Ignorance brings fear
The concept of energy service in business is fairly simple and promising. It is seen as the best way to cut energy costs with relatively little investment in the shortest possible time and with the best result. It is assumed that there are only two main players in this process - the customer and the contractor. In fact, the latter includes several structures intended to ensure those maximum results with minimum cost.
Modern managers are well aware that the key focus of any company’s activity is to manage the energy consumption at all technological and operational stages. And it is important not only for satisfying the requirements of the Federal Law # 261-FZ “On energy saving and energy efficiency improvement...”. Let's listen to people in the market.
“Federal Law # 261-FZ has opened up a new segment for the Russian market - energy service contracts (ESCO), - says Konstantin Presnyakov, manager of the Energy Efficiency Department at LLC MUVICOM.
- “According to Sberbank, by 2015 about 3.5 trillion rubles, 2 billion of which are loans, will be invested in energy efficiency, including ESCO. The market potential for energy contracts is not less than 500 billion rubles per year. Currently demand for ESCO is developing and gradually increasing. It is taking place in accordance with the mechanism laid down in the Federal Law # 261, according to which 2013 is the stage where we can safely say the country is ready to implement energy efficiency solutions based on ESCO”.
Energy services are one of the main ways of improving the energy efficiency of any organization, city and region. The key task is to use the mechanism of energy services to support the capability of electricity, water, heat and gas supply systems, to optimize energy consumption, as well as ensuring the energy security at the enterprise.
“The law in the part relating to the ESCO applies to all market participants consuming energy resources, but the main customers are from the public sector,” - said Konstantin Presnyakov. – “A bold introduction of ESCO in the public sector will provide real savings to budgets of all levels and reduce the load on the power generation companies that would release the necessary facilities to develop the real economy.”
"Every region of the Russian Federation has regional energy saving programmes. These funds are allocated to the regions from the federal budget, - said Yuriy Dudin, head of energy efficient solutions sales department at LLC IES Garant. - Within the framework of these programmes energy metering is installed and energy surveys of budget organizations are carried out.”
Noting the tendency of increasing numbers of modernization projects using energy service contracts, General Director of the Energy Service Company, AtomSvet, Vadim Dadyka said there are currently pending legislative issues with payment of energy savings in budget organizations. The issue is that the mechanism of budget funds requires official interpretations on the funds used in any case, including the funds resulting from saving.
“As there are virtually no such interpretations for funds from energy efficiency savings to be used to settle an account with an energy service company, it can be regarded as a violation,” - says Vadim Dadyka . – “This creates additional investment risks. Difficulties are also made by the peculiarities of budget planning for RF subjects and municipalities - over 3 years, while the payback periods of most energy service projects exceed this. Perhaps the above issues will be resolved by the adoption of amendments to the Budget Code of the Russian Federation, where the target budget expenditure items will be drawn up in accordance with state and local programmes.”
Certainly, energy service companies simplify the management of energy-saving programmes for customers. But another sting in the tail of this process can be introduced by the banks, which are not always willing to respond to the proposals for funding of such programmes. Experts assume that many banks rank energy service projects to be high risk. While in other countries, where this area has been actively developing for a long time, and there are flexible financing schemes, in our country their potential is still rarely seen.
As stressed by Yuri Dudin, today it is extremely difficult to find bank financing for energy service contracts. Because, first of all, banks have little understanding of energy services schemes and, as a result, are afraid of them. Secondly, loans are not financially secured (banks should allocate money only against the promise of obtaining a future result). Third of all, banks have no technical experts who could verify the energy service company’s calculations and confirm the likelihood of energy saving.
“Raising funds for energy service projects is a critical issue,” - agrees Vadim Dadyka. – “Difficulties in raising loan financing suffer because many banks have little understanding of mechanisms by which the energy service company generate revenues from resource saving. As a result, banks overrate and overprice the risks of energy service projects, which leads to higher rates on loans and a longer payback period or refusal of the project.”
Nevertheless, despite the difficulties now more and more customers understand the need to increase energy efficiency. There are a lot of factors driving business managers to think about it: for example, in the municipal heat supply sector the level of fixed assets depreciation is so high that the situation became critical. Problems can be solved by the introduction of energy service projects and other alternative programmes. However, despite the fact that now there is a slowdown in the domestic market of energy services and implementation of many programmes is extremely difficult, everyone understands that it is profitable. On the one hand, the customer has realized that he cannot overload his balance sheet, which is so burdened with the cost replacement of fixed assets, and can take care of the energy side with energy service contracts, which are not counted as debt. On the other hand, the law on this subject is still being developed and many issues require meaningful solutions.
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