28.2.2007
Activities of ESCO industry in Finland
The information given in this report is based on the interaction of the company Motiva Oy ( with the Finnish ESCO-market actors and the energy authorities supporting ESCO-activities in Finland. Motiva Oy is a company selling most of its services to the authorities in the areas of energy efficiency and renewable energy sources. Motiva Oy maintains a register of ESCO-projects on the basis that the ESCOs voluntarily provide their project information. The information is to be seen in the above mentioned website.
There is no all-inclusive survey available to provide satisfactory answers to all the questions. However, the indicative information to be provided in this report should give a fairly good picture of the status of the ESCO-industry in our country.
1. ESCO Market Scale
The specific energy consumption in Finland is one of the highest in the world, 259,6 GJ/capita in 2005. The population of Finland is 5,2 million. The high specific consumption is mainly due to long transportation distances, the northern location of the country and the structure of the economy where energy intensive industries have a central role. The shares of the final consumption of energy were the following in 2005: industry 48 %, space heating 22 %, transport 17 %, and others 13 %. Due to the importance of energy as a cost factor and due to the fact that 2/3 of the energy used is imported energy efficiency has traditionally been taken good care of. The specific consumption figures per unit of output and volume or floor area of buildings are therefore reasonably low. In spite of the relatively good standard of energy efficiency there are needs and possibilities to further improvements. ESCO-activities are recognized as one of the means to meet the new situations arising e.g. from the rising cost of energy.
The ESCO-industry started to be established in Finland in the early 1990´s. The growth has been slowbut the number of companies involved in this business is gradually growing from the single pioneering company to several enterprises with varying profiles.
1) Activities of ESCOs
The number of companies known to Motiva to have applied the principle of an ESCO at least in one project is currently 10. The smallest of the companies has only a couple of experts working on the projects, the largest of them belonging to a publicly listed company in the stock exchange. Only two of the companies are pure ESCOs while the others make most of their business in other activities.
The known Finnish ESCOs can be roughly characterized in the following way:
Name of ESCO / CharacteristicsAre Oy / Big, full-service electrical&mechanical contractor with a couple of references in the ESCO-business.
ENESPA Oy / Small broker-ESCOacquiring and managing all services in a project, incl. design, engineering, procurement, construction, installation, operation, maintenance and financing.Most references in the municipal sector.
Foster Wheeler Energia Oy / Big multinational manufacturer of heavy energy production equipment (steam boilers, etc.), with one known reference in the register of ESCO-projects.
Inesco Oy / Medium-size broker-ESCO, acquiring and managing all services in a project, incl. design, engineering, procurement, construction, installation, operation, maintenance and financing. Specialized in projects in industry.
Suomen Lämpöpumppu- tekniikka Oy / The biggest manufacturer of ground heat pumps in Finland, using the option of providing a full delivery of a heat pump system using the ESCO-principle with references in the municipal sector (e.g. schools)
TAC Finland Oy / Belongs to the international corporation of Schneider Electric, supplier of integrated systems for building automation, providing energy saving services based also on the ESCO-principle, references in the municipal sector.
YITBuilding Systems Services Oy / Daughter of the stock-listed YIT Group, providing a full range of services applying the ESCO-principle, most references in the municipal sector. Energy supply in included as an option in the services. Through an acquisition the ESCO-references of an ABB-owned company (the founder of ESCO-industry in Finland) were transferred to this company. References in industry and municipal buildings.
Kuusankosken Aluelämpö Oy / A municipal district heating company. One ESCO-project reference with a heat recovery investment in a process plant of a company producing insulation material.
Etelä-Savon Energia Oy / A power company with one ESCO-project reference where an investment was made to replace fuel oil with wood chips as a fuel in a municipal heating plant.
Sarlin Oy Ab / Big supplier of e.g. compressed air systems and services providing also energy efficiency improvements to those systems based on the ESCO-principle.
2) Sales volume of the Finnish ESCO-industry
Since there is no study supporting systematic acquisition of the requested information only some rough estimates may be given based on the information received by Motiva from the ESCOs on a voluntary basis. This information does not, however, include any financial or economic data. Those can only be estimated on the basis of the given figures on energy savings and pay-back times.
Due to the low number of active ESCOs the business volume is still modest. The number of new ESCO-contracts concluded annually is in the range of 10-15. The main sectors of energy use where ESCOs have managed to establish business are the industry and the municipal sector. In the industry investments in heat recovery from exhaust gases are typical, in the municipal sector heat recovery from exhaust air in various types of sports facilities are predominant.
