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Best practice: The goose that lays the golden egg

    Selina Roskam
    • Public
    • 12
    By Selina Roskam in the group EPC developments 629 days ago

    Summary

    Best practice on Energy performance contracting at Witte Dame in Eindhoven by Ovvia

    • De Witte Dame
    • Interviewee: Jan van Hout, director of OVVIA

     

    The De Witte Dame Rijksmonument was struggling with enormous energy bills. The new owner realised that this posed a threat to the health of the financial operation of the building. He was keen to move from a red label to label A. At the same time the tenant, Fontys University of Applied Sciences, was making demands in relation to the air quality that would actually lead to even higher energy costs. The solution lay in replacing the existing energy-guzzling systems. The question of who would pay such a replacement threatened to throw a spanner in the works. Fortunately, the ESCO formula offered a solution. OVVIA financed the operation, in which the owner and the users share the proceeds.

    The whole is more than the sum of its parts

    The needs of the commissioning party and the users were the starting point of the search for a smart solution. Jan van Hout, director of van OVVIA, explains, “The wish to reduce costs and the wish for more fresh air ran counter to each other in the original situation. For us, it was an opportunity. The only way of resolving the dilemma was to optimise the whole system rather than one single component. We proposed the installation of a highly energy-efficient ventilation system, combined with heat pumps. And that is exactly what we have succeeded in doing.”

    Everyone wins

    What aspects of this project are you proud of? Jan replies, “The parties involved were unable to agree on how the costs and revenues were to be distributed. That is a common occurrence. That’s a shame, because the parties then decide on what may be the least costly solution at the time, but which means spending money like water for the next fifteen years. What a waste! That is why we said that we would pay for the equipment, so it would cost nothing extra. By using an ESCO, we have saved the goose that lays the golden egg. I am proud that we managed to alter the process - that we reached a solution through dialogue. We can now share the benefits together. We are already saving 34% CO2; the requirement was a saving of at least 25%. And there is more. We have tackled the air treatment, the control technology and heat generation, and we are also going to make the supply of cooling sustainable. We will be sharing the yield with the owner and the users. Everyone’s a winner, so everyone is happy.”

    Fear is a bad adviser

    The guarantees on the energy performance and the indoor climate are laid down in an energy performance contract. This enables the operator of De Witte Dame to provide the tenants with the best-possible climate control, without any unexpected costs. That sounds ideal, so why are projects of this kind not more commonplace? Jan says, “I have noticed that there is often a fear about outsourcing where performance contracts are involved. People are used to working with specifications in which everything is laid down and fixed. The tendering process for a performance contract is completely different. It contains functional requirements, but the contractor is free to devise the technical solution himself. There is still not enough experience with contracts of this kind. The government could change that by taking a lead. In practice, though, it is parties in the private sector that have a big lead in this area.”

    Too good to be true

    What other obstacles are there? Jan says, “Once I have explained it, people see the benefits. But there is also some scepticism. Commissioning parties have their doubts about our calculations on the savings that could be made. ‘That’s not right, surely?’ is a commonly heard reaction. If I then offer to pay for the investment myself and to supply according to performance guarantees, they look amazed. That is ‘too good to be true’. However, financing this type of project is our core business, and we are very efficient at it. Through lack of knowledge and the many doubts, local authorities in particular ultimately opt for conventional solutions. That means burdening themselves for another fifteen years.”

    Start with a guarantee of success

    How can you break through this impasse? Jan replies, “I recommend to commissioning parties that they should first gain a clear picture of the property they currently own. Standards of monitoring are often below par. If I ask a local authority to name the twenty buildings out of a hundred that consume the most energy, they are unable to say. I would take a building where you can create a great success, one that the councillor responsible would be really pleased about, with a forecast that you can be certain of success.”

    Bridging the gap between technology and funding

    It is clear that a paradigm shift is needed. Different worlds are coming together and have to understand each other’s language. This process moves more quickly in the private sector than the public one. Jan continues, “At first, when discussing matters with local authorities, I used to speak with the technical employees who were responsible for property and real estate. This rarely resulted in projects being commissioned. I then redirected my attention towards the financial side of local authorities. That did not work either. What you have to do is to bring these two key areas together. And that is what I do now. It gives you a greater chance of success. I now present real-life case histories much earlier on in the process. I take account of the fears that commissioning parties have, and you can deal with them with the help of good examples.”

    No pain, no gain

    There is no point in flogging a dead horse. You have to be prepared to dare. Jan continues, “There is no sense of urgency. It never ceases to amaze me that we waste public money on poor buildings. Not even measures that would generate a return within five years are being implemented, although they are compulsory, as laid down by the Activities (Environmental Management) Decree. Whenever I point this out, the usual response is, ‘we don’t have the necessary budget to invest in this’. But if I finance it, I get my return, and that suits me very well. The ‘net present value’ should be the starting point. No pain, no gain. It’s as simple as that. This different approach is still too little-known. And ignorance breeds intolerance.”

    Use your common sense

    What tips do you have for commissioning parties who are considering an energy performance contract? “Begin small, start with an intervention you were planning anyway. Try to establish connections with partners. Do it together. If you are still not sure, go for a part solution, involving lighting for example. It is smart - pure and simple. You can recoup your investment in a few years.”

    In addition, commissioning parties should look differently at the solutions. Jan says, “I often explain the following situation. Suppose you can invest one hundred euros in sustainability and you can choose one of three areas - lighting, insulation, or solar panels. What would you invest in? The answer I mostly get is ‘solar panels’. Wrong! You first need to tackle the insulation and the lighting. That will cause your energy costs to fall, so you will need fewer solar panels. This solution is much more robust. It is not rocket science - the sums are simple. With integrated solutions based on the Trias Energetica strategy, you can make savings of up to 80%. That helps you stand the test of time, and you are no longer exposed to fluctuations in the price of energy. We are pleased to invest as well, because it is profitable. We have the best of both worlds. Sustainable is always better than conventional!

     


     

    Project details

     

    Name:

    De Witte Dame

    Place:

    Eindhoven

    Building:

    De Witte Dame

    Sector:

    Commercial real estate

    Type: 

    Performance contract for new installations, management, and maintenance

    Date of completion: 

    2014

    Performance contract - involved parties

    Commissioning party:   

    Operators of De Witte Dame

    Contractor:       

    Van Hout Adviseurs en Installateurs

    Financer:                            

    OVVIA

    Features of the performance contract

    To what components does the performance contract relate?

    - ventilation system

    - air treatment

    - heat generation

    - heat pumps

    - CO2 savings

    - energy and indoor climate

    - maintenance and management of all installations

    - control technology

    - cooling

     

    Envisaged annual savings:

    Savings of at least 25% CO2; the actual amount saved is 34%. From label D to label A.

    Contract duration:

    Ten years

    Technical details:

    Combination of heat generation by heat pumps and district heating with heat recovery from air treatment, in combination with effective control technology.

    Contact details for more information

    Company:

    OVVIA

    Name:

    Jan van Hout

    Telephone number:

    +31 (0)40 294 29 26

    E-mail address:

    jan.vanhout@ovvia.nl

    Website:

    www.ovvia.nl

     

     

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