The presentation to members of Malaysian Association of Hotels Melaka

By

ZAINI ABDUL WAHAB Committee Member (Strategic Initiatives)

MAESCO

Hatten Hotel, Melaka 20th August 2014

EE Potentials in Malaysia & Building Facilities

Introduction to energy services & MAESCO

Options for energy cost savings through sustainable energy management implementation at building facilities

Overview of EPC Projects Implementation

What’s next?

Building owners can see reduced operating costs, increased building

values, greater return on investment, and higher occupancy from new and

retrofitted green buildings

UNEP - GEO-5 for Business

Impacts of a Changing Environment on the Corporate Sector

Companies may receive reputational benefits from achieving green building

certifications . A 2011 survey of U.S. adults- 64% would prefer to patronize a

business whose facility is certified as green, while 48% indicated that green

certification of a facility improves their image of a company.

University of Missouri researchers - consumers would be more

willing to pay between 15 & 20% more for retail products from

companies that support sustainable practices

UN Global Compact of 766 CEOs worldwide-93 % of

CEOs said sustainability issues will be a critical factor

to the future success of their business

2012 Ernst & Young Survey – 66% of executives saw an increased amount

of sustainability-related inquiries from investors in the past year. 70%

inquiries focused on energy management and greenhouse gas emissions

& more than ½ questions about sustainability reporting

Survey on 250 CFOs in 14 countries by Deloitte - CFOs are increasingly aware the

benefits sustainability can bring to the business. 2/3 respondents said they are

involved in driving sustainability strategies .More than 50 % said their

involvement in pushing sustainable practices has increased in the past year.

IS ENERGY EFFICIENCY AN

OPTION OR A MUST DO NOW?

Clearly, the industrial and

commercial sector s offers

much higher savings potential Source: www.reexasia.com

Source: reexasia.com(Feb 2011)

Source: ESCO

TREASURY BUILDING, MINISTRY OF FINANCE OF MALAYSIA

17% reduction of electricity bill in 2011 based on 2010 baseline consumption – SEDA Malaysia

SAVING POTENTIALS

Pumps (25% - 35%) Chiller (20% - 25%)

AHU/FCU (25% - 35%)

Cooling Tower(15% - 20% Lighting System (40-60%)

EEPs viewed as “Infrastructure Investments” – LOW PRIORITY VS. CORE BUSINESS – don’t fix if not broken

EEPs funding through loans/debts WILL IMPAIR “CREDIT CAPACITY” from core business – NO WAY for SMEs/SMIs

BENEFITS ARE TOO SMALL TO APPEAR ON CEO’S RADAR SCREEN & to justify “perceived’ operating complexities/risks

NOT CONVINCED ON ACTUAL COST SAVINGS ACHIEVED nor aware of proven Measurement & Verification(M&V) methods to ensure sustainability of savings.

Profitability

Sustainability

Competiveness

Competency

Working environment quality

Corporate Image

Operating Costs - Energy

Risks – price fluctuation & supply shortages

Pollution

Carbon emission

Depletion of fossil fuel

INCREASE USERS’ COMFORT

SALES & ENERGY COST SAVINGS

BOOST IMAGE & VALUES

An Energy Service Company(ESCO) Develop and implement turnkey, comprehensive energy efficiency

projects

ESCOs offer performance-based contracts (i.e., contracts that tie the compensation of the ESCO to the energy savings generated by the project) as a significant part of their business

To ensure credentials, ESCOs must demonstrate the technical & managerial competencies to design & implement projects involving multiple technologies : Lighting

Motors & Drives

Heating & steam systems

HVAC Systems

Control Systems

Maximum Demand Controls

Building Envelope Improvements

…at building/industrial facilities

The Malaysian Industrial Energy Efficiency Improvement Project (MIEEIP) components includes ESCO Development Programs and ESCO participation in EE Technology Demonstration Projects

Industrial was chosen as the sector in which the greatest commercial and environmental impact could be achieved

MAESCO was registered with the Malaysian Registrar of Society in September 2000

Incorporated in conjunction with the launching of the MIEEIP by a Government’s implementation agency, PTM (Energy Centre of Malaysia) which is now known as Malaysia Green Technology Corporation(Green Tech Malaysia)

Energy Management Training Courses for Energy Managers

Workshop for Registered Electrical Energy Manager (REEM) Application

Rental of Equipment for energy audit and M&V

Awareness and promotional programs

Visits And Dialogues With Government and Key Stakeholders

Industrial Energy Efficiency For Malaysian Manufacturing Sector (IEEMMS) :UNIDO-SMECORP

