Contracting

Contracting is the transfer of one's own tasks to a service company. In its main application form of supply, plant, energy or heat contracting, the term refers to the provision or supply of operating materials (heat, cold, electricity, steam, compressed air, etc.) and the operation of associated plants

About 15% of the market consists of so-called energy-saving or performance contracting and, despite often being equated with contracting, is to be classified completely differently in legal, substantive and procedural terms. In this variant, no energy is supplied or provided, and the operation of technical systems can be agreed. Rather, the content of the contract is exclusively the fulfillment of a savings guarantee given by the contractor.

Model :

„We will provide you with a steam engine free of charge. We will install it and provide customer service for five years. We guarantee that the coal for the machine will cost less than you currently have to spend on feed (energy) for the horses doing the same work. And all we ask of you is that you give us a third of the money you save.“ (James Watt, 1736–1819)

In Germany, business management models based on the performance contracting used in the United States were developed from around 1980. The first models of heat or supply contracting emerged. The supplier market developed over the following decade. Almost 500 heat contractors appeared on the market in the 1990s, a number of which have since disappeared again. The industry has undergone a process of concentration, which the most efficient companies (turnover of EUR 80 million p.a.) have survived. Smaller companies, e.g. heating installers, who tried their hand in the industry have almost completely disappeared or their projects have been taken over by larger companies

At the same time, the development of savings contracting was reserved for a niche market. In retrospect, the beginning of greater attention was perhaps marked by the city of Berlin's invitation to tender for energy-saving contracting in 1996, which was implemented by the Berlin Energy Agency as project manager. Energy-saving contracting in Berlin operates under the title Berlin Energy Saving Partnerships and covers over 500 properties belonging to the state of Berlin and the Berlin district administrations with around 1,300 buildings.^[1]At the same time, the first tender was also launched by a small municipality, the town of Schwabach in Franconia.^[2]Further milestones in the development of the energy performance contracting market were the publication of the Federal Environment Agency's guide, the guide written by the Berlin Energy Agency (BEA) on behalf of the federal state of Hesse and the current guide from the German Energy Agency. The latter two in particular provided a great deal of legal certainty in the area of public tenders and made it possible for this contracting model to spread further, albeit still tentatively.

The range of events and literature also increased significantly during this time. The various associations and organizations of energy and heat suppliers contributed to this. Unfortunately, the various publications and especially events have not always made a clear distinction between the conditions and especially the legal basis for supply and savings contracting. With the draft ofDIN8930-5, an attempt was made to at least define the nomenclature of the individual types of contracting. However, the DIN can hardly keep up with the rapid developments on the market and can at best be used for an initial orientation on the basic types of contracting agreements. GEFMA Guideline 540 deals exclusively with the two types of contracting.

While other services related to the use of buildings have experienced a veritable outsourcing boom over the past two decades (e.g. cleaning, security services, canteens), the outsourcing of in-house energy supply by means of contracting has only seen relatively low growth. This is primarily due to the fact that energy contracting does not offer the typical outsourcing advantages due to high specific investments (only usable for the individual location or customer):

theinvestments cannot be significantly reduced with plant contracting compared to in-house implementation (often even at a cost disadvantage, e.g. due to the additional measurement and control devices required) and

The flexibility advantage that can usually be achieved with outsourcing (fixed costs become variable costs) is completely eliminated with system contracting, as the contractor can secure the complete amortization of his investment through a long-term contract commitment with corresponding base prices (= fixed costs). At the Hannover Messe (in April 2005), the contracting companies represented there clearly showed an increasing specialization in individual market segments, e.g. housing industry, steam and heat supply industry.

With rising energy prices, energy-saving contracting can be expected to gain ever greater acceptance, although this type of contracting always involves a relatively large amount of procedural effort, even when not awarded by the public sector. The sometimes very specific features of technical specifications and tender evaluation also make neutral advice almost impossible.

Variants

According to the DIN standard for cooling systems and heat pumps, terms and symbols Part 5 CONTRACTING (DIN 8930 Part 5)

1. Energy-saving contracting, also known as performance contracting or (energy) saving contracting
2. Energy supply contracting, also known as plant contracting or useful energy supply
3. Financing contracting, also known as third-party financing (TPF) or plant construction leasing.
4. Called operations management contracting or technical facility management

Energy-saving contracting

Energy-saving contracting is also known as energy-saving contracting or performance contracting.

After an assessment (preferably free of charge), the energy-saving contractor prepares an offer. This sets out a series of measures with guaranteedenergy savings guaranteed by the energy-saving contractor. If the contractor accepts the offer (i.e. a contract is concluded), the energy-saving contractor plans, builds, finances and (optionally) operates all the measures required to achieve the energy savings. In return, he receives a portion of the energy costs saved until his expenses for financing, planning and controlling - and also his profit - are compensated at the end of the contract. The financing can be provided by the energy-saving contractor or borne by the client himself in the form of a construction cost subsidy of any amount against a corresponding reduction in the term of the contract

The procedure is suitable for all cost interfaces or resources, particularly for the energy audit of a large number of buildings. Energy managementthat already exists or is being set up is particularly effectively supported by this form of contracting. Smaller projects in which plant technology has to be refurbished (e.g. individual buildings, model buildings or pilot projects) are less suitable due to the complexity of the process.

