1. Energy Services in The Netherlands
“Energy demand, paradoxically, is not driven by a demand for
energy itself, but rather by a demand for energy services”
Master’s Graduation Presentation by Joost van Barneveld
Current status and how to stimulate development
Steinberger et al., 2009
Supervised by Robert Harmsen (UU), Andrew Satchwell (LBL) and Peter Larsen (LBL)

2. Outline
• Introduction: Context and motivation
• ESCO Basics
• EU and Dutch policy
• Current situation
• US ESCO study
• Conclusion
• Recommendations
2

3. Context
• The EU and thus The
Netherlands face a diminishing
fossil fuel supply and rising
imports
– 7% of EU GDP in 2020 spent on
fuel imports
– Dependency on unstable
suppliers
• GHG Emissions
– EU Commitment to limit
global warming to < 2°C Naturalgasproduction(trillioncubicfeet)
3
EU Net imports, (MTOE)

4. EUEnergy consumption by sector (MTOE)
EU Energy Policy Targets: 20/20/20
• A reduction in EU GHG
emissions of at least 20%
below 1990 levels
• 20% of EU energy
consumption to come from
renewable resources
• A 20% reduction in primary
energy use compared to
projected levels, to be
achieved by improving
energy efficiency
4

5. Why ESCOs ?
• The Built environment consumes 40% of EU TPES
• ESCOs have as core business to reduce energy
consumption in the built environment
• The Dutch ESCO market is underdeveloped
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6. Research Question
• Given that ESCOs can contribute to improving Energy
Efficiency in the built environment, how can the development
of an energy services industry in The Netherlands be
stimulated ?
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7. Playing field
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8. Methodology
• Data sources
– Journals (Energy, Energy Policy, etc.)
– Laws & directives (Eur-Lex, Rijksoverheid)
– Consultancy and statistics offices (IEA, Eurostat, CBS)
– LBL Esco Database
• Analysis
– Barriers, opportunities and incentives
– Focused on existing buildings
• Conclusion
– Based on comparing Dutch and USA analyses
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9. Navigation
• Introduction
• ESCO Basics: How does it work ?
• EU and Dutch policy
• Current situation
• US ESCO study
• Conclusion
• Recommendations
9

10. ESCO Basics
• The ESCO guarantees energy savings that are the result of its services
• The ESCO finances the investments privately, or arranges financing based
on the guaranteed energy savings
• The ESCO’s reward is directly tied to the achieved energy savings
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11. ESCO Basics
• Energy Performance Contracting: For existing buildings only
• Typical contract term: 5 – 10 years
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12. ESCO Basics
• Client benefits:
• One contractor for all
energy related services
• New equipment without
capital requirements
 Client keeps capital
for core business
• Improved comfort, NEBs
• Shared Savings during
contract term
• All savings after contract
expires
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13. Financing and Transaction costs
• Credit acquired by highest rated party
• Transaction costs influenced by
– Financial arrangements, risk division, M&V
• EPC available from € 200 k – € 500 k energy bills
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14. Navigation
• Introduction
• ESCO Basics
• EU and Dutch policy: What’s the plan ?
• Current situation
• US ESCO study
• Conclusion
• Recommendations
14

15. EU Policy
• EU EEP (2007 / 2011): non-binding framework for EU Efficiency policy
– ESCOs mentioned as important tool for EE
– Public authorities lead by example
– Member states required to draft National EEPs
• EPBD (2010/31/EU)
– Minimum standards for new and renovated buildings and buildings
installations
– Minimum requirement: cost effective over the lifetime of the investment
• ESD (2006/32/EC and 2011 draft)
– Energy audits and labels for all buildings
– To be displayed on change of ownership or tenancy
– Focuses on availability of energy consumption information
– National governments should be launching customer for ESCOs
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16. Dutch Policy
• Binding targets for 2020
– 14% renewables
– -16% GHG vs. 2005
– Largely to be achieved by emission trading and EE
• Based on covenants and voluntary agreements
– Housing corporations, installers, construction industry
• Tax deductions for EE and environmental investments
– Reduces investment costs by ~11%
• Targeted technologies
– Combined Heat and Power (CHP) / Warmte-Kracht Koppeling (WKK)
– Thermal Energy Storage (TES) / Warmte-Koude Opslag (WKO)
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17. Dutch Policy
• No solid targets for existing buildings
– new buildings focus seems inappropriate: declining
housing market and 16% vacancy in offices market
– No renovations target
• 56% of EE targets in residences and offices
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40%
16%7%
19%
19%
Origin of NL EEAP 2011 Energy Savings
Residential
Tertiary
Industry/SME
transport
Agriculture

