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Report

Teaser, summary, work performed and final results

Periodic Reporting for period 1 - NOVICE (New Buildings Energy Renovation Business Models incorporating dual energy services)

Teaser

Summary

The aim of the NOVICE project is to develop and demonstrate an innovative business model for Energy Services Companies (ESCOs) that will provide energy savings to buildings and demand response (DR) services to the grid after renovating buildings or blocks of buildings. This will enable a dual revenue stream that can reduce the payback period for investments in building renovations and accelerate the much needed market uptake of the Energy Performance Contract (EPC) financing model. In order to achieve this NOVICE introduces new actors (aggregators) into building energy upgrade projects and enables their collaboration with ESCOs, financing institutions, facilities management companies and engineering consultants. By adopting the NOVICE business model, ESCOs and Aggregators can jointly tackle the energy efficiency, demand response and onsite generation market. This seamless collaboration allows them to exploit the economies of scope and scale whilst diluting the risk associated with implementing building energy renovations.

The deployment and rollout of the NOVICE business model will increase capital investment in building renovations resulting in higher penetration of Energy Efficiency (EE) upgrades and faster roll out of demand response services. It is anticipated that a global investment of $10 Billion will be made in the energy value chain for demand response programs by 2020. This investment would both incentivise consumers to actively participate in demand response whilst also contributing to energy efficiency. At the same time, the revenue of ESCOs in Europe is forecast to grow very moderately from $2.7 billion in 2015 to $3.1 billion in 2024. NOVICEâ€™s ambition is to provide the mechanism for a significant share of the DR market to be used in the renovation of European tertiary buildings through ESCOs. The main specific objectives of NOVICE for the realisation of that ambition are to:

â€¢ Engage and train new actors and stakeholders (aggregators, ESCOs, technology providers, FMs, engineering consultants) to implement the proposed augmented building renovation process
â€¢ Address regulatory, market, technological and financial barriers to the implementation of dual energy services business model in building renovation
â€¢ Prescribe the building energy renovation technologies that increase both demand response flexibility and energy efficiency of participating buildings
â€¢ Develop an innovative business model and a new Energy Performance Contracting template for providing dual energy services.

Work performed

The first 18 months of the project have allowed the NOVICE project team to develop a deep understanding of the market conditions that are required to implement the proposed business model, the types of building in which the NOVICE model could be deployed and the combinations of technology solutions that could be deployed according to the HVAC systems commonly found in buildings. In WP2 a series of technology kits was developed that can be used by building owners/managers to identify the particular combination of energy efficiency and demand response technologies that are suitable for their building based on the existing HVAC and other building systems installed. Both implicit and explicit demand response scenarios were considered, the cost of installation of each of the technologies was estimated where possible and the comfort standards and control techniques that can be used to ensure thermal comfort of building users were all investigated.

In WP3 a survey of ESCOs and aggregators was carried out to determine the current status of the EPC and demand response markets. Detailed literature reviews supplemented the survey results and captured in detail the status of the EPC and demand side response markets in nine different European countries. Following this initial market review, a SWOT analysis was undertaken to identify the Strengths and Weaknesses of the NOVICE model in each market and the Opportunities and Threats that each market presents to NOVICE. The process was augmented by considering the SWOTs from the point of view of each key market actor in the NOVICE model (ESCOs, aggregators, finance providers, building owners, and facilities managers). Our research highlighted key policy differences between countries and allowed a series of key recommendations and guidelines for policy makers to be developed that will enhance uptake of the NOVICE model.

WP4 began with a survey of building owners to determine the level of consideration that has already been given to dual energy services and to identify any potential barriers and gaps in knowledge of end users that may prevent deployment of the NOVICE model. WP4 has also examined typical EPC and aggregator contracts to determine how they could be combined into an enhanced EPC that covers both energy efficiency and demand response services. An example of an enhanced EPC template has been developed and can be used as initial text for discussion between parties wishing to implement the NOVICE business model.

WP5 identified the main building types that would be most suitable for the deployment of NOVICE and their key characteristics in terms of size, end use, technical features and systems. 3 building archetypes were selected (large hotels, hospitals and large supermarkets) as they represent commonly found building types across Europe with high potential for energy efficiency upgrades and good suitability for deployment of demand response services. An energy model (using EnergyPlus) will be used to set up a dynamic building energy model of each archetype for a range of realistic scenarios representing the deployment of combinations of energy efficiency and demand response measures.

The first NOVICE demonstration activities have taken place at 3 leisure centers in Dublin, Ireland. The demand response market in Ireland is currently closed to new entrants until October 2019 so a demand response simulation event was held to understand the maximum turn down capacity that is available at the site and the impact that such an event could have on thermal comfort of building users. The initial results show potential to achieve modest turn down at the two largest leisure centers with little impact on the thermal comfort of building occupants.

Final results

Energy performance contracting has been used as a method of financing deep energy retrofit projects for a number of years in both the public and private sectors. A state-of-the-art EPC is currently one that offers the client a holistic package of energy efficiency and/or energy generation measures at no upfront cost, taking into account the characteristics of the building and the requirements of the building users. The initial finance is repaid through the savings on energy bills and/or reduction in maintenance costs. The NOVICE project aims to go beyond state-of-the-art by developing an enhanced template for energy performance contracting that incorporates both demand response and energy efficiency measures into the same contract. From the clientâ€™s perspective this is advantageous as it transfers any risk associated with both services to the ESCO and reduces the administrative burden as only one contract is needed to cover both revenue streams. It is expected that by the end of the project the NOVICE approach will be demonstrated as the new state-of-the-art for EPCs in countries with mature EPC and DR markets.