What is the first step to implement this type of solution and how long does it take?First steps should start with internal research to see if your company has outsourced any functional areas and whether the timing might be right to outsource infrastructure. If so, learn what basis those decisions are made upon and if the most senior decision-makers would consider this type of arrangement. Understand their measurements of a successful project proposal. The answers to these questions will help you to build your business case for Energy Infrastructure as a Service. The process for the first project can easily take 12 months or more once you have answers. After that any additional projects should move more quickly and smoothly.
If we are planning to build a new facility, could this solution be applied in a new build situation?Yes, Energy Infrastructure as a Service is an ideal solution for a new facility. The design and equipment ownership can be set up to maximize value for your business.
How is this different from a traditional Energy Service Company (ESCO) service?Many ESCO services are performance contracts, where payments are tied to percentages of savings. As a rule, those kinds of contracts lend themselves well to entities with restricted access to capital and very long-term operating commitments like government facilities and public school districts or universities. The type of arrangement Duke Energy One is proposing is not a performance contract, and thus does not come with the same expensive and onerous measurement requirements and potentially argumentative basis for setting payments. The most typical differentiation will be in the ownership of the equipment. Typically, a pure ESCO will not own the equipment, but Duke Energy One will own the equipment with this type of project.
Any insight into sharing both the upside and downside of production risks (e.g., uptime/production) being affected by energy conversion asset failure?This should begin with understanding and quantifying the impact to the business of the potential loss of any infrastructure that might be provided on an as-a-service basis. Beginning with that understanding, the service is often appropriately designed. Contract language can include liability language that is reasonable for both parties when appropriate. In the right situation this could be theoretically possible. In most cases, the determination of upside sharing and downside costs is often hard to predict for both sides. Ideally you want your agreement to have enough teeth in it to motivate the owner to maximize uptime, but not so onerous that cost of managing the uptime risk is higher than the true value of the uptime. Additionally, be wary of providers that are willing to make uptime guarantees that seem overly ambitious. This might be the first sign of a bad long-term partner.
Energy Infrastructure as a Service (EIaaS)
Learn what is driving leading companies to consider entering into a long-term Energy Infrastructure as a Service agreement to help improve their profitability while also helping reduce their carbon footprint. We’ll explore how they plan to utilize this new frontier for outsourcing to help improve reliability, modernize systems, reduce costs and meet their sustainability commitments.
The session features George Plattenburg, Strategic Business Development, Duke Energy One and will be moderated by John Failla, Founder & Editorial Director, Smart Energy Decisions.
- Improving your infrastructure by removing single points of failure, replacing aged and inefficient equipment, and through re-designing your systems to meet current site needs.
- Moving the traditional point of service boundary from the “utility meter” to “inside the plant” including energy conversion and delivery assets such as boilers, chillers, air compressors, and electrical switchgear.
- Enabling variable air and water flow and maximizing “free” heating and cooling to unlock significant environmental impact reduction benefits.
- Creating a measurable, assured rate of return for re-investing in new strategic initiatives.
Frequently Asked Questions:
Who should lead this type of effort in a company and what do they need to do to be successful?