ESCO companies earn their income by developing engineering, equipment supply, project financing, and guaranteeing the energy savings for the customer.
ESCO companies win by developing engineering, equipment supply, project financing, and guaranteeing the energy savings for the customer.
Companies that are part of AMESCO have trained and certified engineers in design, auditing, and verification of energy savings. In order to give greater certainty in ESCO-type projects, companies carry out very detailed audits and analyses that help to ensure – with a high-confidence degree – that savings will be generated.
Savings generated as a result of the ESCO projects depend on each solution. In some cases, savings can be of 5-10% and reach savings of up to 50% -75%. Conditions to achieve savings are variable and depend on variables such as: age of the facilities, equipment status, investment requirements, and electricity rates, among others.
The project cost for the customer must be typically zero. However, depending on each case, projects may require some initial or final investment by the customer.
Yes, but these can be typically implemented by using simpler schemes like monthly fees to credit cards or direct monthly fees on CFE (Electricity Federal Commission, for its acronym in Spanish) receipts. The federal government has programs that are channeled through the FIDE (Trust for Electric Energy Savings) to develop such projects.
Energy savings are typically measured from a baseline established by the ESCO and approved by the CLIENT. They require highly sophisticated and accurate equipment to measure energy consumption on boards and monitoring systems, to determine the consumption baseline. From these data, the project is designed and implemented, and the savings are verified on a monthly basis or as otherwise provided in the contract.
ESCO normally handles the saving verifications, which are validated together with the customer.
A baseline of energy consumption refers to an arithmetic measure establishing the amount of energy an equipment required to operate under customer-specific conditions. A baseline can be affected by weather conditions, age of facilities, and maintenance the equipment receives. A baseline should include a reasonable period of time that reflects the consumption characteristics such as seasonality and temporality.
In Mexico, ESCO project investments are typically carried out by the same ESCO companies. Development banks through NAFIN and BANOBRAS have achieved financing some projects of a certain level. Commercial banking has managed to directly finance the ESCOs so that in turn they transfer the fund to the customer. In an ESCO-project-traditional scheme, the financial institution should be the one which directly provides the necessary resources to develop the project and the ESCO will strictly be a vehicle to provide technological and engineering expertise to ensure savings.
Money flow to pay the investment in an ESCO project comes from the difference achieved between energy consumption before implementing the solution (baseline), and the new consumption after implementation. This difference in hour-kilowatt or in Energy Units multiplied by the value of the energy source, results in savings.
The ESCO business contracts can typically be less than 1 and up to 5 years. In case a longer period is required, the contract may be adjusted by mutual agreement between the customer and the ESCO.
The risk assumed by the customer within an ESCO project is specifically linked to the type and complexity of the project and will depend on the type of technology installed. There will be ESCO projects with more or less complexity, therefore the level of risk depends on the operation itself.
An ESCO project typically requires of:
I. Study or analysis of energy consumption in the specific application. For example: hour-kilowatt power consumption of the cooling systems of a warehouse.
II. History of 12 months or more regarding the variability in energy consumption.
III. Energy costs for the customer.
IV. Capacity requirements for growth or decline.