18. Navigation
• Introduction
• ESCO Basics
• EU and Dutch policy
• Current situation: Opportunities and practices
• US ESCO study
• Conclusion
• Recommendations
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19. Current situation and Potential
• Potential annual revenue: € 21 M – € 65 M
• Deliver 2% of NL EE targets in services sector annually
• ES Suppliers focusing on new buildings and CHP, TES
• Virtually no ESCOs present
– < 20 pure ESCOs
– Revenue < € 4 M in 2010
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20. Barriers and Opportunities
• Barriers
– Immaturity of market
• Trust in EPC concept, Unfamiliarity with TCO
• Absence of standards for contracts and financing
– Unstable policy environment
– Limited capital availability
• Opportunities
– Government committed to exemplary role in
building EE and launching customer combined
with large potential
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21. Current situation and Potential
• Government has
jurisdiction over 46% of
potential market
• Good credit rating
• Stable customer
• Single biggest client 16%
13%
9%
35%
17%
6%
4% Education
Healthcare
Retail
Offices (commercial)
Offices (Gvt.)
warehouses
other
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22. State Building Service Plans
• Improve 2 label steps or to
label C
• New buildings highly
efficient
• Rented buildings have
mediocre score
• 16% EE improvement over
total portolio
• Owned/rented = 0.6
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• Energy labels:
– G corresponds to 1970’s
standards
– A nearly energy neutral
– A++: energy generator
>33%

23. State Building Service Practices
• Focuses on partial improvement
– Recommissioning of HVAC equipment (optimisation)
• Uses DBFMO Performance contracting
– Design, Build, Finance, Maintain, Operate
– Most suited for new buildings
– Broad range of services, not primarily focused on EE
– Implemented by ad-hoc consortia
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• Damages ESCO
opportunity:
– Package profitability
declines
– Random parties reduce
options for specialization

24. Navigation
• Introduction
• ESCO Basics
• EU and Dutch policy
• Current situation
• US ESCO study: Is gvt. Focus justified ?
• Conclusion
• Recommendations
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25. USA Lessons
• EE is core business
for ESCOs
• MUSH generates
most revenue
• 84% of revenue from
public investments
• Federal client is
single greatest client
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26. USA Lessons
• FEMP generates
“significant” fraction
of ESCO federal
revenue
• Public investments
responsible for 84%
of all ESCO revenue
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2 4
9
12
15
18
21
24
27
30
0
5
10
15
20
25
30
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
EEImprovement(%)
FEMP Existing buildings EE targets

27. Navigation
• Introduction
• ESCO Basics
• EU and Dutch policy
• Current situation
• US ESCO study
• Conclusion
• Recommendations
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28. Conclusion
• Opportunities in government buildings
• Barriers related to information unavailability and
lack of standards
• Dutch Government:
– Misdirects policy towards new buildings
– Can influence 46% of potential ESCO market
– Comitted to exemplary role and launching customer
• US Escos
– receive 84% of revenue from public investments
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29. Conclusion
Q: How can we stimulate the development of
an energy services industry in The
Netherlands?
A: The Dutch national government should
develop long term consistent policy that
requires building managers under their
direct or indirect jurisdiction to pro-
actively consider having their buildings
serviced by energy service companies.
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30. Navigation
• Introduction
• ESCO Basics
• EU and Dutch policy
• Current situation
• US ESCO study
• Conclusion
• Recommendations
30

31. General Recommendations
• Develop renovation policy and information
availability for existing (public) buildings
– Database with floorspace, building types and
energy performance
• Initiate stakeholder platform
– With the state as client and policy maker
– Financial institutions, ESCOs and contractors
– Disseminate best practices, knowledge, standards
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32. Practical Recommendations
• RGD should
– Reconsider EE ambitions
– Investigate impact of DBFMO practices vs. EPC
– Separate energy contracting from DBFMO
• Alleviates ad-hoc problematic
• Stimulates ESCO development
• Establishes knowledge on EPC
– Valuable for stakeholder platform
– Rollout to lower governments and MUSH
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33. Discussion
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34. • Can you actually compare USA and Dutch
buildings ?
– Energy consumption in MJ/m2 primary in 2008
was 1243 MJ/m2 for the USA commercial sector
and 1238 MJ/m2 for the Dutch
– Data is hard to compare:
• Non-overlapping sectors
• Primary vs. Delivered energy
• Data is hard to get
Discussion
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35. Discussion
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