Energy Saving in Municipal Buildings in Small Communities in Rural Districts REPORT

How County Council and Sør-Østerdal municipalities invested in their buidlings in order to:

• Save energy

• Protect the environment and counteract climate change

• Save money

EE in municipal buildings in Sør-Østerdal

1 POLITICAL MOTIVATION

« «In the Sør-Østerdal region, we work to pre- affirm that this targeted cooperation lasting serve nature, and we have a long-standing more than six years has led to significant energy tradition of cooperation. From the outset, savings beneficial to climate and the environ- therefore, we have worked to counteract the ment, savings in energy costs for municipalities, environmental threat that man made climate and the building of networks and expertise. change poses. The municipalities in the region were quick to plan systematically in order to Furthermore, the partnership has created activity meet this challenge. adopted its energy and jobs for the local communities. I am also and climate plan (SEAP) as the first municipality proud that this task was carried out with a full as early as 2004, closely followed by the other consensus in all municipalities, unaffected by municipalities. The Sør-Østerdal region was an municipal elections and political changes. It early adopter of renewable heat technology in shows that even the biggest challenges of our district heating plants and exploiting forests as time can be solved through cooperation!» an important energy resource.

Hence, it was only natural for Sør-Østerdal to join the European network of mayors, Covenant Erik Hanstad SUMMARY of Mayors, where we are committed to going - Mayor of beyond the targets stated by the EU in its - Chair of Sør-Østerdal Regional Council 20/20/20 program. We are still among the few Norwegian municipalities participating in the Since 2009, the five municipalities in Sør- The energy efficiency project and ENSAMB network, which now tallies over 6,000 European Østerdal have collaborated to reduce energy have supported and motivated the municipalities municipalities. consumption in municipal buildings. The collabo- and Hedmark County Council to invest over 140 ration started as a purely inter-municipal project million NOK (17 million Euros) in energy saving Municipal administrations act as role models in under the name «Energy Efficiency in measures in their buildings. This has led to their respective communities, and it is impera- Municipal Buildings in Sør-Østerdal». The annual energy savings of close to 17 GWh tive that they put words into action. That is why project was expanded in 2012, when we, to- (estimated), which means a reduction in green- we chose to focus on the municipalities’ own gether with the property department in Hedmark house gas emissions of around 3,400 tons buildings, demonstrating what it is possible to County Council, applied for and were granted CO2e. This amount corresponds to emissions achieve through cooperation. I can proudly considerable support from the EU for this work. from around 500–750 cars. The EU supported portion of the activity was named ENSAMB (Energy Saving in Municipal Our goal was a reduced energy consumption in Buildings in Small Communities in Rural municipal buildings of at least 25%. Calculations » Districts). and measurements show that we have achieved between 26% and 33%. In addition, we have Energy saving investments under the EPC built networks and increased competency and (Energy Performance Contract) contract form skill levels among the municipal staff. have been an integral part of the project. EPC is a modern contract form where the supplier The reporting period runs from initial work guarantees a result until the investment is started in September 2009, until ENSAMB was repaid. closed on October 30, 2015.

Photo: Studio Westjordet 2 by Ottar Strand 3 Sør-Østerdal is made up of the municipalities Elverum, , Stor-Elvdal, Trysil and Åmot. They work together in many areas, including energy and climate OBJECTIVE EU – support

issues. All municipalities developed and adopted their energy and climate plans Project ambition: Implicit in the project mandate, is to identify (SEAP) at an early stage. – Reduce energy consumption in buildings mana- national and international support schemes that ged by municipalitites in Sør-Østerdal by 20–25% contribute to: Sør-Østerdal is a typical inland region in , characterized by long distances, by the end of the 5 first years (referenced with the 2007–2009 period, and temperature adjusted). • Municipalities receiving professional technical a cold and dry climate, a small population with dispersed settlements, and a large support for this important work To achieve its ambition, it is the municipality’s land area. The total population is around 35,000 inhabitants spread over an area • Municipalities receiving financial support for parts 2 assessment that the following qualitative target be of approximately 10,000 km . reached during the project: of the project cost

Assess all municipal buildings and facilities in • Municipalities getting access to competence and 1terms of an energy audit with priority measures experience through networking and collaboration (where not already done) with others