The annual value of the additional energy cost savings could be estimated at 3-5 million euro (2,4-4,0 million dollar).
Most of the contracts concluded are based on guaranteed savings, some on shared savings.
Most of the ESCO-contracts are of the type design & build with an arrangement for the operation to secure the achievement of the savings commitment. The ownership of the installation may remain with the ESCO until the end of the guarantee period or the client may finance the procurement of the hardware and be the owner leaving the responsibility for operationand savings with the contractor.
All alternatives of financing have been applied, financing arranged by the ESCO's having been the most common. In cases of renovation projects where pay-back with energy cost savings alone is not possible the client (e.g. a municipality) has taken care of the part of the investment which is not directly related with energy savings (e.g. structural changes for renovation).
There is a sample list of implemented ESCO-projects in Finland in Enclosure 1.
2. Outline of ESCO Projects
The smallest ESCO-projects have been investments of some 20000 euro (16000 dollar) and the biggest project in the industry about 7 million euro (5,6 million dollar).
The annual energy savings (in most cases heat) in the smallest projects are 20-100 MWh and in the big projects 20-40 GWh. The pay-back times in the projects with the industry have been around 3 years and in the municipal sector typically around 7 years.
3. Policy and programswhich support ESCO Industry
1) Incentive
Investment subsidies are available for energy efficiency improvements from the Ministry of Trade and Industry which is in charge of the energy affairs in the Finnish government structure. Buying an ESCO-service is considered an investment in energy efficiency improvement and enjoys the possibility of being awarded a subsidy of 25 % at the maximum.
In most ESCO-projects the starting point is the result of an energy audit pointing out the profitable investments for improving energy efficiency. The client of an energy audithas the possibility to apply for a 40-50 % subsidy from the Ministry of Trade and Industry for the energy audit costs provided that the Motiva procedure is applied in the audit.
A voluntary energy conservation agreement system is widely applied in Finland. Most of the major market actors in the energy industry, most of the energy using industry, public and private sector building owners have joined the agreement system. The party to these actors in the agreement is the Ministry of Trade and Industry. The agreement includes an appeal to consider the use of ESCO-services in the implementation of energy efficiency investments.
Motiva Oy has assignments from the Ministry of Trade and Industry since the mid-1990´s to promote ESCO-activities in Finland. This is done by producing brochures and guidelines, by developing contract models, by collecting project reference information from the market actors, by arranging seminars and by publishing a lot of information on the website
Motiva Oy also participates in joint projects with other European Union countries (e.g. Eurocontract) and in Task XVI (Competitive Energy Services) of the DSM agreement of the IEA (International Energy Agency).
No other incentives are offered by the government programs.
2) Introduction of the ESCO projects to government organization's buildings
There is one major owner organization of government buildings in Finland. The buildings of the government do not enjoy any special treatment in terms of applying the ESCO-concept. The subsidy for the cost of using an ESCO-service is not available to the government buildings. There is no information available concerning an ESCO-project in the government sector.
The rules of public procurement that are common to all European Union countries have to applied also when procuring ESCO-services. This means that a public organization (municipality, willing to use an ESCO-service has to arrange a competitive bidding among qualified ESCOs in order to be able to buy that service.
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28.2.2007
EXAMPLES OF ESCO-PROJECTS IN FINLAND
Name of ESCO
/Client
(Business)
/Project
/Calculated net energy savings (type of energy)
MWh/a
/Contract period
Are Oy / Huurre Finland Oy(Manufacturing of prefabricated,
insulated doors and wall elements)
Market Hall,
City of Turku / Optimized use of the exhaust gases of the process.
Recovery of condensing heat, modernization of the control system. / 3000
360 / 2005-2012
2005-2011
Enespa Oy / Greenhouse,
City of Kuopio
Sports Hall,
City of Lappeenranta
Primary School,
City of Jyväskylä
Ice-hockey halls:
City of Nokia
City of Hämeenlinna
City of Säkylä
City of Järvenpää
City of Huittinen / Replacing electric heating with
a heat pump system.
Heat recovery from the exhaust air.
Replacing oil heating with the use of wood pellets.
