Transcript ｽﾗｲﾄﾞ ﾀｲﾄﾙなし

Promoting Performance
Contracts in Japan
– Cases Review –
Jyukankyo Research Institute
Hidetoshi Nakagami
President,Jyukankyo Research Institute Inc.
October 31,2001
1
Table of the Contents
1. Introduction
2. ESCO business climate in Japan
3. Implementation of ESCO projects at
municipalities
4. ESCO project at Osaka Prefecture
---The first full-fledged ESCO case at
municipality in Japan---
5. Conclusion
2
Table of the Contents
1. Introduction
2. ESCO business climate in Japan
3.
Implementation
of
ESCO
projects
at
municipalities
4. ESCO project at Osaka Prefecture
---The first full-fledged ESCO
municipality in Japan--5. Conclusion
3
case
at
The Latest Energy Policy for the Longterm Energy Demand in Japan
(1) Prospect of the Final Energy Demand and CO2
Emissions (May, 2001)
(2) Breakdown of GHGs Reduction Target at
COP3
(3) GDP Elasticity of the Final Energy Demand
(4) The Government Proposed Measures for 2010
Energy-Saving Target (July, 2001)
4
(1) Prospect of the Final Energy Demand
and CO2 Emissions (May, 2001)
(M illion kl/t-C )
500
459
450
409
400
402
FinalEnergy D em and
349
350
A pprox.
313
300
402
287
250
BAU
C urrent
M easures
A dditional
M easures
350 B A U
307
C urrent
M easures
292
A dditional
M easures
Target level
C O 2 Em issions
200
1980
5
1985
1990
1995
1999
2010
(Fiscalyear)
(2) Breakdown of GHGs Reduction
Target at COP3
（
％）
25
〈E ne rg y O rie nte d 〉
20
E ne rgy orie nte d
(2010/1999) ：
15
A pprox. 10 ％
10
E ne rgy orie nte d
0
-5
-10
-15
-20
-25
6
６％ reduction
5
C F C s s u b s titu te
：
2％
(1999/1990) ：
A pprox. 10 ％
C O 2 a b s o r p tio n b y
fo res t：
▲ 3.7％
J I & E m is s io n s
tr a d in g
：
▲1 . 8 ％
T e c h n o lo g y
in n o v a tio n ：
▲2 ％
R eduction of
m etane,N 2O ,etc：
▲0.5％
E n e r g y s a v in g s
R e n e w a b le e n e r g y
N u c le a r p o w e r
( 2 0 1 0 /1 9 9 0 ) ：
Ap p r o x .
▲2 0 ％
(3) GDP Elasticity of the Final Energy
Demand
7
Final Energy Demand
annual growth ratio (%)
GDP annual
growth ratio
(%)
Elasticity
73/80
-0.04
3.5
-0.01
80/90
2.0
4.1
0.50
90/99
1.6
1.1
1.40
99/10
0.15
2.0
0.08
99/10
0.00
2.0
0.00
(4) The Government Proposed Measures for
2010 Energy-Saving Target (July, 2001)
Management of Traffic System
(TDM , ITS)
Inter-Sector
1%
17%
36%
Transport Sector
Technology Development
of Electric Vehicle
10%
Promotion of Clean-Energy
Automobile 3%
8%
Strengthen of Standard
for Appliances
Industrial Sector
30% 57Million kl
Commercial and
Residential Sector
15%
Strengthen of Standard
for Factory
36%
33%
10%
Top-Runner Approach
Strengthen of Standard
for Housing
8
Prospect for the ESCO as One of the Energy
Conservation Measures (at Office Buildings)
BEMS
Measures for
office building
ESCO
Regulatory action
Energy Cost Savings by
every conservation
Savings
Customer
Profits
Customer
ESCO
Servic
e charge
Energy cost
Energy cost
9
ESCO guarantees energy
savings at fixed rate
Customer
Guarantee
ESCO
• The steep increase in
energy consumption will
be expected in the
Commercial sector.
• Promotion of an Building
Energy Management
System (BEMS) with IT
technology
• Preparing circumstances
to promote ESCO
projects
• Strengthening expansion
of the regulatory action
for Office buildings.
