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Case KaraporttiCampus ESCO casesupporting Asset Management

• Timo Salonen WR, email: timo.m.salonen@nokia.com• 08-05-2019• 29-05-2019 year two savings and next steps added

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• For efficient life cycle cost management Asset Management in line with ISO 55000 is a powerful method

• Energy is important enabler for Life Cycle Cost management

• ESCO model is one way for energy savings which also brings LCC savings

• Asset Management model is implemented with Sodexo

Big picture and Engineering Strategy

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• During spring 2015 tendering material for Karaportti ESCO/LCC Project Development was sent to several companies

• Model was so called “American ESCO” where companies where shared information and possibility to go through all the buildings in Campus for an ESCO proposal

• Based on ESCO proposals company Caverion was selected to provide final binding ESCO saving proposals

• In case proposals would have been rejected and agreement not reach, Nokia would have paid the agreed cost of binding proposal cost

Campus ESCO case

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• Agreement preparations were started and as base for the agreement was selected Energy Performance Contract (EPC) - Gov.uk used in UK private and other sectors

• Agreement provided sufficient coverage and structure for a robust agreement

• Agreement was modified to Finnish situation• Agreement was prepared with good co-operation

between Nokia and Caverion. Erja Saarivirta/Motiva had an important supporting role in getting the agreement created

• Agreement covered well all the key areas. Only drawback was the lenght; over 100 pages

Campus ESCO case

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• Parallel with agreement preparations ESCO Business case was prepared

• Business case took in account also savings in Maintenance and Repair. In ESCO agreement both were included in service.

• Analysis was based on Net Present Value of Cash Flow scenarios based on ESCO and “do nothing” =continue existing way

• Maintenance and Repair costs based Asset Review and Analysis done by company WYG as a third party

• Also Energy savings alone were sufficient to carry the business case

• CO2 Emission reductions by 20% was also important factor for Business Case

• Business case was approved in October 2016 and agreement signed

Business Case

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• Implementation of the ESCO case started in November 2016 and were ready by March 2017

• ESCO agreement period started in April 2017• ESCO installations were different by building and

included automation, LED lighting installations, pumps, heat distribution packages, AHU fan renewals and frequency controllers etc.

Implementation of ESCO case

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• One part of the savings are achieved by optimizing the indoor working temperatures • Temperatures tend to rise from the recommended level due time up to 24 C even 25 C

even though most of the time recommended level is about 21,5 C. • As part of the implementation of the ESCO case also indoor temperature optimization was

implemented and communicated

Implementation of ESCO case

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Implementation of the ESCO case started in NovemberESCO energy saving period started Apr. 2017. To this date energy data is collected from 10 months (Apr. 2017 – Jan. 2018). Following data includes all ESCO projects buildings

• Electricity consumption (10 month period):• Comparison year’s* measured energy 4 021 MWh• Energy saving target level** 3 043 MWh• Measured energy 2017-2018 2 660 MWh

• Heating consumption (10 month period):• Comparison year’s* measured energy 6 287 MWh• Energy saving target level** 5 679 MWh• Measured energy 2017-2018 5 236 MWh

*Most of the buildings comparison year was 2015**Energy guarantee level

Current Saving situation after 10 month agreement period

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Overall ESCO Savings after 10 months agreement period

Current Savings situation

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Cumulative ESCO Savings after 2 years. Heat savings are degree day adjusted to be comparable. Electrical energy 1-to-1 which means cooling savings are also 1-to-1. However, because of warm summers especially last year this has been Nokia’s benefit.

Current Savings situation

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• Asset Management Strategy implementation continues and ESCO as one tool in the tool box• Key is to get first Asset data in tool, then optimisation of the assets • Total Cost of Ownership key indicator of the success of the strategy• Energy is important enabler of the strategy and ESCO one of the tools

Next steps

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• ESCO tendering process with Energy Performance Contract (EPC) is a viable option in Finland; there is sufficient number of suppliers and maturity in the market

• It is very important to have a robust agreement framework to really understand what has been agreed. This has worked well with EPC agreement model. Motiva could work with this to be available for other companies, too. Nokia is happy to support.

• Financial analysis is the key; it is important to get all the benefits to business case. When Life Cycle Costs are studied in asset level also maintenance and repair savings can be taken in account. Energy savings can carry the business case alone, but with LCC break-even point can be got to level of 3 to 4 years and that makes a lot of difference

• Time is needed for different steps, because as part of the exercise financial analysis should be Cash Flow analysis to bring up the benefits

• Good co-operation between customer EPC company and hard services collaborator should work well. That has been the case in Karaportti with ARE and Caverion.

• Communication with occupants is very important. Condition optimization and energy savings can be supporting each other and occupants understand and support energy and emission savings

Campus ESCO case, lessons learned

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• What is needed for TCO analysis ? • Asset data

• Asset definition framework

Nokia next steps Asset management and Total Cost of Ownership

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• Next level for asset management and energy savings as part of Total Cost of Ownership savings

• Cash flow analysis example for do nothing, sell and lease vs new build

Nokia next steps Asset management and Total Cost of Ownership

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• Comparison between “do nothing”, current site upgrade, new build 1-to-1 comparison with cash flow analysis (NPVCF)

• Risk cost process should be included as part of the TCO• Hosting and other service type of options to be compared• IoT and 5G will be really important technologies to get energy savings in totally new level

and an constant self-steering ArtificiaI Intelligence operation

Nokia next steps Asset management and Total Cost of Ownership next steps