In principle, all measures from the field of building technology are conceivable. Basically, the control of the systems is usually replaced with at least some of the valves and pumps and connected to a central building management system in order to enable controlling in the first place. Furthermore, for example, the heating boiler can also be replaced or the distribution system renewed. It is also possible to realize savings in maintenance costs through renewal

The advantage for the contractor can lie in a systematic optimization of the building operation with a consolidation of thebuilding automation into a centralbuilding management system. This is usually carried out at a high technical level across all resources. The financial expenditure for heating and control can be reduced. The scope of possible savings corresponds to previously existing effects of inefficient system technology, contractual regulations or other economically effective decisions or circumstances that the contractor changes. The savings are available to the client in full after the contract period. Depending on the contract, the assets brought in are transferred to the building owner from the beginning or at the end of the term (in accordance with the German Civil Code)

One possible disadvantage of savings contracting can be that, if the client chooses terms that are too short, only the most economical measures are selected in this procedure, while other measures that make sense in the long term are not implemented or are made more difficult. This "cherry-picking" can make later general refurbishments or long-term solutions more difficult. In reality, it therefore depends on the precise wording of the contract with regard to the scope of contracting and the consideration of later measures or in-house measures

In fact, a predetermined profitability limit determines the selection of measures for both in-house implementation and energy-saving contracting projects. As structural measures such as façade renovations or window replacements rarely pay for themselves within the contract term of 10–15 years that both parties usually aim for, they are not part of the standard repertoire of a savings contractor. If the package of measures is to be extended, refurbishment subsidies can be implemented at any depth up to a general refurbishment at the same time. A savings amount is always guaranteed for partial refinancing. The savings compared to the consumption basis of recent years are divided between the plant and structural measures

It should also be noted that the conversion of consumption on the basis of a consumption base using a so-called degree day correction is only an approximation. Even years with roughly the same number of degree days can have different usages and therefore different consumption data. It is therefore important to ensure that the basis for comparison is at least 3 years. Finally, a consideration of the overall cost-effectiveness must mainly evaluate the implementation of savings potential that may not be achieved as quickly and comprehensively with other methods. In particular, the savings and interest foregone must be taken into account in the case of self-implementation, which is stretched out over many years for financial and personnel reasons

Because of the high creditworthiness and simultaneous lack of money, this type of contracting is used particularly in local authorities (see alsoPublic Private Partnership). Compared to other forms of contracting, the prevalence is still very low; it is possible that there are often concerns and reservations about the risks and procedures involved. However, various guidelines (Federal Environment Agency andDeutsche Energieagentur) offer good help here and can both help to overcome initial skepticism and provide guidance for public tenders.

All in all, it should be emphasized that energy performance contracting is often - and wrongly - viewed solely as a financing instrument. An essential aspect, especially for institutions that cannot provide the full technical knowledge themselves, is to pay(1) a contractor directly for the guaranteed energy optimization. Only with this type of contracting does the contractor's interest also lie in the realization of economical operation of the system technology in the overall building, as he can only generate his profit by proving this.

Anlagen-Contracting

Installation contracting is also referred to as energy supply contracting or useful energy supply.

The contractor builds and operates the energy plant at its own risk and cost on the basis of long-term contracts with its customers. The systems are owned by the contractor and are therefore often installed on the neighboring property or a land register entry is made regarding the transfer of ownership of the new heating system in the customer's building. The contract terms vary between 5 and 20 years. The common goal is to achieve economic and ecological benefits through more efficient heat generation and heat storage. the contractor will usually charge for the quantities of heat delivered at an agreed point and measured there using heat meters

Since the heat meter usually represents the interface between the central heating system and the users in the rest of the building, it is in the interest of the system contractor to minimize losses within the central heating system (boiler, burner, storage tank, control system, pump, etc.).

Reducing heat losses within the building, i.e. in the heat distribution, on the radiators and usage changes, is not a direct task of the contractor.The services here are not remunerated via the energy saved, and there is no contractually binding savings guarantee as with energy-saving contracting. Here, the contractor's costs for installation, financing, maintenance and primary energy purchases are paid in monthly installments. As a rule, a two-tier price system is agreed, consisting of a fixed basic price (GP), for example €/kW, €/a, €/month and a variable working price (AP), for example in €/kWh, €/MWh. In practice, variousprice escalation formulas orvalue protection clauses have been developed, which allow prices to be adjusted, usually on a fixed date, in the event of changes to the framework conditions: changes in the price of primary energy, material or labor costs. The index figures from the Federal Statistical Office are often contractually agreed as the starting point for price adjustments.Financing contracting

Financing contracting is also known as plant construction leasing or third-party financing.

The contractor is responsible for financing, while the operating risk remains with the contractor. Area of application for delimitable technical facilities or systems. Finance contracting is often combined with facility management or operations management contracting.The term finance contracting is controversial. Important bodies such as the AGFW Contracting Committee or the Forum Contracting e.V. do not recognize the term.Operational management contracting

The energy systems are owned and financed by the contractor, otherwise the process is similar to plant contracting. The contractor is responsible for the trouble-free operation of the systems. Depending on the contract, the energy is either delivered at a specific point in the system or the end product - a warm room - is the subject of the contract. Billing is usually based on a flat rate according to expenditure or performance. This type of contracting is usually used where trouble-free operation is absolutely essential, for example compressed air for production plants or heating in hospitals

Sources

Wikipedia :http://de.wikipedia.org/wiki/Contracting

nova cal :http://www.novacal.de/de