ESCO Capacity Building Seminar by NEDO Dusit Thani Hotel Bangkok Outline of ESCO & How to found ESCO December 17, 2008 Note: This Presentation is made based on public data during the author has been president of FESCO for 10 years. Therefore, please note that it does not show existing business condition in the company. Kenzo Tsutsumi, Founder
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ESCO Capacity Building Seminar by NEDODusit Thani Hotel Bangkok
Outline of ESCO &How to found ESCO
December 17, 2008
Note: This Presentation is made based on public data during the author has been president of FESCO for 10 years. Therefore, please note that it does not show existing business condition in the company.
Note: This Presentation is made based on public data during the author has been president of FESCO for 10 years. Therefore, please note that it does not show existing business condition in the company.
Kenzo Tsutsumi, Founder
Social Change among Energy ConservationUltimate Object of ESCO Business is to Improve Social Inefficiency
Political Current in JapanGlobal Warming Issue → Strengthen to Reduce
CO2 EmissionsRegulation → Concerning the Promotion of Measures
to Cope with Global WarmingDeregulation → Energy DeregulationEnvironmental Ratings → ISO14000
Public Works → To Promote Out-sourcing to Pivate-sector
Enterprise Management → Green Management・Carbon Management
Job Creation → Environmental Business Development
Political Current in JapanGlobal Warming Issue → Strengthen to Reduce
CO2 EmissionsRegulation → Concerning the Promotion of Measures
to Cope with Global WarmingDeregulation → Energy DeregulationEnvironmental Ratings → ISO14000
Public Works → To Promote Out-sourcing to Pivate-sector
Enterprise Management → Green Management・Carbon Management
Job Creation → Environmental Business Development
1
What is the ESCO Business?Feature of ESCO Business: Energy Service Company
• 1.Total Service:Integrated Facility Doctor
Preliminary audit → Detailed Energy Audit→ Management of retrofitting work → M&V
• 2.Performance Service:Guaranteed Energy ConservationGuaranteed by performance contract
• 3.Financial Service:No Initial InvestmentPropose business plan
“with three birds with one stone”
2
Financial Service of ESCOMechanism of three birds with one stone :
To achieve energy conservation・Increase of customer profit・Business formation
Increase ofCustomer Profit
Guarantee
FESCO Service Fee
EnergyConservation
Energy
Cost
Before
ESCO
Energy
Cost
After
ESCO
Audit
Equipment
After Care
Engineering Management
From Reduced
Cost
Reduced Cost
FESCO Service
3
Contract Scheme of ESCO Business (1)Shared Savings Contract
Financial flow of shared savings contract
Performance contractReimbursement
Payment of service fee
Lease/ Loan Contract
Financial InstitutionClient
4
Contract Scheme of ESCO Business (2)Guaranteed Savings Contract
Financial flow of guaranteed savings contract
Financial InstitutionClient
Performance contract
Payment of service fee
Lease/ Loan Contract
Reimbursement
5
Points of ESCO Business and competitiveness
Enhance Engineering AbilityWhat is real engineering?
Deference between “Technology” and “Engineering”Realistic solution finding capability to solve the problem
Engineering ability for ESCOQuick audit ability to solve the problemSolution finding ability with cost performanceAbility to realize with reasonable cost
How to enhance engineering ability?Remove the concept of “Service is Free of charge”Train the engineers who understand ESCO business
What is real engineering?Deference between “Technology” and “Engineering”Realistic solution finding capability to solve the problem
Engineering ability for ESCOQuick audit ability to solve the problemSolution finding ability with cost performanceAbility to realize with reasonable cost
How to enhance engineering ability?Remove the concept of “Service is Free of charge”Train the engineers who understand ESCO business
6
Change of existing paradigm is neededBusiness custom should be changed by ESCO business
Change the “Service Concept”“Is the service free?”Knowledge and know how should be charged
Change relationship with ESCO and clients
“Is the customer always right?”Consider the solution with clients
Change from process to result-oriented“Is matter of understanding equal to matter to perform?”Guaranteed energy conservation amount by ESCO
Change the “Service Concept”“Is the service free?”Knowledge and know how should be charged
Change relationship with ESCO and clients
“Is the customer always right?”Consider the solution with clients
Change from process to result-oriented“Is matter of understanding equal to matter to perform?”Guaranteed energy conservation amount by ESCO
7
How to Found FESCO
8
Tool & methodto achieve the vision
Matters which are decidedby the exectives
Company philosophy/Vision/Basic strategy
Contribution to establish the society with good compatibility between the environment and economic activity
Challenge the integrated environment and energy service company
Basic strategy・business plan
Basic policy to establish mid-term business planIn the newly/differential theme,business field should be expanded
Basic philosophy・Willare basically not changedDNA which is inherited
Client Oriented ESCOOutline of Energy Conservation
Support Service
14
●Shared Savings ESCO Contract
Outline of Energy Conservation Support ServiceOutline of Energy Conservation Support Service①①
Manufacturer of energy conservation equipmentSub-contractor
Fuel Supply Company
Facility Owner
Financial Institution
Client Energy SupplyO&M
Energy Service
Contract
Pay Service Fee
Applied Subsidy(applied with client)
Subsidization
Order Placement to factoryCommission the maintenanceOrder the Fuel
Delivery of equipmentMaintenance ServiceFuel Supply
Maintenance Contract
Fuel Supply Contract
Financial contract(nonrecourse loan)
NEDO・Petroleum
Association of Japan
15
In the client facility, energy audit will be done. Based on the result of the audit, planning of retrofitting and retrofitting work will be done. Introducing high efficient large scale cogeneration system establish energy conservation and CO2 emissions reduction by supplying both electricity and heat to the system. FESCO pay the investment of equipment instead, and operate management after that consistently.