Full range of services required for

comprehensive EE project implementation Energy Audit

Consultancy

Design of energy efficient systems

Implementation Project Financing

Implementation and Project Management

Construction management

Energy performance monitoring and verification

performance

Testing & commissioning

Operation & maintenance

M&V

Energy Performance Contracting

Energy Auditors

Energy Management Consultants

Energy Management/Energy Efficiency Expert Trainers

Energy Efficient Equipment Manufacturers/Suppliers

Energy Management Services/Technologies Providers

Total Facilities Management Services Providers

60 Registered Members

Investments for energy saving projects implementation using EPC model

Energy auditing services to identify energy saving measures

Capacity building programs – training in energy management system , system optimizations for management & technical groups

Consultancy/advisory services in Sustainable Energy Management System Development & Implementation based on ISO50001:2011 standard

Energy performance measurement & verification services

Awareness & promotional programs

ENERGY EFFICIENCY

IMPROVEMENT PROGRAM

Sustainable Energy Management

Awareness Program

Capacity Building –

Training & Development

HRDF refundable programs

Measurement &

Verification (M&V) Internal/3rd Parties

Adoption of Energy

Management System

(ISO50001)

Internal/Consultant

Energy Saving Project

Energy Auditing

Internal Budget

EPC Model

Full/matching grant – with commitment to

implement

Energy Saving Projects Implementation

EPC model

Standard

Procurement

SUPPORT

MEASURES

by the

government

Options To Save Energy Costs For Businesses

• Management Directives

• Implementation of EnMS - to ensure sustainability of energy cost reduction initiatives

MEASURES

With LOW/NO

COST

Minimal Cost

Savings

•Priorities of budget - core business/operations

•Investment risks

•Limited human resources & expertise

MEASURES WITH HIGH

COST

Significant Cost Savings

May require expert

assistance & external

financing

In-house

initiatives

EN

ER

GY

SA

VIN

G

PR

OJEC

TS TECHNICAL

VIABILITY

FINANCIAL VIABILITY

SUSTAINABILITY PLAN

Expertise/

Competency

EnMS

(ISO 50001)

Performance M&V

Financial criteria &

sources

MANAGEMENT

COMMITMENT

ENERGY

POLICY

PLANNING

IMPLEMENTATION &

OPERATION

SYSTEM &

PERFORMANCE

CHECKING

MANAGEMENT

REVIEW

Energy saving measures – to bring results in improving

energy performance

& cost reduction!

Energy saving projects implementation through direct investments by ESCO with “Zero Up front Cost” concept to the owner of building facilities

The returns from the investments will be used to pay back the ESCO only from the actual energy savings achieved from the implementation of energy conservation measures by ESCO based on shared- saving contract with conditions agreed by both parties.

Owner’s Share(10-30%)

ESCO’s share(70-90%)

(Loan & interest, O&M, spare parts, insurance, profit & etc)

EPC contract period BEFORE

Baseline Detailed

Energy Audit 100% saving enjoyed

by owner

After EPC contract period

Energy bill

saved

Develop EnMS & in-house capacity building

Implement EnMS & sustain saving

YEAR

EN

ER

GY

BIL

L

Implement EPC Project

Project Funding & Financing Options

Engineering & Economic Feasibility Studies

Project Design, Engineering & Permitting

Project Construction

Project Commissioning

Operation, spare parts & Maintenance

Performance measurements & monitoring

Energy performance reporting

EPC Contract Negotiation &

Signing

Install Data Logger/

permanent sub-meters

Collect energy data to establish energy

baseline values

Improve & optimize energy

consumption with energy

saving measures

Measure & monitor actual energy savings

achieved against agreed baseline values

Finance energy saving

improvements with no upfront

capital

Invest savings achieved into

other projects

ESCO to identify Energy

Saving projects

ESCO guarantee Energy

savings - the remuneration of

ESCOs is directly tied to the

actual energy savings achieved

Energy saving is shared between ESCO & the building owneras per agreed terms & payment

schedule with a single-source responsibility

ESCO supplies, installs, maintains & retain an on-going operational

role in measuring & verifying the savings over the contractual terms.

Use future energy ,cut operating

cost, be more competitive & improved comfort & productivity from upgraded systems

Positive environmental impacts & reduced environmental footprint

Experiences in EPC Projects /Track

Records in energy services

Financial Strengths

Management capacity in

energy services

Technical Competency &

Expertise

ESCO

To secure financing &

ensure sustainable operations

Item EPC-Shared

Saving Model

Cash

Purchase

Technical Expertise ESCO ESCO

Implementation(design, installation,

testing & commissioning) ESCO ESCO

Funding Source ESCO OWNER

Sharing of returns % At agreed % &

conditions

100% to

OWNER

Technical & Investment Risks ESCO OWNER

Energy Performance Maintenance &

monitoring works and risks ESCO OWNER

Savings at 40-60% from lighting system

Energy Saving Micro Ballast and HP Fluorescent T8-28

watts

LED Fluorescent Tubes LED Down Light

LED Ceiling Light High Performance

LED Street Light

LED Spot/Flood

Light

To confirm areas of interests by MAH

members for further actions with

MAESCO-MIGHT-Melaka GTC for the

next step

Commitment on support measures by

the government