THE REGION AND THE Rank measures implemented in buildings and In autumn 2010, ENOVA (Norwegian State Energy 2plants in each municipality according to a Agency) informed us about a new support program benefit-cost ratio. under development in the EU. The scheme is part of the IEE (Intelligent Energy Europe) program, CHALLENGE and is called MLEI (Mobilizing Local Energy Invest- Seek to immediately implement measures requiring simple, standard measures. ments). It covers support and technical assistance 3 for energy saving investments. Our application was Develop comprehensive energy measures submitted in May of 2011, and the formal agree- The energy and climate work has its background in the 4identified in the energy audits (those conside- ment with the EACI (on behalf of the European massive global challenges we now seemingly face, red potentially profitable) until a decision basis for Commission) was signed on June 18, 2012. namely the use of fossil energy resources, and the implementation is reached. consequences of atmospheric carbon content with Based on an estimated investment volume of climate change as a result. In Norway, this has resulted Develop an awareness campaign aimed at all around 85 million NOK, we have applied for up to in a climate agreement in Parliament, and an increasing 5users of the buildings, with the goal of achieving 562,500 Euros. This will simultaneously trigger awareness of the need to preserve energy. In addition, savings through reasonable use of energy. 600,000 NOK in extra funding from ENOVA. The favorable natural conditions in the Sør-Østerdal muni- application effort was also supported by ENOVA. cipalities enable us to make better use of renewable Prepare a base for energy management for the energy resources, and create business out of them. 6buildings and facilities in the municipalities. An The scope in ENSAMB is very similar to the energy effective energy management system consists of savings project. Some noticeable differences are: Combined, the five Sør-Østerdal municipalities have technical installations and/or organizational chan- around 260,000 m2 of municipal buildings to manage, ges. The project can assist the municipalities in • We integrated Hedmark County Council’s (HFK) exclusive housing. Due to settlement structures, there introducing a suitable energy monitoring system property department in the project are over 120 municipal purpose buildings for various for municipal buildings, in turn facilitating municipal types and categories. A rough estimate indicates that control of optimized energy consumption. • Some additional reporting we purchase energy, mainly for heating, for approxi- mately 40–50 million NOK (5 million Euros) annually. Os • A steering committee for ENSAMB, where HFK Increase competency in energy and energy Tolga consumption at all levels of the municipal is included, was put in place Energy efficiency measures can in many cases reduce 7 Engerdal operational organizations. energy consumption by 20–30%. The potentially high Other activities coincided closely, and

Rendalen profitability of energy efficiency measures is well Stor-Elvdal meetings and activities were therefore coordinated. documented, with investment recovery times down to a few years.

Trysil There are several obstacles to getting started, but they Åmot are often linked to limited capacity and expertise for Elverum analyzing buildings in order to determine what can be Løten done practically, and in what order. Våler

Åasnes As a result, the Sør-Østerdal municipalities created a Nord- Grue joint 5-year project in 2010. The initiative came from Odal

Sør- the Sør-Østerdal Regional Council. Support from ERNU Odal (Elverum Region Business Development) led to both the hiring and financing of a project manager for two months to write a project plan, and apply to ENOVA for support of further work. 4 5 Energy cost with/ NOK WITHOUT EPC without EPC

ENERGY AUDITS, PACKAGES WITH AND METHODOLOGY EPC

At an early stage in the project, it became clear Work in Hedmark County that an energy saving target of 25% would require Council (HFK) significant investments. Following a SINTEF report Years (40/2009), we calculated the investment need to be over 80 million NOK (11 million Euros). HFK’s ambition for energy savings in the their buildings, was one of several objectives in the The investment would entail over 1,000 individual Energy and Climate Plan adopted in 2009. Measures End of measures, big and small, posing a challenge for A survey of potential energy saving measures implemented contract smaller municipalities with limited resources. for all-purpose buildings for the secondary upper schools was conducted using internal resources. In our dialogue with KS (The Association of Unlike the smaller municipalities, HFK has its own Norwegian Municipalities) and the Norway Inland resources to implement the measures. Principles forming the basis for selected Energy Agency, we were informed of a methodo- Figure above explained: logy called EPC (Energy Performance Contracting). measures in existing buildings in HFK: This methodology was also recommended by Energy cost to be significantly reduced by ENOVA. EPC means that an ESCO (Energy Service However, for new buildings we have chosen other implementation of measures. Company) calculates, implements and guarantees 6. Switch to more environmentally friendly solutions. These orders are placed as turnkey pro- the result of the implemented measures. The energy sources jects, but include a requirement for higher energy Depreciation of investment paid with the project concluded that EPC was an appropriate 5. More effective equipment classification than the minimum requirement set by the TEK 10. Moreover, further requirements have guaranteed savings. methodology for most buildings, but that other 4. Temperature control and management supplemental contract forms also were needed. included a more detailed management of heat and The municipalities profit (during the contract We therefore distinguish between: 3. Upgrading windows and framing ventilation systems (control at room level – VAV), high efficiency heat recovery, lighting management period it is assumed that the savings 2. Insulating floors and ceilings guarantee over-fulfilled). After the contract • EPC and energy efficient lighting equipment, and the period, the entire savings become the gain of • Conventional measures 1. Weather sealing use of central water based heating systems. the municipality. • Integrated measures, i.e. a larger project that also contains an energy saving portion

