The City of Cape Town has conducted a number of Energy Performance Contracts. The lessons from these projects have been captured in this case study. The section below is a excerpt from this case study, which summarises the procurement process that the city has follow in implementing these projects. IntroductionThe City of Cape Town first initiated energy performance contracting in 2009 with the issuing of an energy performance contract tender for four municipal buildings to be retrofitted for full energy efficiency. This first performance contract was funded through the Danish International Development Agency’s (DANIDA) Urban Environmental Management Programme (UEMP). In 2011, the City of Cape Town issued a second energy performance contract tender for a further fourteen municipal buildings, which was funded by the National Department of Energy’s Energy Efficiency Demand Side Management Programme (EEDSM). This performance contract was limited to lights, occupancy sensors and smart meters. In 2013, a third tender was issued for a further twelve building complexes, also funded through the EEDSM. These twelve buildings will receive full energy efficiency retrofits once the tender award process is complete. Over the four years that the City of Cape Town has been engaging with energy performance contracting, it has refined its approach considerably. This Case Study explores the most recent (2013) model being used by the City of Cape Town in this regard. To ensure that the municipality complies with the financial controls laid out in the Municipal Financial Management Act (No 56 of 2003) (MFMA) the process of procuring a service provider for an energy performance contract is conducted in two stages. These are described in the following sections. Stage One: Contracting a service provider and completing detailed auditsStage one of the tender process involves securing a service provider to undertake detailed audits of each of the buildings for which energy efficiency measures are to be implemented in terms of the contract. The service provider is paid to undertake these detailed audits. The purpose of the first stage is to identify, through the audits, a suite of energy efficiency interventions that can be implemented in the various buildings along with the pay-back periods for these interventions.To initiate Stage One, the City of Cape Town issues a tender calling for “Provision of a service provider for detailed audits and energy efficiency interventions at council building complexes”. The tender requests bidders to quote on the following key items:
On receiving a formal appointment, the winning service provider proceeds to undertake detailed energy audits of each of the buildings identified in the tender to establish a baseline for energy use and to identifying energy efficiency interventions that can be implemented. Using the results of the audit as a basis, the service provider then proposes a suite of energy efficiency interventions for each of the buildings. The following details must be provided for each proposed intervention:
Stage Two of the process involves the implementation of the energy efficiency interventions and the ongoing evaluation of the success of the interventions.Stage Two is initiated with the selection of a preferred suite of interventions by the City of Cape Town. Using the results of the detailed building audits, relevant municipal staff select a sub-set of interventions that are deemed most cost effective for each building. The service provider then implements the selected interventions in the various buildings concerned and is paid for the implementation of these interventions.Once the interventions are in place and the service provider has been paid for the completed interventions, the performance guarantee period starts. The service provider is required to manage and maintain the installations and to guarantee performance for the entire pay-back period of the interventions. For example, if it is anticipated that it will take 5 years for the City of Cape Town to recoup the costs of the interventions through energy savings, the guarantee period will be 5 years. For ease of management the guarantee is managed in twelve month cycles. The first twelve month cycle is initiated within fourteen days of completing the installation of the interventions. At this point the service provider is required to lodge a performance guarantee with the City of Cape Town in the form of a bank guaranteed cheque. The performance guarantee must be for the amount of money that the service provider predicted the interventions would save the municipality over a twelve month period. During the performance guarantee period the energy usage of the buildings is monitored and compared against historical energy usage prior to the implementation of the interventions. This information is used to determine the total energy savings that can be attributed to the interventions completed by the service provider. There are three possible scenarios for the release of the guarantee:
|