Table of the Contents
1. Introduction
2. ESCO business climate in Japan
3. Implementation of ESCO projects at municipalities
4. ESCO project at Osaka Prefecture
---The first full-fledged ESCO case at municipality in
Japan--5. Conclusion
10
Situation of Entry into the ESCO
Business (Member Companies of JAESCO)
C onstruction w ith Perform ance C ontract
C onstruction for Energy Savings
Number of Constractions
450
400
120
350
300
250
200
104
286
150
100
54
50
57
0
1998
126
1999
2000
(Fiscal Year)
11
Recognition of the ESCO Business
(among medium-size Factories)
Q : D o you know the ESC O business?
No
response
3%
No
45%
Yes
52%
(n=177)
12
Development of the ESCO Performance
and its Outlook (Member Companies of Jaesco)
R esidentialand com m ercialsector
Industrialsector
Order Volume（million yen）
45,000
40,000
35,000
25,856
30,000
25,000
19,304
20,000
14,299
15,000
10,000
2,849
4,296
1,409
11,237
5,000
0
1,416
1998
2,807
1999
14,150
18,905
3,990
2000
2001
2002
2003
(Fiscal Year)
13
Table of the Contents
1. Introduction
2. ESCO business climate in Japan
3. Implementation of ESCO
projects at municipalities
4. ESCO project at Osaka Prefecture
---The first full-fledged ESCO
municipality in Japan--5. Conclusion
14
case
at
Recognition of the ESCO Business
among Municipalities (March, 2001)
Q :H ow m uch do you know about the ESC O business?
N o response
2%
K now w ell
7%
H ave heard
30%
D on't know
61%
(n=1477)
15 Source: Survey by Ministry of Public Management, Home Affairs, Posts and Telecommunications
Recognition of the ESCO Business
among Municipalities (1999-2000)
Q : H ow m uch do you know about the E S C O business?
（n= ）
Know well
Year of 1999
2%
Year of 2000
7%
Have heard
22%
No response
0.6%3,071
75%
30%
1,477
61%
1.9%
75%
Prefectures
19%
Cities = 200,000 - 1,000,000
44%
12%
6%
36
14%
86%
12-major cities
Cities = 50,000 - 200,000
Don't know
35%
40%
21%
47%
7
75
1.0%207
Cities < 50,000
2%
34%
63%
1.0% 98
Towns & Villages > 20,000
3%
34%
61%
2.1% 141
Towns & Villages = 10,000 - 20,000
Towns & Villages < 10,000
1% 23%
1%
28%
74%
69%
1.7%300
2.2% 600
0%
20%
40%
60%
80%
100%
16 Source: Survey by Ministry of Public Management, Home Affairs, Posts and Telecommunications
Prospect of ESCO implementation at
Municipalities
Q : W hat is the possiblity to im plem ent E S C O to your m anicipal facilities?
Possible
Possible with careful consideration
Year of 2000
6%
Prefectures
28%
12-major cities
14%
Cities = 200,000 - 1,000,000
12%
No response （n= ）
Others
51%
25%
42%
1,477
5% 11%
17%
36
11% 6%
7
86%
51%
Cities = 50,000 - 200,000
7%
37%
Cities < 50,000
8%
34%
Towns & Villages > 20,000
5%
Towns & Villages = 10,000 - 20,000
2%
25%
Towns & Villages < 10,000
5%
21%
0%
Difficult
9%
41%
40%
28%
20%
25%
47%
55%
5% 10%
60%
207
98
2% 16%
6%
6%
61%
40%
75
3%
80%
14%
141
12%
300
4% 10%
600
100%
17 Source: Survey by Ministry of Public Management, Home Affairs, Posts and Telecommunications
Table of the Contents
1. Introduction
2. ESCO business climate in Japan
3. Implementation of ESCO projects at municipalities
4. ESCO project at Osaka Prefecture
---The first full-fledged ESCO case at
municipality in Japan--5. Conclusion
18
Location of Osaka Prefecture
Osaka Prefecture
JAPAN
19
Structure for Implementation of
the ESCO Project
Osaka Prefecture
Public Building
Division
Research
Consignment
Consulting
Jyukankyo Research
Institute
(co-work with Osaka Public Building Division)
Adjustment among
related divisions
- Energy Audit
- Settlement of the legal barriers
- Setting the policy line for the ESCO project
Section
Originating
Request
Medical
Center
Division
- Making the Request for Proposals
- Setting the timeline for the RFPs
- Establishment of the evaluation standards
- Making general outline of the ESCO contract
- Supporting other variety of municipal work
20
Objects of the Energy Audits
(1) Hospital A:
Osaka Medical Center and Research Institute for Maternal
and Child Health
Total Floor Space：６７，９３０㎡
