frESCO
Innovative business models for novel energy service bundles for residential consumers
| Business | Period | Project Coordinator | Funding Scheme |
|---|---|---|---|
| Energy | June 2020 - November 2023 | CIRCE | H2020 |
Challenge
Under an Energy Performance Contracting (EPC) arrangement an external organization (ESCO) implements a project to improve the energy efficiency or renewable energy production, and uses the stream of incomes from the cost savings or the returns from the renewable energy produced, to repay the overall costs of the project, including the costs of the initial investment.
Despite the large economic energy saving potential in the EU, nowadays very few ESCOs apply EPC to the residential market due to some main barriers (such as high transaction costs and high fragmentation of market) which make a large-scale application of the ESCO EPC model for residential buildings particularly difficult.
New EPCs need to adapt to evolving energy market trends with the introduction of novel hybrid schemes that do not only reduce costs, but also create new revenue streams for the end-consumers/ prosumers, by empowering them to participate in energy transactions and become active players in the energy market. Such an approach is expected to significantly reduce the payback period of relevant investments in smart equipment, distributed energy resources and assets (e.g. storage, EVs) thus, increasing the attractiveness of modern EPCs both for the investor (ESCO/ Aggregator) side, but also on the consumer side (enabling also the removal of the so called tenant/ landlord dilemma as the landlord does not have economic motivation to reduce electricity costs, which are paid by tenants).
Approach
In this context, RINA is part of frESCO Project (funded from the European Union’s Horizon 2020 research and innovation programme under grant agreement No893857 on 1 June 2020) in order to deliver the next generation of EPC on the basis of:
- synergetic business models between aggregators and ESCOs,
- hybrid innovative energy services properly combining energy efficiency and demand response,
- clear and well-specified legal/ contractual provisions and objective measurement and verification schemes to ensure savings objectives achievement and fair & transparent remuneration of flexibility under the principles of Pay-for-Performance schemes.
frESCO's new business models will be demonstrated in 4 different pilots (Spain, France, Croatian and Greece) with complementary characteristics in terms of building typology (single-/multi-family), climate, regulation, energy consumption, energy assets, consumer groups, etc., thus facilitating the replicability of frESCO's solutions across Europe.
Conclusion
In conclusion, frESCO will introduce a variety of multiservices bundles to be provided by ESCOs/ Aggregators towards residential consumers in the frame of extended EPC offerings under the principle of Pay for Performance:
- Building retrofitting and investments for the installation of smart equipment (metering, sensing, actuating), together with extended offerings for the installation of distributed generation (PV) and storage (batteries) units;
- Energy efficiency measures, spanning behavioural transformation, targeted guidance towards energy savings, along with more advanced concepts for net metering/ self-consumption maximization through smart automation at both building and local energy community level;
- Flexibility services (with the introduction of storage and, if available, electric vehicles as means for enhancing flexibility);
- Non-energy services (Comfort preservation, Indoor Air-quality, Security, Well-being, Emergency notification services, etc.).
Overall, frESCO aims to directly achieve a primary savings of 464 MWh/yr and a reduction of 108 tCO2/yr and trigger 28.3M€ investment during the replication.
