The identification of the building pools can provide a good solution for the management of property energy issues. The technique involves combining several buildings into a single joint project. It allows economies of scale by reducing the number of contracts and transaction costs. It also increases the negotiation power towards ESCOs to negotiate more interesting financial conditions. Furthermore, bundling building allows the diversification of the risk. Buildings with lower energy saving potential can also to be included with others having higher energy saving potential.
Small municipalities may not have enough buildings to reach a certain energy consumption baseline. It may then be possible to combine with one or several other municipalities which are interested in this project, and make the buildings “suitable” for Energy Performance Contracting (EPC).
There are two ways of pooling buildings:
- Either by mixing buildings of all kinds together (buildings with different sizes, a different levels of profitability, and with different functions),
- Or by gathering buildings of an equivalent function.
In the case of the One Stop Shop RenoWatt in pilot region Liège, the second option was chosen because it requires a limited diversity of competencies since all buildings have the same function. The innovative aspect of the way of pooling buildings consists for the One Stop Shop to gather buildings from distinct public authorities, and to combine large municipalities with small ones.
Identification of the building pools – The way of pooling the buildings is the innovative aspect of the One Stop Shop
The objective of the described actions below (from the energy cadastre to the quick scans) is to have an overview of the buildings to cluster them, depending on their consumption and the level of opportunity for an energy retrofit project. In some cases, a building’s level of dilapidation is such that its renovation would be too expensive. In that case, the building is not taken into account for the building pools.
The pooling of buildings happens in 5 steps:
For the detailed building pools of RenoWatt, See Toolkit One Stop Shop annex 3.
The step-by-step process described below illustrates the importance of conducting the inventories gradually. It saves time and money; it avoids unnecessary work, and allows you to focus only on the buildings that will be taken into account.
STEP 1 – Energy cadastre
Establish an energy cadastre of the buildings. It helps to cut the number of buildings, by eliminating the unprofitable sites.
The role of the One Stop Shop is to interact with the energy officer within each public authority and work together to gather data (according to a methodology developed by the University of Mons. The methodology is explained in annex 10, p.53). Often public authorities do not have an updated list of the buildings they own. The cadastre details the specificities of the buildings (function, heated area,…). In order to gather the energy consumptions of the buildings, the One Stop Shop, with the public authorities’ agreement, directly contacts the energy distributor that will be able to give an overview of the building energy consumption, thanks to the EAN code (European Article Numbering).
An example of the sheet to complete can be found in annex 4 (p.45).
STEP 2 – Sorting of the remaining buildings
The second step aims at sorting the remaining buildings. For each building/site, a more detailed sheet needs to be completed. The content of the sheet is mainly technical. Data processing is an important task that is done off-site.
An example of the sheet can be found in annex 5 (p.47-48).
Before starting the third step of the selection process, the One Stop Shop presents the result of the first selection to each public authority. These meetings also help to reduce again the number of relevant buildings/sites.
Another best practice to share is that the documents to be completed should be first tested by one of the public authorities, and then validated. This helps to ensure that the energy managers will have the appropriate documents.
STEP 3 – Quick scans
The third stage of the selection process consists of performing quick scans to evaluate more in detail and more accurately the potential energy retrofits and which buildings should be renovated. Quick scans are done by local companies that are specialized in energy audits. A methodology is provided to the audit companies. It is important to note that one single company should have the lead on this task, even if it is subcontracting (parts of) the work. Unlike step 2, which was an office work, step 3 implies sites visits.
STEP 4 – Financial return of the investments
This step consists in making a financial estimate of the projects’ profitability (which energy gains will be done? In what time frame will the investments be absorbed?). The Net Present Value (NPV) method is being used to calculate the investments’ profitability. It can be summarized as follows:
- The NPV helps to define whether an investment in a project is profitable or not within a set time period
- To calculate to NPV, it is essential to convert the costs and the revenues for the years to come in the Euros of a given year (in the One Stop Shop’s case, the works start in 2017). 1 EUR in 2020 does not have the same value as 1 EUR in 2017
- The information needed to calculate the NPV of an energy investments project is the inflation, the expected increase of the energy costs, the interest rate of the loans, and the opportunity value of the capital.
- The NPV may include a residual value of the investment at the end of the contract.
An example of a sheet gathering the information to calculate the financial return of the investments and the NPV can be found in annex 9 (starting from p.52).
STEP 5 – Technical inventories
This step is about performing a detailed and technical inventory. It consists of making an inventory of the technical particularities of the buildings and of considering whether this is appropriate to renovate the buildings. It also aims at evaluating the costs related to replacing the existing elements (e.g. kind of boiler, age of the equipment, consumption, number of years to replace it). The inventory is based on the NEN2767 methodology[1], which enables to measure (using a score) the condition of a building in an objective way.
The result of the third and the fourth steps is to select some buildings and distribute them in pools. A financial “profitability” analysis will be done for each buildings pool.
In the case of the One Stop Shop RenoWatt, step 3 (quick scans), step 4 (financial return of the investments) and step 5 (technical inventory) were performed at the same time due to a lack of time. Ideally, quick scans should be done before the technical inventory since they allow to reduce the number of buildings and thus the number of technical inventories to do, which is expensive and time consuming.
The 5 steps on a timeline
The chart below translates on a timeline the theoretical approach described above. It gives the planned timeframe regarding the identification of the buildings that will be pooled, the work on data collection, the follow up with the municipalities on the buildings to select and the validation of the buildings selected.
(1) Work on the energy cadastre sheet template: in the case of RenoWatt, it had to start from scratch for the content of the energy cadastre sheet. In the future, there will be no need to spend time on this task.
(2) Data collection for the energy cadastre sheet: this work has been done by the architect, who went “on the field”.
(3) Selection of the buildings for the technical sheet: this task consists in processing the data gathered for the energy cadastre sheet. It helps preparing the next step, which consists in selecting the buildings for which a technical sheet will be fulfilled.
(4) Validation of the quick scans: for time saving, the quick scans were conducted and validated at the same time.
(5) Presentation of the financial model to the municipalities: 2 meetings with each municipality were needed
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[1] NEN2767 is a Dutch norm, which aims at the harmonization of the way of conceiving the maintenance of buildings. More info: http://iampro-e.crow.nl/instrumenten/nen-2767-condition-assessment
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