(2) Hospital B:
Osaka Prefectural Rehabilitation Center
Total Floor Space：１４，６２７㎡
(3) Market A:
Osaka Prefectural Central Wholesale Market
21
Total Floor Space ： ４５，１１２㎡
Results of the Energy Audits
206,812
H ospital A
Before
After
173,968
30,684
H ospital B
26,247
Energy Savings
14.5％
Energy Savings
15.9％
Energy Savings
1.6％
203,356
M arket A
200,188
0
22
50,000
100,000
150,000
200,000
(G J/Y ear)
250,000
Settlement of the Legal Barriers
Problems to be Solved:
(1) Characterization of the ESCO Project
(2) Approval of Long-term Debt Contract
(3) Interpretation of Installment Plan and Hidden
Bond Issues
(4) Permission to Use Administrative Property
(5) Locus of Operational Management Responsibility
(6) Method to Select the ESCO
23
(1) Characterization of the ESCO
Project at Osaka Prefecture
Result of the Consideration:
ESCO project is
- Comprehensive tailor-make contract,
- Particular contract model.
It is interpreted as a procurement of Specific
Services on behalf of Energy Saving Services.
24
(2) Approval of Long-term Debt
Contract for the ESCO Project
Result of the Consideration:
ESCO projects:
- Long-term contract (10-15 years).
- During the term of contract, the municipal entity
needs to pay for the ESCO services every year.
Under Article 214 of the Local Authority Law,
local municipal entity needs Approval of Longterm Debt Contract at Local Assembly.
25
(3) -1 Interpretation of Installment
Plan and Hidden Bond Issues
Result of the Consideration:
Under Municipal guidance on application of debt:
- Municipal entities should pay for its procurement within
a purchased year from the prepared budget.
- Inappropriate extension of the payment term could be
illegal and called “hidden bond.”
- However, there are certain types of goods and services
that could be procured.
26
(3) -2 Interpretation of Installment
Plan and Hidden Bond Issues
Result of the Consideration:
Under the present circumstances:
- Only limited amount of debt to be issued each year.
- Hard to utilize the debt for such ESCO projects.
- However, Osaka prefecture successfully interpreted ESCO
project as a procurement of ESCO services, which will be
provided under a comprehensive tailor-make contract,
including design & construction and guarantee for energy
savings
27
(4) -1 Permission to Use Administrative
Property
Result of the Consideration:
Shared Savings Contract scheme:
- During the contract term, all ESCO equipment is owned
by the ESCO
- This means that private company’s property is placed in
the municipal site.
- Needs for The ESCO to apply for permission to use
administrative property and pay the use fee for it.
- Possibility of reduction or exemption for the fee, though,
it needs to be given more consideration.
28
(4) -2 Permission to Use Administrative
Property (continued from previous
page)
Reference of the Consideration:
* Article 238-4 of the Local Autonomy Law:
*
*
*
*
29
management and disposition of the administrative property
Article 225 of the Local Autonomy Law: Use fees
Municipal Ordinances on behalf of reduction and exemption of
the fees for the use of administrative property
Municipal Regulations on behalf of the standards for the
reduction and exemption of the fees for the use of
administrative property
Legislation Supporting PFI (PFI=private finance initiative)
(5) Locus of Operational Management
Responsibility
Result of the Consideration:
ESCO Service :
- Operation and maintenance of the facility,
Municipality :
- Employees are responsible for management of the
buildings.
- Municipalities are unlikely to let private companies be
completely responsible for the public facilities.
Municipality : The existing equipment
30
ESCO
: The newly installed ESCO equipment.
(6) -1 Method to Select the ESCO
Two Options:
The cost and the energy saving effect depends on each
ESCO’s proposals and low-budget proposal would not
necessarily bring the best benefit for the municipal entity.
