September 3, 2013
ManagEnergy caught up with Claudia Carani of the Modena Energy Agency (AESS) at its recent capacity building workshop in Sardinia where she described recent developments in the municipality’s €54 million ELENA-funded energy efficiency project.
The city council of Modena joined the Covenant of Mayors in January 2010. The city developed a Sustainable Energy Action Plan of the Municipality of Modena with the support of come2CoM. The strategic document included input from different stakeholders, public and private, to achieve the commitment of the Covenant of Mayors to reduce the CO2 emissions by 20% in 2020.
To convert the Covenant of Mayors commitment from targets into concrete actions, the municipality of Modena had to look for alternative financing solutions. The internal stability pact, limiting increases in public budgets has put Italian municipalities under financial stress. On top of this there is little potential for loans and investments within Italy.
Energy Performance Contracting (EPC) offered the municipality of Modena a solution to financing. An EPC is a performance-based procurement method and financial mechanism for building renovation. Utility bill savings result from the installation of new building systems thereby reducing energy use and paying for the cost of the building renovation. A “Guaranteed Energy Savings” Performance Contract obliges the contractor, a qualified Energy Services Company (ESCO), to pay the difference if at any time the savings fall short of the guarantee.
To finance the project Modena AESS applied for ELENA funding to support Local Authorities in the Province of Modena. The energy efficiency projects included installation of PV plants on publicly owned roof tops, retrofitting of public buildings to improve the energy performance and improving street lighting within a number of municipalities in the Province of Modena. The project value is €54 million and will be completed by August 2014.
The project targets are:
- Energy savings: 17,200 MWh
- Energy produced by renewable sources: 12,200 MWh
- CO2 saved: 9,900 tCO2/y
Is this project replicable? What needs to be in place in municipalities for a project like this to be successful?
The project is replicable. Scale of projects is a major barrier for energy agencies and local authorities. ELENA expects investments of at least €30 million in energy efficiency and renewable projects. This means that small local authorities must partner with others in order to achieve the size of project and scale of investment required.
What recommendations do you have for other agencies thinking about seeking ELENA funding?
Energy agencies should identify a contracting authority at provincial level to simplify the procedure of applying for ELENA funding. Energy agencies play an important role in finding projects at regional level, they also tend to have project management experience at European level, as such they are best placed to apply for ELENA funding. If energy agencies can share project risks with local authorities through, for example, providing up to or over 10% co-financing and assisting with project implementation, 2020 goals will be achieved. More….
What benefits have you seen so far? How many public buildings have seen improvements in energy efficiency? How many public buildings have PV on roofs?
The following table shows the interim results:
What were the most important challenges?
The most important challenges:
- Difficulties within the Local Administration in ELENA management and in understanding the real potential of EPC contacts;
- The existence of long running contracts for buildings and public lighting with energy management companies, these deadlines date long after the project
deadline of 2014;
- New national Italian laws which require Municipalities to adhere to national-regional contracting authorities (CONSIP/ Intercent-ER) for goods and
- Earthquake events destroyed half of the Provincial territory in May 2012;
- Feed-in tariffs (ContoEnergia) for PV plants are frozen.
|What finance model was used?|
|PV Roofs:||A portion of the roofs on Municipal buildings were assigned for the use of PV. PV systems were supplied through a leasing procedure with
the ESCO. A works contract was drawn up for installing PV systems in public buildings.
|A works contract for installing solar thermal systems for production of DHW in public buildings was drawn up with the ESCO to include
energy supply, operations and maintenance services and the upgrading of heating systems in public buildings.
|Street Lighting:||For the Street Lighting service, including investments on energy efficiency, the ESCO guaranteed a minimum energy performance which was
assigned by a project financing procedure. The ESCO also guaranteed energy performance for the management of public lighting plants and
traffic lights plants.
Benefits that were not foreseen by Modena were the increased local capacity within Local Authorities, where ELENA calls were developed and improved networking of knowledge. Interest increased and attitudes changed towards the EPC call for tender and EPC contract management within Local Authorities. The replication potential of this project for other municipalities is considered high, particularly in Italy. In addition, the use of ESCOs under a performance contracting scheme is a replication of experiences in other EU member states.ManagEnergy Team