Overview Of New Energy Contract Management

concept

This energy saving investment mode allows customers to upgrade their factories and equipment with the future energy saving benefits, so as to reduce the current operation cost. Or the energy saving service company provides energy saving services to customers by undertaking energy saving benefits of energy saving projects or contracting overall energy costs.

The energy management contract is signed between enterprises (users) and energy conservation service companies that implement energy saving projects, and it helps to promote the implementation of energy-saving projects.

According to specific business methods, it can be divided into shared contract energy management business, commitment type contract energy management business, energy cost trusteeship contract energy management business.

The essence of the contract energy management mechanism is:

An energy saving investment way to reduce the total cost of energy saving projects with reduced energy costs.

Such an energy-saving investment method allows users to use the future energy efficiency to upgrade factories and equipment and reduce the current operating costs.

The energy management contract is signed between the enterprises that invest in energy saving projects and the special profit energy management company. It helps to promote the development of energy saving projects.

Under the traditional energy saving investment mode, all the risks and all profits of the energy saving project are borne by the enterprises implementing energy saving investment. In the contract energy management mode, enterprises generally do not require large investments in energy saving projects themselves.

I. Introduction and concept of contract energy management:

ENERGY MANAGEMENT CONTRACT (EMC) is a new energy saving mechanism based on market operation developed in western developed countries in 70s.

Contract energy management does not sell products or technologies, but promotes a financial management approach to reduce energy costs.

EMC's operation mechanism is a kind of energy saving investment service management. After seeing energy-saving benefits, EMC can share energy efficiency results with customers and win double wins.

Based on this mechanism, the development of specialized "energy saving service company" (ESCO for short, referred to as EMC) in Japan has developed rapidly, especially in the United States, Canada and Europe. ESCO has developed into a new energy saving industry.

Contract energy management is a set of energy saving services provided by EMC, including energy audit, project design, project financing, equipment procurement, engineering construction, equipment installation and commissioning, personnel training, energy saving confirmation and guarantee, through the signing of an energy saving service contract with customers.

Customers of EMC services do not need to undertake the capital, technology and risk of energy saving implementation, and can reduce energy costs faster, get the benefits from implementing energy saving, and get E.

Two. Characteristics of contract energy management project:

Energy efficiency is high.

The energy saving rate of the project is generally 10%-40%, up to 50%.

Customer zero investment

All design, audit, financing, procurement, construction monitoring, etc. are all handled by EMC company without customer investment.

Energy saving is guaranteed.

EMC can promise users energy saving to ensure that customers can immediately reduce the cost of energy.

Short investment recovery

The project investment is large and the investment recovery period is short. The average recovery period is 1-3 years from the projects that have been implemented.

Energy saving is more professional.

EMC provides comprehensive services such as energy diagnosis, improvement plan evaluation, engineering design, engineering construction, supervision and management, capital and financial planning, and is responsible for energy management.

Technology is more advanced.

EMC is backed by the latest and most advanced energy-saving technologies and products at home and abroad, and is specially used for energy saving promotion projects.

Low customer risk

Customers do not need to invest large sums of money to import energy-saving products and technologies, specialized services, and at low risk.

Improving cash flow

Customers are implemented by EMC company.

Enhancing competitiveness

Customers will implement energy saving improvements, save energy, reduce energy costs, improve environmental quality, establish green corporate image and enhance market competitive edge.

Articles from China. More scientific management

With the help of EMC company to implement energy-saving services, customers can gain professional experience in energy saving information and energy management, improve the quality of management personnel, and promote the scientific management of internal affairs.

Three. Scope of contract energy management:

EMC energy services, broadly speaking, the business scope includes the sale, supply and management of energy, the implementation of energy conservation and improvement projects, the contract of energy conservation performance guarantee contract, the operation and maintenance of energy consumption facilities, and the diagnosis and consultation of energy saving.

EMC company provides comprehensive services such as energy user audit, diagnostic evaluation, improvement project planning, improvement engineering design, engineering construction, supervision, financing plan and investment recovery guarantee. It adopts appropriate methods or procedures to verify the effectiveness of energy conservation, provide energy users with energy performance guarantee, and then repay the investment cost of energy saving projects by energy saving in the form of project self compensation.