Applying general competitive bidding for the ESCOs is
inappropriate. Among other ways of supplier selection, two
types could be considered to apply for the ESCO projects
at municipalities; (1) competitive bidding system with
comprehensive evaluation, and (2) proposal method and
negotiated contract.
31
(6) -2 Method to Select the ESCO
(continued from the previous page)
Option A: Competitive Bidding System with
Comprehensive Evaluation
The enforcement order under Local Autonomy Law (*1)
allows competitive bidding system with comprehensive
evaluation. However, this selection method is only applied
within the limits of the estimated price for contract, and the
municipal entity needs to specify the detail of the project
beforehand at certain degree.
This method is inappropriate to have ESCO proposals with
ingenuity and uniqueness. (*1: Article 167-10-2)
32
(6) -3 Method to Select the ESCO
(continued from the previous page)
Option B: Proposal Method and Negotiated
Contract
This system is to invite public participation for the ESCO
proposals without any prior specification of the detail by the
municipal entity. Among the participation, the municipal
entity may enter into a private contract with the best ESCO
based on the objective evaluation applied to the submitted
design proposals.
Compared with other supplier selection methods, this one
could be the most appropriate ordering system, which enable
procurement of flexible and effective ESCO proposal.
Problem with this method. (TO (6)-4)
33
(6) -4 Method to Select the ESCO
(continued from the previous page)
Problem with Proposal Method and Negotiated
Contract:
Even though the Proposal Method and Negotiated Contract
seems appropriate, there remains an issue with giving a
reason of the private contract. Local Autonomy Law and
Accounts Law limit to exclusive cases to be able to apply this
method. Such exclusive cases are;(1) competition is not
effective according to the nature and the aim of the contract,
(2) there is an urgent needs for the procurement, (3) there is
no participants, (4) winning bidder doesn’t enter into the
contract, etc….
34
(6) -5 Method to Select the ESCO
(continued from the previous page)
Result of the Consideration:
Osaka Prefecture adopted Proposal Method and Negotiated
Contract with a careful consideration, giving a reason of
the procurement of ESCO services, which require special
skills and track down the supplier, according to the
Exceptional Government Ordinance(*1) .
(*1: Article 10-1-1)
35
Policy Line of the ESCO Project at
Osaka Prefecture
G eneral O utline of the ES C O C ontract
C haracterization
C ontract T ype
C ontract T erm
C ontract M ethod
R easoning
P roposal C ost
Estim ated P rice
O bjects
C onstruction C ost
G uarantee
G urantee P eriod
G uranteed S cope
M &V
S ubsidy
Q ualification
S election S ystem
Evaluation
S tandard
Evaluation Item s
36
ES C O project as new ordering system for constructions
S hared S avings C ontract
Long-T erm D ebt C ontract
P roposal M ethod and N egotiated C ontract
A ccording to an Exceptional G overnm ent O rdinance
A pplicants bear the proposal expense
B ased on the best proposal, according to the inside rule
D epend on the ES C O proposal
A pprox. \500 m illion (w ith C ongressional approval)
G urantee for the energy savings
U p to 15 years
A pprox. 80-90% of achieved energy savings
A pply M & V
R egarding S ubsidy from ＮＥＤＯ(*1)
S creen the applicants by original requisite standard
S et up a com m ittee com posed of m unicipal staff and
academ ic experts
D evelop original evaluation standard co-w ork w ith a
consultant
G ive special im portance to P rofitability, Energy Efficiency.
(P oint S ystem ) Interview m ay be set up, if it is needed.
