B ein aeinten Shared Mostused ESCO capi. Tecmical_s Figures ESCO oun we SS ee AMODEL APPROACH TO FINANCE “=~ meee Soe oon INDUSTRIAL ENERGY EFFICIENCY Bea PROJECTS ae Energy EPC" specify the sharing of the cost saving between ESCO and the host facility over a percentage. eee ° “Energy Sup- kA we Customer OBM Risk Longterm Figured Customer peo ota Snemeg OSD ya, estas Tego easel {SCD aes operators and manna ote ee avert nthe eye aera ome enya el heen up egy Sea hsgclng I) eager | Stnccmone oan speed ps Tismal cpeara tomer sat Tipatnt” Shee iateaec pets orc sie Sot Se, Tefeepaldy te cen une scoop aragemert caked on te bao ates singel murs cna cons age aD ot isco che peraqu oat efsnased pe eM othe equipment 5 Energy-user = (Customer) sels the energy output Assumes costfor all Ownership ‘equipment upgrades ‘Guaranteed Sometimes Only Third Technical Short ermia- Figure Customer Sain gga PVE Rake Beard ‘alate snc ‘since ‘oomner ore nereySer- ESCO guarantees ean perormance parameters and paymerts are ade once the ‘shares. parameter perernance haben canned he urge le thane pared Inevepuer__ level the EO covers the sora the svng enced the uence let tne med Sav- tonal sovns are stores bewoon the ESCO athe core. Energy service agreement; Turn- key project cepital Installation and service rice pore) Institution Figure EC Guaranteed Saving Mode!bulid-Own Operate Tranter eneey er Wee ape Sometimes Only Third Technical Longterm Figure ESCO Owns First-Out EPC ve Paes rok (100yeas) testo ance nancist stb ee ntlthe Fee haves endothe tenant ship be Ine a form of projet nan. where an ESCO recaves 3 concession rom the priate ‘sr publecstomerofmane das conse, own and operate 3 yor de rant rcover its invest operating and maintenance expenses inte project ‘ring the uration of te contet.Cstrer eters into ng te op contrat and ae charged aecrding athe serves deve The service tage nes ata ara operating cst every a pret rt EN) vice agree Mower | 5D cap Technical taeee ce Fanclal Tmispany Tanne ‘Shortterm Similar 5 Saree arent eae 6500 owns, the stem Ccotract A teva mers treed omer Sc pati ae fl pl The rat duration of the canta wil actualy depend on Uheleel of savings achieves the rete the segs the shorter the contrLeasing Con- Energy ser- vice agree- ‘ment Leasing Contract Sometimes- ESCOcapi- ESCOtake Short term ESCO owns Italy tal ey eS the system a ri vyears)and until the peice = small size in- end of the Sometimes: Third party Financial _estment orrreetiies NL financing risk terwards beuuw the owner- ship willbe transferred tothe cus- tomer. Leasing can be an attractive alternative to borrowing because the lease payments tend to be lower than the loan payments; itis commonly used for industrial equipment. The stream of income from the cost savings covers the lease payment. The ESCO can bid ‘out and arrange an equipment lease-purchase agreement with a financing insttution. If the ESCO is rot affiliated to an equipment manufacturer or supplier, it can bid out, ‘make suppliers competitive analysis and arrange the equipment. There are two major types of leases financial and operating. Financial leases are installment purchases of ‘equipment. In financial lease, the client (lessee) owns and depreciates the equ pment ‘and may benelit from associated tax benefits. A capital asset and associated lability ‘appears on the balance sheet. In operating lease the owner of the asset (lessor ~ the FSCO) owns the equipment and essentially rents itto the lessee for a fixed monthly fee; this is off-balance sheet financing source. I shifts the rsk from the lessee :o the lessor, but tends to be more expensive tothe lessor. Unlike in financial ease, the les- sor claims anytax benefits associated with the depreciation ofthe equipment. The ‘non-appropriation clause means that the financing is not seen as debt, (Team [2P)