EMC is a form of energy saving and comprehensive energy efficiency improvement. It provides energy saving diagnosis for commercial buildings and energy consuming enterprises such as lighting, air conditioning and energy consuming equipment. It also provides new energy-saving and efficient equipment and provides a specific energy saving system plan. Its service cost is shared by the energy saving cost, which is the biggest feature of the "energy performance guarantee contract" business.

In addition, the cost saved by energy efficiency is also used as an investment recovery for energy saving projects.

History

With the rapid development of human productivity and the increasing consumption of energy, the regional environment and the global environment are changing rapidly. The global warming caused by the greenhouse effect has become the focus of attention of the international community.

Greenhouse gas emissions are mainly caused by the consumption of large quantities of rapidly growing mineral energy, such as coal, oil and natural gas.

While developing economies, how to economize and make full use of energy has become the first consideration.

As a high energy consuming enterprise, the cost of energy has already accounted for a considerable proportion of the total cost of the enterprise. How to reduce energy consumption and how to increase revenue and reduce expenditure has become one of the problems that all enterprises are actively exploring.

Since the mid 70s of last century, a market based, new energy saving project investment mechanism "Energy Performance Contracting" (EPC) has gradually developed in the market economy countries, and the specialized "energy saving service company" based on contract energy management, a new investment mechanism for energy saving projects (abbreviated as ESCO in foreign countries), has developed very rapidly, especially in the United States and Canada, and ESCO has developed into a new energy saving industry.

In 1997, the contract energy management model landed in China.

The relevant departments jointly developed and implemented the world bank / Global Environment Facility China energy conservation promotion project with the world bank and the global environment facility, and set up an exemplary energy management company in Beijing, Liaoning and Shandong.

Over the past few years, the internal rate of return of the 3 demonstration contracts energy management company projects is over 30%.

The first phase of the project's new energy saving mechanism has achieved good results, that is, the 3 demonstration EMCo for profit making, the use of contract energy management mode and the operation of energy saving technology pformation projects are well received by enterprises. The implementation of the energy saving technology pformation project is more than 99% successful, which has achieved great energy saving effect, CO2 emission reduction effect of greenhouse gas and other environmental benefits.

In view of this, the NDRC and the World Bank jointly decided to launch the two phase of the project.

In November 13, 2003, the two phase of the project was officially launched.

Invest in Company limited by guarantee to set up the world bank project department in China to solve the problem of loan guarantee for small and medium-sized enterprises, and specially set up a trade association that promotes the development of energy saving service industry and promotes the growth of energy saving service companies, the China Energy Conservation Association energy conservation service industry Committee (EMCA).

Present situation

At present, in China, "contract energy management" also refers specifically to enterprises engaged in energy services (EMC), by signing energy conservation service contracts with customers, providing customers with a set of energy saving services including energy audit, project design, engineering construction, equipment installation and commissioning, personnel training, energy saving and so on, and a business operation mode to recover investment and gain profits from the energy saving benefits gained by customers after energy saving reconstruction.

EMC - Energy Management Company; foreign also known as ESCO Energy Service Company, also known as energy management company, is a contract based energy management mechanism operating, profit oriented professional company.

EMC signs energy conservation service contracts with customers willing to carry out energy saving pformation, and provides customers with services such as energy audit, feasibility study, project design, project financing, equipment and material procurement, engineering construction, personnel training, energy saving monitoring, pformation system operation, maintenance and management, etc., and provides energy saving services to customers through profit sharing with customers, or commitment to energy efficiency of energy conservation projects, or contracting overall energy costs.

EMC is a specialized energy saving service enterprise that aims at profit. It implements energy saving projects for customers according to the contract energy management mechanism, and the energy efficiency of the project accounts for more than half of the total benefit of the project.

Sign an energy saving service contract with the customer, ensure the energy saving of the commitment, recover investment and profit from part of the energy saving benefits of the project.

During the contract period, the pformation equipment is EMC, and the benefit of EMC sharing is in full.

After the completion of the contract, the energy saving equipment and all the energy saving benefits are handed over to the customers.

EMC mode brings benefits to energy consumption enterprises:

1, energy consumption enterprises can complete energy saving technology pformation without capital input.

