The aim of the NOVICE project – over its 3-year duration – is the development and demonstration of an innovative business model for Energy Service Companies (ESCOs) that will provide energy savings to buildings and demand response (DR) services to the grid after renovating buildings or blocks of buildings. A dual revenue stream shall thus be enabled that can reduce payback period for investments in buildings renovations and accelerate the much-needed market uptake of the Energy Performance Contracting (EPC) based financing model. Adopting that model, ESCOs and Aggregators could jointly and in a coordinated manner tackle the energy efficiency, demand response and onsite generation market.
An investment of $10 Billion is anticipated globally in the energy value chain for demand response programs by 2020, that would in parallel incentivise consumers to actively participate (for financial benefits) while contributing to energy efficiency. At the same time, the revenue of ESCOs in Europe is being forecasted to grow very moderately from $2.7 billion in 2015 to $3.1 billion in 2024. NOVICE’s ambition is to provide the mechanism for a significant share of the DR market to be used in the renovation of European tertiary buildings through ESCOs. The main specific objectives of NOVICE for the realisation of that ambition are:
- Engage and train new actors and stakeholders (aggregators, ESCOs, technology providers, FMs, engineering consultants)
- Address regulatory, market, technological and financial barriers for dual energy services in building renovation
- Prescribe the building energy renovation technologies that increase demand response flexibility and energy efficiency
- Develop an innovative business model and a new Energy Performance Contracting template providing dual energy services.
WHY CHOOSE THE NOVICE MODEL
The energy transition taking place nowadays provides a plethora of opportunities to increase the value of energy assets in any premises and exploit new business models. One such opportunity is the provision of grid services (demand response) to systems operators (Distribution Systems Operators – DSOs and Transmission System Operators – TSOs) through Distribution Energy Resources (DER). Buildings are already being seen as the cornerstone of the future decarbonised energy system since they can potentially provide much needed flexibility facilitated from on-site (behind the meter) energy production and storage.
So, whenever an energy efficiency investment in a building is taking place by selecting those energy systems (including HVAC, CHP, PV, Heat Pumps, BEMS) that can provide both efficiency and flexibility along the appropriate ICT systems the building can become not only efficient but also smart. The combination of those systems and services enhances further the insights into the energy performance of the building and could result to the optimisation of energy use. Such a smart building can generate revenues from its energy assets by both achieving energy savings and providing grid services. Subsequently, the business value of the building itself and of its energy assets is strongly enhanced and energy bills are being minimised.
NOVICE is doing exactly that. It brings the relevant stakeholders (ESCOs for the implementation of energy upgrade renovations, aggregators for facilitating the provision of demand response to the grid, financiers of energy investments and building operators and owners) together to create an innovative business model that can allow for faster repayment of energy efficiency investments combining revenue streams from both energy savings and grid services into a single offering.
The plan NOVICE for successfully achieving the project’s goals consists of the following general steps
Investigate and identify of the particular building renovation technologies that can offer both EE and DR potential.
Review and assess the regulatory framework and market maturity for ESCOs and Aggregators in Europe.
Identify the potential and dynamics for dual energy services provisions by renovating buildings and quantify the respective revenue streams.
Highlight the barriers of a potential collaboration between ESCOs and Aggregators and ways to overcome them.
Develop the innovative business model to be adopted by ESCOs for accelerating the market uptake of building energy upgrades based on the dual energy services schemes.
Prepare and refine a new EPC template based on value and risk optimisation.
Perform a feasibility study using representative commercial buildings from the portfolio of the NOVICE partners.
Measure, verify and demonstrate the energy savings and the demand response services provided.
Throughout the project’s duration, the plan entails the initiation of at least three agreements between ESCOs and Aggregators in the most mature European markets. Five workshops and three webinars will be organized for stakeholders, to be educated in the NOVICE approach in building energy upgrades. Complementary outreach activities involve three surveys amongst ESCOs, Aggregators and End Users.
Overall, NOVICE targets to trigger over the next three years investments projects – following the dual energy services model – of 20.9 m EUR for the renovation of buildings to a size of about 150,000 m2 in the mature dynamic markets (Austria, Finland, Germany, Ireland and UK) represented in the NOVICE consortium. That will result in primary energy savings of 25.2 GWh/year and CO2 emissions reductions of 5.5 kilotons. The midterm impact of NOVICE past its life and up to 2025 has been calculated to be the triggering of annual energy efficiency investments between 123 – 307 m EUR in all European mature markets that can result in CO2 emissions reduction between 34,000 – 85,000 tonnes/year and primary energy savings between 163,700 – 409,400 kWh/year.