Buildings

Berlin, Germany

Energy Saving Partnership Berlin (ESP) - An effective and innovative model to reduce CO2 and energy costs without expenses for building owners

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Summary

The City of Berlin in partnership with Berlin Energy Agency (BEA) has done pioneer work to develop and apply an excellent model to improve energy efficiency in buildings. The model called “Berlin Energy Saving Partnership” (ESP) offers efficient refurbishment of public and private buildings with the pivotal advantage to release building owner of any investment costs. Due to releasing building owners from expenses and delivering savings immediately, ESPs are very successful. An accredited Energy Service Company (ESCO), which is to be determined through tendering, finances and implements appropriate energy saving investments to achieve pre-defined energy and cost reductions. In their bids, ESCO’s put together their investments targeted at delivering specified energy savings and respective CO2-reductions.

Until today, 1,300 buildings have been upgraded, delivering CO2-reductions of nearly 64,000 t/a (average saving of CO2-emissions of 27,3 % in relation to the baseline scenario). With these investments total guaranteed cost savings of about € 10,5 m or 26% of usual energy costs (baseline) were realised. So far, ESCOs have invested about € 44,4 m to refurbish different hardware components. Berlin's ESPs are also implemented successfully on an international level. To date, BEA’s division “International Know-How-Transfer” initiated more than 20 projects in Europe and world-wide (e.g. Bulgaria, Chile, Romania and Slovenia).

What is the Berlin Energy Saving Partnership and how does it work?

As responsible company, partly owned by the Government of Berlin, the Berlin Energy Agency organises retrofits for large public and commercial buildings. To this objective, so-called Energy Performance Contracts (EPC) are set up between building owners and ESCOs. In average, ESCOs applying for retrofit tenders agree to realise annual savings in energy costs of 26%. To achieve this target, different hardware components such as automatic control engineering systems, heating control systems, lighting systems, ventilation and air conditioning systems can be installed. A further service is consultancy on consumer behaviour. BEA also assists building owners and ESCOs to decide on terms of repayment to ESCOs. Average payback periods are 8 to 12 years.

Effective implementation depends on positive interaction of all key players. The Berlin ESP consists of the following components:

• As central coordination unit, the Division for Climate Protection of the Senate Administration of Berlin offers building owners financial and technical assistance with regard to the tendering procedure of appropriate projects.
• BEA acts as independent project manager that moderates and manages the process from baseline to contract negotiation.
• Building owner combines several buildings to building pools, which are appropriate for tendering.
• As requirement to participation, pools must have a minimum energy bill of around € 250,000 annually.
• To reduce energy consumption in buildings, ESCOs offer sustainable technologies and systems (insulation, CHP, lighting systems, automatic control engineering, etc.).
• Due to expanding payback periods, measures for EPC usually not include window replacement or wall insulation.
• ESCO finances retrofit investments in advance; Depending on agreed energy savings, building owners pay them back in annual instalments over an agreed period (usually 8 to 12 years).
• Building owner pays not a cent of retrofit investments, but realizes energy savings immediately with the beginning of the project.

In terms of energy performance contracting, the Berlin Energy Saving Partnership is an example for the participation model. In this approach the client benefits immediately from realised reductions of energy cost due to the start of main services. The level of the client’s profit is specified in the contract. The application of this model is offering an immediate discharge of public budgets, thus it is very suitable for public administrations. The following two figures illustrate the idea and actor relationships of the ESP-model.

Fig. 1 Idea of EPC – Participation Model

Fig. 2 Energy Performance Contractual relationships and financial flows, general scheme based on credit financing through ESCO.

Best practices of buildings and building pools

Case study 1: Pool 17 Germany's largest prison, JVA Tegel and Siemens

This Energy Saving Partnership (ESP) was the first between Siemens Building Technologies and one of Berlin’s prisons (1,700 prisoners). The contract came into effect in April 2004 and has a term of 12 years. On average, it guarantees annual savings in energy costs of about € 600,000, reducing costs in relation to the baseline by one-third. The annual reduction of CO2 is 4,686 t. Main investments in that Pool were the installation of CHP, the hydraulic adjustment of heating components to achieve adapted supply and the substitution of thermostatic valves. Further measures were targeted at reducing the use of drinking water and the modernisation of lighting.

Annual CO2 reductions: 4,680 tonnes CO2 per year

Annual Financial Savings: € 600,000, 33 per cent cost reduction for investment of € 2.7 m

Case study 2: Pool 19 ‘Steglitz-Zehlendorf II’

Energy Saving Partnership (ESP) ‘Steglitz-Zehlendorf II’ was contracted in June 2005 between the Council of the Berlin Borough ‘Steglitz-Zehlendorf» and a joint venture of ESCOs. The contract has a term of 14 years. With regard to the number of buildings and related area, it is one of the largest ESP until today: The buildings of 69 schools, kindergartens, libraries, sport and other social facilities are participating in that ESP. The contract guarantees annual savings in energy costs of about € 540,000, reducing costs in relation to the baseline by 29 per cent. The focus is on the modernisation of components for electricity and heat supply (e.g. hydraulic adjustment of heating components to achieve adapted supply, substitution of thermostatic valves and condensing boilers). The measures included a substitution from oil to gas and the use of solar thermal systems. The annual reduction of CO2, which is achieved by related investments in the amount of € 2.9 million, is 3,973 tonnes.

Annual CO2 reductions: 3,973 tonnes CO2 per year

Annual Financial Savings: € 540,000, 29 per cent cost reduction for investment of € 2.9 million.

Summary

Energy Saving Partnerships are effective because:

• savings are guaranteed by contract,
• energy efficiency investments in large building complexes are encouraged through building pools,
• investment is refinanced through energy savings,
• building owner participate in the saved costs,
• strong legal framework for tenders and local firms supports model implementation.

The success of the Berlin ESP can be attributed to

• communication and smooth interaction
• political will
• transparent procedures
• financial and political support of the Senate Administration of Berlin,
• transparent procedures,
• enforceable standards and
• independent experts.