2. After the completion of the energy saving project, some energy saving benefits of the project can be shared.

3. During the contract period, the customer payment of the energy consumption enterprise comes from the project benefit, and the cash flow is always positive.

4. After the contract is concluded, the energy saving equipment and all the energy saving benefits belong to the energy consumption enterprise.

5, EMC assumes technical and economic risks for energy consuming enterprises.

EMC mode business characteristics

EMC is a commercialized entity in the market economy, and it is fundamentally different from our country's energy conservation service center, which seeks to survive and develop in the market competition.

The EPC business developed by EMC has the following characteristics

1, commercialization: EMC is a company that operates commercially, and achieves the purpose of profit by implementing energy conservation projects with the contract energy management mechanism.

2, integration: EMC business is not a general promotion of products, equipment or technology, but through the contract energy management mechanism to provide customers with integrated energy-saving services and complete energy saving solutions, to implement "turnkey project" for customers; EMC is not a financial institution, but can provide customers with energy saving projects; EMC is not necessarily the owner of energy-saving technology or energy saving equipment manufacturers, but it can provide advanced and mature energy saving technology and equipment for customers. EMC does not necessarily own the engineering capability of implementing energy saving projects, but it can assure the quality of the project.

For customers, the greatest value of EMC lies in that it can provide energy saving projects for customers to provide optimized engineering facilities with various resources integration and good operation services, so as to achieve energy saving or energy saving benefits agreed with customers.

3, multi win: a major feature of EPC business is that the successful implementation of such a project will enable all parties involved in the project to include EMC, customers, energy saving equipment manufacturers and banks to share the corresponding benefits, thus forming a win-win situation.

For the shared contract energy management business, EMC can share most of the energy efficiency benefits during the project contract period, so as to recover its investment and obtain reasonable profits. The customers share some energy efficiency benefits during the project contract period, get all the joint benefits of the project and ownership of the energy saving equipment invested by EMC at the end of the contract period. In addition, they also gain valuable experience in energy saving technology and equipment construction and operation; energy saving equipment manufacturers sell their products and recover their loans; banks can withdraw loans for the project even with interest.

Because of the multi win, EPC has the potential of sustainable development.

4, risk: EMC usually invests in energy saving projects for customers, and promises energy saving benefits to energy saving projects. Therefore, EMC assumes most of the risks of energy saving projects.

It can be said that EPC business is a high-risk business.

The key to the success of EPC business lies in the analysis and management of all kinds of risks in energy saving projects.

Factors contributing to the success of the contract energy management mechanism

EMC's operation practice in China shows that the market based contract energy management mechanism is suitable for China's national conditions, and is not only popular among the energy consuming enterprises, but also widely welcomed by other energy saving service organizations, energy enterprises, energy saving equipment production and marketing enterprises, and energy saving technology R & D institutions.

From their operation practice, the reasons for success are not only the huge potential of energy saving and the wide energy saving market in China, but also the factors of the contract energy management mechanism, which is more important.

1. full process service for energy saving projects

The contract energy management mechanism stipulates that EMC, which implements energy saving projects, should provide the whole process services, including financing, to customers. This is very popular with large and medium sized energy consuming enterprises and consumers of various energy consumption, and is also unparalleled by the general operation mechanism.

2. assume all risks of energy saving projects.

Another feature of the contract energy management mechanism is that EMC contracts to ensure that customers get enough energy savings, and to share part of the energy efficiency of the project to recover investment and profits. This means that EMC has undertaken technical risks and economic risks for customers, and all kinds of customers are very welcome.

EMC, which is set up by energy saving equipment suppliers and new energy saving technology holders, is more conducive to quickly occupying the market.

3. financing of energy saving projects

Customers accept the contract energy management mechanism, so that they can not invest or invest less to complete the energy saving technology pformation.

This advantage is especially popular in the form of shortage of funds in most enterprises in China.

EMC is funded by its own funds, world bank loans and other loans.

4. other

According to the contract energy management mechanism, EMC is a specialized energy saving service enterprise. It generally has wide energy saving information, rich experience in project operation, and can be bundled to implement energy saving projects. This lays a foundation for reducing early investment in projects, purchasing cheap equipment and reducing construction cost.

Some experiences in the implementation of the contract energy management mechanism

EMC has successfully completed the demonstration of energy conservation projects in accordance with the contract energy management mechanism and gained experience.