Improvement of the control system of the refrigeration system; installation of a laser measurement system to optimize the ice thickness. / 320
440
220
80
253
190
20
20 / 2002-2007
2002-2020
2002-2009
2002-2007
2002-2018
2002-2018
2002-2012
2002-2012
Foster Wheeler Energia Oy / Rautaruukki Oyj,
Ruukki Production,
Raahe
(Production of iron
and steel) / Heat recovery from process cooling air. / 34200 / 2005-2007
Inesco Oy / Fundia Wire Oy
(Steel industry)
Kemira Growhow Oy,
Siilinjärvi
(Chemical industry) / Improving the efficiency of the steam turbine.
Replacing electricity with steam in heating the very heavy fuel oil.
Heat recovery from the stack gases of an oven.
Heat recovery from hot exhaust gases and compressed air.
Replacing the guide wings with
frequency converters in the process
fans. / 1650
1990
8300
23500
4031 / 2003-2009
2003-2008
2005-2011
2003-2008
2005-2008
Kemira Pigments Oy,
Pori
(Chemical industry)
M-real Tako Board
(Board industry)
Stromsdal Oyj,
Juankoski
(Board industry)
Spa & Hotel,
City of Kuopio
Metso Paper Oy, Rautpohja
(Machine industry)
Myllykoski Paper Oy
(Paper industry)
Georgia-Pacific Finland Oy
(Soft tissue production) / Recovery of waste heat from the calcinations oven.
Heat recovery from the exhaust air of the drying units of the board machines.
Heat recovery from the exhaust air of the drying units of the board machines.
Heat recovery from the exhaust air of the restaurants.
Heat recovery from the dust removal air of the foundry.
Heat recovery from the cooling water circuit of the melting ovens of the foundry.
Replacing the existing pumps of the debarking water system with new pumps equipped with variable speed drivers.
Replacement of the old water ring pumps in the vacuum system of the paper machine with a turbofan of high efficiency and a frequency converter. / 11000
21100
10340
1500
4900
3000
1288
3600 / 2003-2008
2003-2007
2003-2008
2003-2009
2003-2008
2003-2007
2003-2007
2004-2007
Outokumpu Stainless Oy, Tornio
(Stainless steel production)
Ovako Wire Oy, Koverhar
(Steel industry)
Ahlstrom Kauttua
(Forest industry)
Suominen Kuitukankaat Oy
(Textile industry) / Heat recovery from the stack gases of the 1st oven.
Heat recovery from the stack gases of the 2nd oven.
Replacing the old oil burners of the melting with new ones.
Modernisation of the compressed air system.
Improvement of the energy economy of the drying line. / 30000
40000
11600
1204
1272 / 2004-2007
2005-2010
2005-2009
2005-2009
2008-2009
Suomen Lämpöpumpputeknikka Oy / Primary School,
City of Lapua / Replacing oil heating with a ground heat pump. / 145 / 2004-
TAC Finland Oy / City of Pyhäjärvi
The Jyväskylä school organization
SciencePark Heureka / Improvements of energy economy in seven municipal buildings.
Changing electric heating to biofuel.
Operational changes of the
air-conditioning units and control equipment. / 543
Cost savings
741 / 2006-2013
2006-2013
2006-2013
YITBuilding Systems Service Oy
(YIT Kiinteistotekniikka Oy) / Sports hall,
City of Turku
Swimming Hall,
City of Turku
Laundry,
City of Turku
Ice-hockey and football halls, City of Turku
Sports hall,
City of Turku
Ice hockey hall and parking hall,
City of Turku
Outokumpu Poricopper Oy
(Copper industry, rolling facility)
Office building,
Port of Turku
Vocational school,
City of Turku / Modernisation of the ventilation, heat recovery and control systems.
Changes in the heat recovery and control systems.
Modernisation of the ventilation, heat recovery and control systems.
Modernisation of the ventilation, heat recovery and control systems.
Modernisation of the ventilation, heat recovery and control systems.
Installation of a heat recovery system for the condensing heat, modernisation of the ventilation, heat recovery and control systems.
Heat recovery from the emulsion system.
Modernisation of the heat recovery system of the hot rolling machine.
Modernisation of the heat distributing and control systems; installation of the heat recovery system for the stack gases.
Installation of a heat recovery system and building automation.
Installation of a heat recovery system; renewal of the building automation system. / 1500
1390
2550
950
590
1135
700
700
2500
200
1650 / 1997-2005
1999-2004
2001-2007
1994-2001
2003-2010
2003-2009
2000-2006
2001-2006
2004-2011
2004-2011
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