Case Studies

1.

Joule Funding is working with a global soft drinks company to help one of its large customers to finance a broad range of energy efficiency measures. This scheme will update catering equipment and HVAC plant, install voltage optimisation and LED lighting to save 10% to 20% of the total annual energy spend.
MacDonald’s has re-imaged all of its European restaurants to make significant energy savings. And KFC is implementing a range of measures to deliver a 15% energy cost saving. So this restaurant operator must do the same if it is to keep its costs competitive.
We can repay the €18 million Euro investment over five years and let the restaurant operator keep 40% of the savings from the beginning – saving energy from the outset at no capital cost to them.
These are still early days for private sector energy saving finance. There is a growing range of efficiency measures, many hatched from some inspirational new technologies, and a diverse range of potential funding solutions.

 

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2.

Our team’s recent experience of Efficiency (or Energy) Services Agreements (ESAs) includes a leading UK social housing provider whose requirement included scoping, procurement, installation and operation of a large scale biomass boiler supplying heat to over 350 homes.
The client wanted to decarbonise their heat plant, improve system resilience and reduce both their own costs and those of their tenants. With a replacement gas plant including a biomass boiler and upgraded BEMS, pipe work and metering, the customer found that overall system efficiency improved by around fifteen per cent.
The customer was able to bill accurately and improve revenue collection while gaining substantial cash flow via the Renewable Heat Incentive (RHI) further enhancing the project’s returns. The carbon saving was sufficient to gain a grant under the Community Energy Saving Programme (CESP), supporting project viability and the customer was able to avoid a scheduled £1 million liability to subsidise energy spend.
The ESA provider paid for the all of the boiler development and construction costs through a finance lease while the managing contractor and operator provide the required performance guarantee. Meanwhile, service payments are levied as a metered heat-charge on the residents measured and verified by the new wireless meter infrastructure.
This project, the first of five, was capitalised at £1.5m and JOULE already have outline funding in place for similar projects at the other sites projects during 2015.

 

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3.

When a leading European logistics company wanted a wide-ranging LED lighting retrofit at four large, UK cold stores, we provided the solution through an Energy Management Service Contract – a form of ESA in which the provider guarantees that a minimum (threshold) energy saving will be delivered by the retrofit at each of the cold stores.
Their objective was to reduce lighting energy consumption at 149 car parks across the country. After piloting with LEDs, the £9million project (including maintenance) was rolled out nationally, financed through a special purchase vehicle (SPV) – a supply and services agreement to deliver the solution with an insurance backed guarantee.
The service payment was based on the energy ( kWh) saved and met all of the funding costs – for the LED lights, a carried spares stock-holding, and a swap-out maintenance contract. The customer kept any additional saving, while in an ESA these are shared with the ESA provider, which is therefore actively encouraged to continue to improve the solution.
The lights were procured through a finance lease, while the managing contractor provided the required warranty and performance guarantee, in this case backed by a substantial (first loss) retention held for the term of the lease. The first project was capitalised at £1.4m.

 

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4.

JOULE Funding recently undertook a Due diligence investment appraisal and development of an LED lighting Energy Services Agreement (ESA) for a UK national infrastructure provider and operator.  Capitalised at around £12million, JOULE put in place a true ESA with the service payment based on the energy (– kWh) saved.  The deal was originated by one of JOULE’s investors

 

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5.

JOULE Funding client, a UK biodiesel company proposed to supply large quantities of process steam to a biodiesel plant under an ESA. The service payment was to be based on the significant energy cost/carbon saving realised by not using kerosene to make steam.
However, following due diligence investment appraisal and development for the financier of a 10MW biomass heat plant, JOULE Funding were able to demonstrate that ESA provider could not realistically hope to meet the obligations under the ESA, particularly in respect of the guaranteed performance and heat-charge.
The financier decided to withdraw from the £8m investment.

 

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6.

Working for a UK property developer JOULE undertook a scoping study for the replacement of an ageing boiler and small scale CHP plant with a large scale, tri-generation CCHP plant in a central London office and retail development.
The study involved the development of outline heads of terms for an ESA with an adjacent hotel and aquarium to replace existing supplies and fully deplete the cooling, heat and power generated by the proposed solution. The study was ultimately used to help sell the building.

 

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7.

For organisations such as a major teaching hospital in the east of England requiring voltage optimization procurement and installation, JOULE Funding would expect to specify, finance, and install the required technology at applicable sites to deliver a guaranteed 5% electricity reduction, and a likely performance saving of around 8%.
Finance and delivery costs would account for roughly 60% of these savings for the first five years after which the assets and all the savings would revert to the site.
This is a tried and tested energy saving method for us, and from a standing-start a solution could be completed in four months, with as much work as possible being done by Babcock engineers and project managers.

 

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