1.EMC sincere cooperation with customers

The successful implementation of the project is the common goal of both EMC and customers. The interests of customers are not to invest or invest less money to get good energy saving equipment and long-term energy saving and environmental benefits, while EMC is to make profits from project success.

Many cases prove that the sincere cooperation between the two sides is the most important. EMC carries out quality service in the whole process of the project, and the close cooperation of customers in the whole process of the project is a guarantee for the success of the project.

2.EMC prevention of economic risks requires help from customers {page_break}

In order to achieve the win-win goal of EMC and customers, EMC needs customers to help prevent economic risks.

Customers should provide detailed information about the management, financial status, product marketing and development prospects, optional guarantee and mortgage measures to EMC, so as to establish and enhance the confidence of EMC investment; EMC should treat customers with integrity spirit, and keep confidential business secrets for customers, and ultimately achieve customers' energy saving benefits, and EMC will make profits.

3.EMC technology risk prevention

Whether the project is successful or not is directly related to the determination of the pformation plan and the selection of the energy saving technology and the matching equipment. It is also closely related to the original operation and energy consumption.

EMC should make clear the original operation and energy consumption under the candid help of customers, and select the pformation plan and all the technology and supporting equipment under the guidance of experts.

This is an effective measure to prevent technological risks, and is also the foundation for successful projects.

Operate

The energy saving service company (Energy Service Company abroad, referred to as ESCO, and domestic Energy Management Company referred to as EMCo) is a specialized company based on the contract energy management mechanism and with profit as the direct purpose.

EMCo signed an energy conservation service contract with the energy consuming enterprises willing to carry out energy saving retrofit, invested or financing energy saving projects for users, provided users with one-stop services such as energy efficiency audit (energy saving potential analysis and diagnosis), energy saving project design, raw material and equipment procurement, construction, monitoring, training, operation and management, etc., to ensure energy saving effect, and profit and roll development through sharing energy saving benefits with the energy consuming enterprises after the implementation of the project.

According to the contract energy management mode, the operation of energy saving projects, after the completion of the energy saving reconstruction project, the original funds used by the energy consuming enterprises to simply pay for the energy expenses can simultaneously pay for the new energy costs and the cost of EMCo, and also achieve partial benefits (that is, saving part of the fees). After the contract period, the customers enjoy the full energy saving benefits brought by the whole project, which will generate positive cash flow and reduce energy consumption.

There may be many reasons for this, but usually it comes from the following three considerations:

Investment returns;

Operational efficiency;

Transfer risks (technical risk, operational risk, management risk, financing risk, etc.).

From the way of EMCo's operation, we can see that EMCo is a commercialized entity under the market economy, and it has a fundamental difference between our traditional energy saving project operation mode and its survival and development in market competition.

Compared with the traditional operation mode of energy saving projects, the implementation of energy conservation by contract energy management has the following advantages:

Professional and systematic technology and services;

To reduce the cost of energy saving projects by reducing the energy cost.

By pferring the risk and burden of the implementation of energy saving projects to EMCo, we can overcome the reservation attitude of energy consuming enterprises caused by the possible risks of implementing projects.

By pferring the main burden of the development of energy saving projects to EMCo, we can help enterprises overcome the worries and doubts that the economic benefits of energy saving projects are not obvious and occupy too much energy.

Through the development of similar projects and massive "duplication", EMCo can improve its energy saving project operation ability, reduce the implementation cost of energy saving projects, and repay the funds of energy saving projects from the energy-saving benefits generated by the energy saving projects themselves, thus reducing the pressure of enterprises to implement the energy saving projects.

What advantages do energy saving service companies have?

To promote the implementation of energy saving projects: to help overcome the risk of implementation of the project caused by the enterprise's retention of the implementation of the project attitude.

Gently loose to implement energy saving: help overcome energy saving projects, economic benefits are not obvious, occupy enterprises too much energy worries and doubts.

To reduce the pressure of energy saving project financing: the energy saving service company improves the project operation ability through the development of similar projects and a large number of "duplication", reduces the project cost; and the capital repayment of the energy saving project comes from the energy saving benefit generated by the energy saving project itself, and reduces the financing pressure of the enterprise to implement the energy saving project.