●On-site Business(ESCO for industrial sector)Outline of Energy Conservation Support ServiceOutline of Energy Conservation Support Service②②
supply control systemFinance:FESCO finance and subsidyContract type:Shared savings
Daily electric demand and seasonal steam demand are analyzed. With 3 type of boilers and high efficient diesel engine cogeneration, integrated control system established large amount of energy conservation and cost.
●Seiko EpsonIna Plant
(Fuel Cell)
●Rengo Co., Ltd. Yashio Factory
Case example
16
ESCO Service
●“Super Marugoto”(ESCO for commercial Sector)● Without requiring any initial investment, both energy conservation(CO2
emissions reduction)and reduction of energy cost were established● Comprehensive service from audit, design, retrofit work and M&V● After contract period, all profit by energy conservation attributes to the client.
Efficient show case
Efficient Chiller Efficient AC
water atomizationEfficient Lighting
DemandManagementSystem
Annual energy Conservation301,200kWh/year(▲12.0%)
100 100 100
240 240 240
450 450350
220
0
200
400
600
800
1000
1200
夏季(6.7.8.9月) 中間季(4.5.10.11月) 冬季(12.1.2.3月)
(kwh/日)
運用改善 照明冷凍機 空調機
負荷別削減%
25%
14% 20% 18%
合計削減量:1,000kwh/日122,000kwh/夏季
12.1%Decrease
790kwh/日96,400kwh/夏季
12.6% Decrease
690kwh/日82,800kwh/夏季
10.9% Decrease
1F area 2F area Total
(Food)2,800 (Textile)2,400 5,200
Contract DemandBefore & After
Demand Reduction
Operation Hour Operation year
566→470kW 96kW 9:00~24:00 364日
(㎡including back yard)【Introduction example】
Outline of Energy Conservation Support ServiceOutline of Energy Conservation Support Service③③
Lighting
ACChiller
Management
(kWh/Day)
Summer WinterBetween period
17
Environmental Rehabilitation ESCO
Outline of Green Energy Business
18
●Woody Biomass Power Generation Business
Lumber producer
Gardening Company
Scrapper
Civil engineering
Forestry
Farmer
Waste from local
Intermediate Treatment Company
Fuel Supply Company
Biomass GenerationSubsidiary
Biomassgeneration
facility
Electricity
New Energy RPS Value
Finance
Power Company
PPS etc
Financial Procurement
Fuel Supply
Purchase Fuel
Contract
Capital subscription
Finance
Fuel Processing Facility
Pay fuel fee
Select MaterialChipping Operation Business
investment
Sell Electricity
Sell RPS value
Outline of Green Energy BusinessOutline of Green Energy Business①①
19
●Biomass Generation SubsidiaryOutline of Green Energy BusinessOutline of Green Energy Business②②
Hokkaidou area
Touhoku area
Kantou area
Hokuriku area
Chubu area
Chyugoku area
Shikoku area
Kyushyu areaOkinawa area
関西地区Hida Wood Power Co., Ltd.
Hida-shi, Ooita
12,000KW
November, 06
4,447million\
Shirakawa Wood Power Co., Ltd.
Shirakawa-shi,
Fukushima
11,500KW
Octobet, 06
4,159million\
Iwakuni Wood Power Co., Ltd.
山口県岩国市大字長野字長野尻1805-7
10,000KW(Capacity)
January, 2006Commercial operation)
3,724millin yen(Total investment)
Iwakuni wood power mascot
Center control room
Steam turbine
20
Market trading ESCO
Outline of Retail Sale of Electric Power
21
Outline of Retail Sale of Electric Power BusinessOutline of Retail Sale of Electric Power Business①①
22
●Electric retail sale flow after the dereguration
Power Company
Low voltage power customer
FESCO(PPS:Power Producer and Supplier)
Normal Time
Emergency
Situation
~Power Supply System by PPS ~
Power Company
Use grid ofPower company
×FESCOStop supply
Power Company
supplementary power
FESCO use grid of power company. So when our plant stopped to operate, electricity from power company is supplied to our client with no electric outage.
FESCO(PPS:Power Producer and Supplier)
Low voltage power customer
High voltage & specific high voltage power customer
High voltage & specific high voltage power customer
Outline of Retail Sale of Electric Power BusinessOutline of Retail Sale of Electric Power Business②②●Feature of Electric Retail Sales by FESCO
Base power Middle power Peak power (adjustment)
・Nakssode Green Power(Oct., 2007)・Procure power from
conterpart・Japan Electric Power Exchange(EPX)
・FESCO Power Station Shiga(Feb.,2006)・FESCO Power Station Gunma(Feb., 2006)
1. Supply electricity cheaper than power company2. Without requiring any initial investment for the customer3. Supply integrated solution service with energy conservation and environmental measures.
23
Company HP http://www.fesco.co.jp
Note: This presentation is made to support diffusion of ESCO business. It is made based on public data during the author has been president of FESCO for 10 years. Therefore, please note that it does not show existing business condition in the company.
Note: This presentation is made to support diffusion of ESCO business. It is made based on public data during the author has been president of FESCO for 10 years. Therefore, please note that it does not show existing business condition in the company.