Most European regions have not yet seen a significant development of energy performance contracting (EPC). Energy performance contracting can be a very good solution to make street lighting refurbishment happen: guaranteed energy services in the form of EPC work best in cases of high energy and costs savings potentials. Apart from legal barriers, this can be attributed to the lack of understanding and trust in EPC and the absence of experienced ESCOs and organisations facilitating the EPC market development. Street lighting is a good “learning and testing ground” for EPC due to its lower technical and economic complexity (compared to building-related EPC). Furthermore, the recent market introduction of LED technology for street lighting offers high energy and cost savings with comparatively short pay-back times.
The project “STREETLIGHT-EPC” will create demand and supply for EPC projects in 9 regions by setting up regional EPC facilitation services. These services will provide comprehensive support to both municipalities and SMEs as potential ESCOs. The project partners aim to implement 36 EPC street lighting projects in Ireland.
To see if you have a feasible project follow this link to the Quick Check for EPC Streetlight Project.
Streetlight Energy Performance Contracting Facilitation Services
Streetlight Energy Performance Contracting Facilitation Services
The Facilitation service will provide advisory and information services to:
- Local authorities and other public or private bodies interested in carrying out EPC projects
- SME’s interested in becoming ESCOs and existing ESCOs
- Banks/financing institutions
- Any other relevant stakeholder in establishing an EPC market
Please see below a short analysis report, survey and regional network from South East Energy Agency.
South East Energy Agency Analysis Report Analysis_Report-Carlow_Kilkenny_County-EN.pdf (663 downloads)
See below presentations from Streetlight EPC Stakeholder Meeting held on the 15th August in Hotel Kilkenny;
Kilkenny County Council Presentation
South East Energy Agency’s Presentation StreetLightEPC-CKEA.pdf
Please check here for regular updates on up and coming events in terms of Streetlight EPC
In the meantime if you require further information please contact firstname.lastname@example.org
Step-by-step to streetlight refurbishment
There is an urgent need to act for local authorities: nearly 80 % of all currently used street lighting lamps will be “phased out” by 2017, which means they will not be available for purchase. Whereas refurbishment can significantly increase energy efficiency and reduce electricity and maintenance costs, it requires substantial upfront investments. This is a major problem for many local authorities.
Here energy performance contracting (EPC) can be a solution: energy efficiency investments are pre-financed and implemented by an energy service company (ESCO). The annual energy and maintenance cost savings then cover the investment and capital costs.
This document provides a practical step-by-step guidance to local authorities and ESCOs on implementing streetlight (EPC-) projects.
Street lighting is an important contributor to traffic and public safety. Assuring good visibility during hours of darkness also requires a substantial amount of electricity and money. For local authorities with older, inefficient systems, street lighting can account for 30-50% of their total electricity consumption. However, the savings potential in this field is enormous – in many local authorities 30-70% with current technologies.
The recent market introduction of LED technology for street lighting offers high savings with comparatively short pay-back times (typically around 5-7 years without civils). LED technology has been developing very rapidly over the past years. With cost reduction potentials of over 50 %, in many cases it is now an economically very interesting option for street lighting refurbishment.
Some advantages of LED:
- high energy-efficiency
- low maintenance requirements
- no UV- and IR-radiation
- choice of light colour
- exact light direction possible (good for animal night life)
- high flexibility, dynamic light control systems
- long lifetime (about 50-70,000 hours)
Why Energy Performance Contracting (EPC)?
Streetlight refurbishment to LEDs requires significant investments which is a major barrier for most local authorities. Energy Performance Contracting (EPC) can offer a solution in many cases to overcome this barrier.
Energy Performance Contracting is a contractual arrangement between a beneficiary (e.g. a local authorities) and a provider of an energy efficiency improvement measure, a so-called “Energy Service Company” (ESCO). The ESCO finances and implements energy efficiency investments – for example the refurbishment of a street lighting to LED technologies for the whole county or a number of pre-identified similar projects. The annual energy savings are used to cover the investment and capital costs. After the end of the contract, the client benefits from the energy and cost savings.
Energy efficiency investments are pre-financed and implemented by an energy service company (ESCO), the annual energy savings then cover the investment and capital costs.
Frequently asked questions on streetlight EPC
What is the meaning of the following terminology;
Reference value that is calculated based on the energy costs and energy consumption which were incurred within a reference period (e.g. the last 3 years)
Guarantees assuring the agreed quality level of the ESCO’s work (e.g. minimum savings, functionality of the system)
Local authorities/public body (or company) in whose installations an ESCO project is carried out
The basis for the cooperation between ESCO and client, regulates rights and obligations for both parties, mostly important the achieved savings, the contract duration and warranty issues.