On the one hand, the implementation of energy saving renovation projects for customer enterprises through specialized EMCo in accordance with the "contract energy management" approach can not only help many energy companies overcome the obstacles encountered in implementing energy saving projects, including project financing obstacles, new energy saving technologies, asymmetric information barriers, etc., but also help enterprises undertake or share part of the technical risks, economic risks and management risks of projects.

On the other hand, EMCo helps customers to overcome these obstacles, and can accelerate the extensive implementation of projects with good energy efficiency and economic benefits. More importantly, EMCo based on market operation will do everything possible to find customers to implement energy-saving projects, strive to develop new energy-saving technologies and energy saving investment markets, so as to make itself grow and grow, and form a market based energy saving service industry in China.

The promotion of contract energy management in China will effectively promote the energy conservation / environmental protection undertaking in China, accelerate the establishment of a conservation minded society, and ensure that the central government's goal of "per capita GDP in 2010 is doubled than that in 2000, the energy efficiency has been significantly improved, and the energy consumption per unit of GDP has been reduced by about 20% at the end of the" fifteen "period.

Business mode of EMCo

Energy conservation service company (EMCo) provides energy saving services to customers through signing energy conservation service contracts with customers.

EMCo is a relatively special enterprise. Its particularity lies in that it sells not a specific product or technology, but a series of energy-saving "services", that is, to provide energy saving projects for customers. The essence of such a project is EMCo to sell energy to customers.

The business activities of EMCo mainly include the following "one-stop" service content (taking energy efficiency benefit sharing contract as an example):

1. energy audit (energy saving diagnosis)

EMCo according to the specific circumstances of customers, we evaluate the energy consumption of enterprises and the various energy saving devices and measures.

The current energy consumption of enterprises is determined, and the energy savings of various alternative energy-saving measures are predicted.

2. energy saving project design

According to the results of energy audit (energy saving diagnosis), EMCo advices to customers how to make use of mature energy saving technology / energy saving products or overall solutions to improve energy efficiency and reduce energy consumption cost.

If customers are willing to accept EMCo's proposal and suggestion, EMCo will carry out specific energy saving project design for customers.

3. negotiation and signing of energy saving service contract

EMCo negotiated with customers "energy conservation service contracts" for energy conservation projects to be implemented.

In some cases, if the customer does not agree to sign an energy saving contract with EMCo, EMCo will charge the customers for the initial cost of energy audit and energy saving project design.

4. energy saving project financing

EMCo will invest or provide financing services to customers' energy-saving projects. The sources of EMCo for energy saving projects may be EMCo's own funds, bank business loans or other financing channels.

Help enterprises overcome the financing difficulties of energy-saving projects.

5. procurement, construction, installation and commissioning of raw materials and equipment.

EMCo is responsible for the procurement of raw materials and equipment, as well as the construction, installation and commissioning of energy saving projects, similar to the implementation of the turnkey project.

6. operation, maintenance and maintenance

EMCo trains the equipment operators for customers, and is responsible for the maintenance and maintenance of the equipment / systems installed in the project.

After the project period, EMCo can continue to provide paid operation, maintenance and maintenance at the request of the client company or through consultation.

7. energy efficiency guarantee EMCo guarantees energy saving for customers, and monitors and confirms energy efficiency in the project contract period with customers or third parties.

8.EMCo shares energy efficiency benefits with customers. During the project contract period, EMCo has invested {page_break} in projects.

(including civil engineering, raw materials, equipment, technology, etc.) ownership, and share energy efficiency with the customers.

After EMCo's project funds, operating costs, risks and reasonable profits are compensated, the ownership of the equipment will normally be pferred to the customers.

Customers will eventually get energy-efficient equipment and save energy costs, and enjoy all energy-saving benefits.

The contractual relationship between EMCo and the specific implementation of energy saving projects is called "energy conservation service contract".

EMCo's operation is called "contract energy management".

Through the description of the new energy saving management mechanism and EMCo operation mode, we think that it is different from the following modes of operation: from this we can see that EMCo is a commercialized entity under the market economy and is seeking survival and development in the market competition, which is fundamentally different from the energy conservation service center which now belongs to the local government and has some government functions.