*1: N ew Energy and Industrial T echnology D evelopm ent O rganization
Timeline from RFPs to Conclusion of
the Contract
P ressrelease & N otification
Distribution of RFPs &
Materials
Selection and Announcement
of the Best and a few of
High-graded Proposals
Congressional
Approval
Receiving Questions
Briefing & Distribution
of Response Paper
Receiving Participatory
Intention & Qualification
Documents
Solicitation for Proposals
for the Qualified ESCOs
Distribution of Plans
Site Visit (Energy Audit)
37
Receiving Proposals
《N O 》
《Y E S 》
Suspension of
the Project
Final Selection of the
Contractor
《N O 》
Detail Design & Final
Contract Negotiation
《YES》
Conclusion of the ESCO
Contract
Design & Care of Works
Evaluation of the ESCO Proposals (the Real One)
Evaluation Item
① G reater A nnualP rofit for the M unicipality during the
C ontract Term
② G reater TotalP rofit for 15 Years　(*1)
③ S pecifics and V alidity of the ES C O P roposal
④M ore than 10% of Energy S aving R ate for Total
⑤ G reater Effect on C O 2 R eduction
⑥ G reater Effect on Environm entalIm provem ent
⑦ G reater A m ount of the G uaranteed Energy S avings
⑧ FinancialC redibility and A bility to A ccess Long-term
Financing
⑨ U niqueness and U nusualTechnicalK now -how in the
ES C O P roposal
⑩ C onsideration on U pgrade of the Existing Equipm ent
⑪ S pecifics and V alidity on P roposals for O peration and
M aintenance of the ES C O Equipm ent and M &V
⑫ C redibility and A bility on C are of W orks and P unctual
D elivery
⑬ S horter C ontract Term
⑭ P roposalon the P ossibility of U sing S ubsidy
⑮ P roposalon P ossible P erform ance after the
Term ination of C ontract
⑯ W ell-balanced in O verallES C O P roposal
P oint R ating P oint
C oeffcien
t
1　～　5
5
1　～　5
1　～　5
1　～　5
1　～　5
1　～　5
1　～　5
5
4
4
2
2
4
1　～　5
4
1　～　5
1
1　～　5
1
1　～　5
2
1　～　5
1
1　～　5
1　～　5
2
2
1　～　5
1
1　～　5
5
Total
R em arks
TO TA L　S C O R E　(　225　)
38
(*1)　N o m atter w hat the contract term s each participants suggests,this category caliculates the totalprofit of the project for 15 yeas.The
term "TotalP rofit for 15 Years" here m eans "TotalEnergy Sasvings for 15 Years" m inus "TotalESC O Service Fees during the C ontract
Term ."
Evaluation Items for ESCO Proposals
- Past Performance on Other ESCO Projects
- Greater Annual Profit for the Municipality during the Contract
Term
- Greater Total Profit for 15 Years
- More than 10% of Energy Saving Rate for Total
- Greater Effect on CO2 Reduction and Environmental
Improvement
- Greater Amount of the Guaranteed Energy Savings
- Financial Credibility and Ability to Access Long-term
Financing
- Shorter Contract Term
39
Payment Condition
In C ase of P rojected P erform ance has not been
A chieved
C apital
Energy Cost
R egular
P aym ent
P aym ent in
the case of
S hortfall in
S avings
(A )
Energy Cost
Interest R ate
E S C O service
charge for such
year　=　(A - D )
Realized
Savings
E S C O P rofit
Guaranteed
Savings
ESCO Service
Charge
40
M unicipal P rofit(C )
Energy Cost
Energy Cost （Baseline）
B efore E S C O
Im plem entation
Expected Savings
(B )
S U R P LU S
D ischarge and
P enalty for N o
S avings or
S urplus
ESCO Service Charge for Such Year would not be
Paid
S H O R T FA LL
(A xM unicipal profit
rate(C /B ))=(Ｄ）
Table of the Contents
1. Introduction
2. ESCO business climate in Japan
3. Implementation of ESCO projects at
municipalities
4. ESCO project at Osaka Prefecture
---The first full-fledged ESCO case at
municipality in Japan---
5. Conclusion
41
Operational Issues
- Adjustment among the interests of the various related
departments and agencies within the municipal entity
- Increase in overall project cost due to procedure for
permission to use administrative property and the use fee
- No consideration for consigning operation and
maintenance of the existing equipment to the ESCO
- No authorization for operation manual for the existing
equipment provided by the ESCO
- Lack of incentives for the ESCO to achieve more Energy
Savings due to absence of the Bonus clause
- Preferential treatment for the local companies
42
Task for the Future
To encourage further implementation of ESCO
projects at Municipal entities, such problems below
need to be solved:
- Further study for the procedure based on the
Legislation Supporting PFI
- Problem solving of the needs for identifying
quotation of the project cost in advance
- Reduction or Exemption measures for the fee to use
administrative property
- Simplification of the process of RFPs
43