being finalised

11. City of Yarra EPC $3.4 million 45% greenhouse gas saving
11.6 year payback
18 buildings covering 65% of total building energy use
$3.4 million
45% greenhouse gas saving

12. Frequently asked questions
Hard to see bills change over the years.

13. What is an EPC?

14. An integrated process with a savings guarantee
Request for Proposal
Detailed Facility Study
Install solutions
M&V
EPC
DFSA
1 contractor audits, specifies scope, contracts works, and measures and verifies
Because there’s only 1 accountable party, a savings guarantee is possible. If there were different designers to contractors, it would be difficult to find any party willing to take this risk.

15. Why EPC? Why not just do it ourselves?

16. Guarantee reduces risk Low risk supports financing
More savings
Guarantee reduces risk
Low risk supports financing
Doesn’t require customer to be an expert
Audits conducted under a competitive tender process have delivered more savings than paying someone to do an audit.
Savings guarantee places risk on the provider,
Due to the guarantee, the project lends itself more to financing, as there is a guaranteed return that can be used to service a loan.
The customer doesn’t need to specify the solutions.

17. How can anyone guarantee the savings?
Hard to see bills change over the years.

18. Careful application of the M&V protocol:
Data logging systems/equipment
New meters on relevant circuits
Annual site bills
Modelling
Hard to see bills change over the years.

19. EPC measurement & verification
Measurement and verification of savings. This text box not really necessary, but has been added to deliberately make the page look overly busy… for visual effect and nothing else really.
Request for Proposal
Detailed Facility Study
Install solutions
M&V
As per blue box in upper right corner
Initial M&V outline
(for pricing)
DFSA
EPC
Ongoing M&V reporting:
Annual M&V reports
One off M&V reports (e.g. option A solutions)
Annual commissioning requirements
Post-install measurements
Reporting
Making good
Financial reimbursement
Some pre-install measurements
Quick overview of how M&V works.
IPMVP Options:
A: Partly measured retrofit isolation
B: Fully measured retrofit isolation
C: Whole of site
D: Simulated Calibration
Methodology agreed (option, sample, timing & duration)
Baseline agreed
Some measurements taken (e.g. option A ‘before’)
Comprehensive MVP developed

20. Do we have to install everything they recommend?

21. No

22. Do we have to share the savings?

23. No

24. Does the ESCO take over our electricity bills?

25. No

26. What about maintenance contracts?

27. No

28. Do we lose flexibility in use of our buildings?

29. No

30. Are we big enough?

31. If you spend over $200K per year on utilities

32. How do we pay for it?

33. Cash
Debt finance
Finance Lease

34. Doesn’t it cost a lot to measure and verify?
Hard to see bills change over the years.

35. It will cost more if you don’t.
Hard to see bills change over the years.

36. Did you get what you paid for?

37. How much will an EPC cost? .. and save?

38. Hypothetical Local Government EPC
Project scope
Civic centres
Aquatic centres
Libraries
Depots
Other facilities
Annual utility expenditure = $800,000
37% savings
= $288,000
Capital investment (year 1 debt impact) =
Annual operating statement impact =
Avoided capital (asset replacement) =
$2 million
$153,600
$604,000

39. What will my chief finance officer think?

40. They should support this.
Hard to see bills change over the years.

41. Accounting treatment of energy efficiency investments For projects funded with cash OR debt where the payback period is less than the investment life.
zero, then +ve
BALANCE SHEET
Increased liabilities or less cash
Improved asset value of buildings
Operating statement
Depreciation expense (~1/15th of investment)
Annual cost savings (~1/7th of investment)
Savings more than double the expense
Net Debt (liabilities – cash)
Increased net debt by value of investment in year 1
Impact reduces to zero over term of the payback period
Positive impact thereafter
+ve
- ve
for payback term, then
+ve

42. How do I get started?
Hard to see bills change over the years.

43. Call me
Sam Burke
Hard to see bills change over the years.

44. Further information
Select ‘EPC’ under ‘State Purchase Contracts’