1. the difference between sales behavior of equipment manufacturers, distributors and trade intermediaries

Although EMCo provides raw materials and equipment for energy saving retrofit, it does not provide a single device like a manufacturer or supplier. It is all the technology, raw materials and equipment needed for energy saving pformation, and performs a series of services according to the contract requirements to ensure energy saving effect to customers. In the contract period, the ownership of equipment belongs to EMCo, so it is not the same as the sales behavior of general equipment manufacturers, of course, it is also different from the sales behavior of various trading companies for the purpose of earning the middle price difference.

2. difference from technical service and consultation

Although EMCo provides customers with various services such as procurement, installation, commissioning, operation and maintenance, these are only an integral part of the whole project, including a system that provides financing and a variety of technical services.

Unlike general technical services or consulting agencies, they provide only one aspect of technical services or consultations without providing financing services.

3. difference from "financing lease"

Generally speaking, leasing can be divided into operational leasing and financial leasing.

Under the existing enterprise financial system in our country, "financial leasing" refers to the equipment leasing business with the characteristics of financial leasing and ownership pfer.

That is: the lessor shall purchase the equipment and lease it to the lessee according to the specifications, models and properties required by the lessee. The ownership of the equipment belongs to the lessor during the contract period, and the lessee has only the right to use it. After the contract has been paid off, the lessee has the right to purchase equipment in accordance with the salvage value, thereby fully possessing the use right and ownership of the equipment.

There are great differences between the two energy management contracts.

(1) in the "financing lease", the leasing object is only limited to the equipment. Although the ownership of the lease term still belongs to the lessor, the essence of ownership is actually attributable to the lessee. The most obvious feature is that the "accumulated depreciation" of the equipment is extracted by the lessee, and the tenancy period covers almost 75% of the whole equipment life expectancy. EMCo does not only have raw materials and equipment, but also services, the subject matter is the whole pformation project, and the contract period is only 1/3 or shorter, and during this period, the substantive content of the ownership of the whole project is completely owned by EMCo.

(2) in the "financing lease", the lessor approved by the people's Bank of China only provides rental services to the lessee; EMCo not only purchases the whole set of raw materials and equipment for customers, but also provides a series of services such as conceptual design, installation, testing, debugging, maintenance, training, consultation and energy efficiency guarantee during the contract period.

(3) in the "financing lease", the lessor does not guarantee the possible use of the rental equipment to the lessee. During the lease term, the cost of maintenance and alteration of the underlying equipment is borne by the lessee itself, and the lessor receives the rental charge on time according to the relevant state regulations and the relevant terms of the lease contract. The primary task of EMCo is to ensure the energy saving effect. Only when the amount of energy determined in the contract is guaranteed, can the two sides achieve benefit sharing, so as to achieve mutual benefit, how much benefit EMCo can share, and how much energy can be linked to it. Moreover, the loss caused by equipment failure caused by customer irregularities in the contract period is borne by EMCo.

(4) the nature of the funds recovered by the two party is different.

The funds that should be collected in the "financial lease" are called rents, including the original value, interest and rental fee of the leased asset (excluding maintenance, maintenance, etc.).

Considering the time value factor of money, we should convert the rent payable to the present value according to certain interest, which should remain unchanged during the contract period (except for the final change of income). The EMCo's funds collected each time are linked to the amount of energy that has been achieved. Only when the amount of energy specified in the contract is met or exceeded, can the amount stipulated in the contract be recovered in full, and there may be changes in the contract period.

Although there are many differences between contract energy management and financial leasing, with the further development and practice of the contract energy management mechanism in our country, some companies have begun to introduce financial leasing as a way to solve the financing problem, and even some energy-saving service companies have also been pformed into financial leasing companies, using energy leasing policies and combining the characteristics of the contract energy management mechanism to implement energy-saving projects.

4., the difference between "loan" and "loan"

EMCo is also quite different from the nature of financial investment companies.

First of all, analyze the difference between EMCo's overall service and lending. EMCo provides a one-stop service for energy saving projects, and also ensures the energy saving effect to customers according to the contract. These are all lenders, no matter how much they can manage or not.

EMCo, like the lender, has to bear the risk of capital and customer reputation, but at the same time, they must take full risks of technology risk, contract execution risk, energy saving, overestimation risk and market risk.