Specialised company that offers EPC services
Is done with the achieved energy savings
Replacement of lamps, retrofitting of existing installations, new control systems, system optimisation, retrofitting of poles, complete replacement of luminaires. Extending the street lighting system can be incorporated into the project, but cannot be financed by savings.
This really depends on the project and its size. However, in many cases, a minimum investment of circa €50,000, otherwise the cost of preparing the project (including setting up the contract) represent too large of a proportion of the savings.
What impact does the EPC project have on the local authorities staff respectively the existing service provider?
The EPC may result in new tasks for the staff previously in charge of some aspect of the street lighting system, such as data collection, quality control, the implementation of the measures and the revision of annual accounts.
Careful preparation and development are crucial for the successful implementation of an EPC project. At the beginning of the project, all concerned staff should be involved in order to ensure transparency and acceptance by all parties. Good planning of the project and clear requirements for the ESCO in terms of quality criteria are required.
The “baseline” is the basis for calculating the ESCO’s fee. To prevent that factors which are out of the ESCO’s control (e.g. energy prices, change of operation times) act to its advantages or disadvantage, energy costs and energy consumption levels are compared to those of the reference year.
The contract guarantees energy savings. Therefore, any increase in electricity cost is the responsibility of the local authorities and is paid to the utility through the electricity bills.
Whether implementing energy efficiency investments with or without EPC is more advantageous depends, among other, on the following factors:
- the size of the project (for very small projects the achieved savings are not sufficient to cover the investment and contract preparation costs within a reasonable time frame)
- the availability of investment funds and personnel capacity
- the purchasing conditions for the lamps and luminaires
The ESCO bears the technical and financial risk for the successful implementation of the project, especially in relation to the guaranteed savings. In order to protect the local authorities from damages resulting from the ESCO’s eventual economic difficulties, it is advisable to take precautions in this respect in the EPC contract.
Depending on the EPC contract, the local authorities may either benefit from lower energy costs as of the beginning of the project (this will most probably entail a longer contract duration) or only after the contract ends.
Typical durations of EPC contracts vary between 7 and 12 years, but – depending on the conditions – they can also be shorter or longer.
Can other measures such as the extension of the existing installation or the lighting of a new road be included in the EPC project?
Yes. This has the advantage that the local authorities can benefit from the ESCO’s know-how in this field. However, in these cases, a down payment is usually required because extensions cannot be financed by savings.
The local authorities remains the owner of the retrofitted facilities. (The NRA in Marked Networks and Motorway sites)
At the end of the contract period, the local authorities can take over the ESCO’s tasks again and benefit solely from the lower energy costs. Of course, the agreement may also be extended or amended.
A list of ESCOs will be available at www.southeastenergy.ie and/or the “EPC Facilitation Service” South East Energy Agency will help you to identify potential ESCOs.
Questions from Streetlight EPC Q&A session:
From start until finish, the entire project usually takes from 2-3 years.
What are the key criteria (financial and non-financial) in tender procedures for selection of ESCOs?
In addition to economic criteria, quality criteria for the lamps are important and the quality of the guaranteed savings.
In any case maintenance should be included in the contract as it is a very important part for total savings, however, there are a number of options how to include maintenance.
If it is included in the contract, the local authorities would not be allowed to change electricity suppliers for the whole duration of the contract (no possibility to change to a cheaper supplier). Current OGP framework will dictate this.
The savings level is determined by the rough analysis and measured before and after refurbishment.
The ESCO needs to pay compensation to the local authorities.
This needs to be defined in the contract. In Upper Austria, the revenue from extra savings most often goes to the local authorities. In any case, the local authorities ends up winning from any extra savings that are achieved, since they will end up with a more efficient lighting system at the end of the contract.
The added costs will probably be similar to those of hiring the services of a good planner. However, in most cases in the long run, the EPC project will help you save money (the ESCO in general has “better” conditions when buying lamps/luminaires).
Where a local authorities’s credit rating is low, this can be done with bank guarantees. If a bank guarantee cannot be obtained, in some countries, the department (national) level might guarantee, otherwise the local authorities is not a good candidate for EPC (KO criteria).
Does an ESCO guarantee for whole public lighting systems or just luminaires if only luminaires where a part of reconstruction?
The ESCO only guarantees for their own installations (those parts that they have installed). The rest is the responsibility of the local authorities.
How is the cost of the infrastructure (poles, cabling, ducting) taken into account in an EPC finance model?
Who pays for the new infrastructure? When the ESCO calculates the total investment cost, it usually includes all costs that it has for the implementation of the project: material, installation, staff costs, etc. When a local authority wants to change other installation than the luminaires (switch boards, cabling, pillars, etc.), these costs can be considered in the project costs, but can most often not be financed through the energy savings. In these cases, the local authorities has the extra cost of financing these parts of the installations. Most likely under health and safety grounds or even in the case of moving away from traditional ESB Network Infrastructure.