5., the difference between "investment" and "investment"

The investment of the investor in the enterprise is not only for one project, but for the enterprise as equity capital and credited to the "owner's equity" account. Thus, the investor will become one of the owners of the invested enterprise and share the risks faced by the enterprise in the course of operation.

Of course, in fulfilling their obligations, they also have the right to share all the benefits in proportion to the investment ratio. Without any other reason, these funds are not specifically specified in the repayment period.

EMCo's service is only for an energy saving reconstruction project. It only bears all the risks that the project is facing. What it shares with customers is only the energy efficiency generated by the project, and it does not involve other aspects of the customers' enterprises. Moreover, the sharing is also limited, not covering the whole project life cycle.

EMCo itself may not be able to complete all the services. However, as a specialized energy saving service company, EMCo can achieve the energy saved by the contract by integrating various kinds of external resources.

The following types of institutions may be involved:

Basic types of energy conservation service contracts

The most important part of the energy saving service contract involves how to determine the baseline, how to calculate, check and confirm energy saving, how to make payments to customers by EMCo and other clauses. It is very important to clearly state the above contents in the contract and let the customers understand it.

According to the different responsibilities and obligations of customer enterprises and EMCo, and the different ways of payment from customers to EMCo, the energy conservation service contracts can be divided into different types.

With the continuous development of the contract energy management mechanism in China, three different types have emerged, which are basically similar to those currently in North America, Japan and Korea.

1. energy saving benefit sharing type of contract stipulates that EMCo is responsible for project financing, and the proportion of energy efficiency between customers and EMCo will be shared during the project period.

The main features are as follows:

Energy saving projects (energy saving accounted for more than 50% of the total project revenue);

EMCo provides funding for the project.

EMCo provides the whole process service of the project.

The contract stipulates energy saving indicators and methods to detect and confirm energy saving (or energy saving rate).

During the contract period, EMCo and customers share energy efficiency benefits according to the contract. After the completion of the contract, the equipment and energy saving benefits are all owned by the customer enterprise.

For example, during the 5 year project contract period, customers and EMCo share 20% and 80% of the energy efficiency respectively. EMCo must ensure that the project cost and profit are recovered during the project contract period.

In addition, the proportion of energy efficiency sharing between the two sides can be changed during the contract period.

For example, in the first 2 years of the contract period, EMCo shares 100% energy efficiency benefits, and the customers and EMCo share 50% energy saving benefits in the 3 years after the contract term.

2. energy saving guarantee type, in this type of contract, EMCo ensures that the energy cost of customers will be reduced by a certain percentage, which can be provided by EMCo by project financing or by customers themselves.

The main features are as follows:

Energy saving projects;

All or part of the project funds are provided by the customer.

EMCo provides the whole process service of the project.

The contract stipulates energy saving indicators and methods to detect and confirm energy saving (or energy saving rate).

The contract stipulates clearly that if the project fails to meet the promised energy in the contract period, the EMCo will compensate all the economic losses that have not been achieved.

The customer pays the service charge to EMCo and the funds invested by EMCo.

For example, EMCo ensures that the fuel cost of the customer boiler is reduced by 10%, and all the additional energy saving benefits are all enjoyed by EMCo.

3. energy cost trusteeship in this type of contract, EMCo is responsible for managing the operation and maintenance of the entire energy system of the customer enterprise, contracting the energy cost.

The main features are as follows:

Energy saving projects;

According to the contract standard, EMCo manages and improves energy system for customers, contracting energy costs;

The contract stipulates the standard of energy service quality and its confirmation method. EMCo will be compensated according to the contract when it fails to meet the standards.

The economic benefits of EMCo come from the savings of energy costs, and the economic benefits of customers come from the reduction of energy costs.

From the current situation, most contracts are one of the above three ways or a combination of several ways.

Each payment method can be properly adapted to meet the specific needs of different energy consuming enterprises and the special requirements of energy saving projects.

However, no matter what payment method is adopted, the following principles should be adhered to.

Both the EMCo and the customer must fully understand the terms and conditions of the contract.

The contract is fair to both EMCo and customers, so as to maintain good business relationship between the two sides.

The contract should encourage both EMCo and customers to pursue the greatest possible energy savings and ensure the continuous and well functioning operation of energy saving equipment throughout the contract period.