Nothing, because you have a contract guaranteeing the lighting level and savings (which will still be achieved, regardless of the development of technology).
There is the possibility that ESCOs guarantee each other’s EPC contracts. In case an ESCO goes bankrupt, the contract is taken over, under the exact same conditions, by another ESCO. Respective provisions could be foreseen in the EPC contract.
With the installation of an LED retrofit project the maintenance will be reduced but there will still be a maintenance contract required for general maintenance, cleaning etc. After the installation the warranties will cover the luminaire for 3 – 5 years, extended warranties are sometimes offered by the manufactures. The new maintenance schedule will be based on the LED installation and an annual general maintenance programme. A costing of the proposed maintenance plan would carried out at the early stage of the process.
The South East Energy Agency through the “Facilitation Service” will assist potential SME’s/Electrical Contractors to engage in the EPC process through workshops and guidebooks.
What is the difference between EPRP (Energy Performance Related Payment) and EPC (Energy Performance Contracting)?
An EPRP is a performance related payment for energy efficiency projects that deliver savings and is usually a short term contract approximately one or two years. It is up to the installation companies to ensure the energy savings are being achieved. An EPC is a longer term contractual agreement (10 – 15years) where energy payments or shared savings are made over that period.
South East Energy Agency has developed “Quick Check” documents through the Streetlight EPC project to establish at an early stage whether a project is feasible for EPC. These Quick Check can be found on our website and once completed can e-mailed to email@example.com
How can local authorities/owners of streetlighting use this checklist?
This document aims to support local authorities in assessing whether energy performance contracting could be a suitable option for refurbishing their streetlighting systems (or a specific area within their municipality) in 2 steps:
- Step 1: OK and KO criteria
Check the table below and answer the questions for your Streetlighting system (or a part of it). If all or nearly all questions are answered with “yes”, then you can proceed to Step 2
- Step 2 Streetlight-EPC Data collection sheet
Complete the data collection sheet which is inserted in this folder and send it to the South East Energy Agency. They will get back to you with information on possible next steps towards Streetlighting refurbishment in your region.
Street-lighting is an important issue for most local authorities – it must meet a range of requirements, most importantly contribute to road and social safety and allow for cost-efficient and low-maintenance operation. For local authorities with older, inefficient systems, street lighting can account for 30-50% of their total electricity consumption. The saving potential is enormous: generally, with current technologies 30-70 % of savings are possible. This savings potential was recognised by European policies: EC Regulation 245/2009 foresees “phasing out” of a range of lamp types frequently used for street lighting between 2012 and 2017. Phasing out means that these product groups can not be purchased any more. Nearly 80 % of all lamps currently in operation will be affected by the phase-out, among them High Pressure Sodium (HPS) and High Pressure Mercury (HPM) lamps.
What is EPC?
Energy Performance Contracting is a contractual arrangement between a beneficiary (e.g. a municipality) and a provider of an energy efficiency improvement measure, a so-called “Energy Service Company” (ESCO). The ESCO finances and implements energy efficiency investments – for example the refurbishment of a streetlighting to LED technologies for the whole city or a selected project. The annual energy savings are used to cover the investment and capital costs. After the end of the contract, the client benefits from the energy and cost savings.
Box EU-Project Streetlight-EPC
A project funded by the Intelligent Energy Europe Programme was launched in April 2014 with the objective of triggering the market uptake of EPC through street lighting refurbishment projects. The project, called “Streetlight-EPC” will create demand and supply for EPC projects in 9 regions by setting up regional EPC facilitation services. These services will provide comprehensive support to both local authorities and SMEs as potential ESCOs. The project team includes 9 regional agencies/organisations, which will provide the EPC facilitation services, 9 municipalities and a European network.
Further information: www.streetlight-epc.eu
For South East Energy Agency Contact Details and Consultancy Services on Streetlighting Energy Performance Project Development please click here.
- SEAI Technical Assistance http://www.seai.ie/Your_Business/National_Energy_Services_Framework/Technical-Assistance/
- SEAI Case Stories http://www.seai.ie/Publications/Your_Business_Publications/Case_Studies/
- City of Venlo, Netherlands http://eeef.lu/news-detail/items/city-of-venlo-is-upgrading-73-of-its-public-lighting-via-a-senior-debt-facility-provided-by-the-eeef.html
- Kilkenny County Council, City Partner, Streetlight EPC http://www.kilkennycoco.ie/eng/Services/Environment/Energy-Conservation/Streetlight-EPC/
- National Roads Authority, Public Lighting Presentation http://www.tii.ie/tii-library/national-roads-conference/nra-national-roads-conference-2014/2.4_Gerard-Keogh_Opportunites-for-Savings-in-Public-Lighting.pdf
Regional and National Funding Sources
Candidate Projects for Streetlight EPC