The basis for all methods is good analysis, planning and calculations, and the following was carried out:

• An overall analysis of a total of 133 buildings • A bundling of buildings with the same challenges into packages (there were two EPC packages) • An adoption of the EPC model by all munici- palities for most of their buildings

Next, the procurement process was completed. Conventional and integrated projects were condu- cted according to established internal procedures. For the EPC, the purchasing process was conduc- ted according to a model developed by KS and ad- viser to KS, Kjell Gurigard. The process was quality assured by KS’s attorney, Marianne Dragsten. The Norway Inland Energy Agency also followed the process closely, and contributed advice.

6 7 BUNDLING AND THE EPC PROCESS A

EPC is a contract form where an ESCO or contractor is responsible for the entire delivery and implementation, and then guarantees the performance for an agreed upon period of time. Normally, this period covers the time until investments are repayed by the savings. In B C D Sør-Østerdal, the period is around 9 years for all contracts.

The EPC process briefly summarized: installations will be handed over to the munici- • Municipalities prepared technical descriptions palities, with the ESCO continuing to monitor of the buildings energy consumption. This operation is also done • Municipalities agreed on a set of selection by municipal staff, but supervised by the ESCO. criteria for each package In phase 3 (Energy Warranty Period), the ESCO • Public purchasing methodology «Purchasing by guarantees energy savings of at least 90% of the negotiation» was selected calculated number. If this value is not reached, a • Announcement was made through DOFFIN – fine is triggered. If value exceeds 110%, a reward, the procurement data system for public authori- half the profit of the extra savings, is triggered. The Contract hierarchy D. Project Monitoring Agreement (Phase 3 – ties (Elverum separately, and Engerdal, Stor- energy warranty lasts until the investments are Option). In this phase, the ESCO regularly (day, Elvdal, Trysil and Åmot packaged together) returned, in our case around 9 years. An EPC agreement consists of four separate week, month) monitors the energy perform- • ESCOs were invited to inspect 1–2 buildings contracts: ance, and alerts operations personnel if a devi- in each municipality, and propose solutions for Financing of the investment A. Property Development Agreement ation occurs. Such discrepancies are often due these In Europe, an EPC agreement is commonly follow- (Umbrella Agreement) to technical irregularities like incorrect settings, • ESCOs were also invited, on the basis of ed by a financing agreement from the ESCO. So technical failures etc. Regular follow-up documents, to outline the energy saving potential far, this has not been commonplace in Norway. B. Project Development Agreement meetings to evaluate the project and to approve of remaining buildings This is especially true for municipalities, as a (Phase 1 – Audits and Analysis Phase) charges (fine / reward) are also held in this • Offers were evaluated according to five criteria: favorable financing alternative exists in the form of phase. - Cost of analysis Kommunalbanken (The Municipal Bank of Norway, C. Project Execution Agreement (Phase 2 –

- Net present value of measures in the pilot owned by the state). Kommunalbanken also has a Option). Here the customer is free to trigger the In addition, there is now a separate Norwegian buildings (fixed) «green» rate, which is 0.1 percentage points below option, or pay for Phase 1 and implement the norm (NS 6430:2014) for EPCs. This did not exist - Net present value of measures in remaining the nominal interest rate (for measures listed in the measures themselves without a performance at the time we approached the market, but we buildings (estimated) Energy and Climate Plan). guarantee. cooperated closely with the development of the - Capacity In Sør-Østerdal we did request an offer on finan- norm, and many of our experiences were taken - Expertise cing, but, like we anticipated, no supplier could into account. match Kommunalbanken’s conditions for financing. We received three offers for both EPC packages. One clarification and negotiation meeting was held with the ESCOs before one company was selec- TECHNICAL DOFFIN INSPECTION OFFER SUPPLIER ANALYSIS REPORT IMPLEMENTA- DELIVERY AND ENERGY ted, and contract phase 1 (Analysis) was signed. DESCRIPTION REQUEST PILOT BUIL- SELECTED (PHASE 1) TION TRANSFER GUARANTEE The analysis phase (phase 1) took 4–6 months, DINGS (PHASE 2) (PHASE 3) and the report was presented to the municipalities. For all municipalities it showed a net present value higher than the estimated value they had won the contract on. After a political approval in the muni- ~ 1 year 4–6 months 2 months 6 months 1–2 years 7–9 years cipal councils, the contracts for Phase 2 (Imple- mentation) were signed. Phase 2 takes 12–18 months. After that, management of the Political Possible exit decision Political decision 8 9 In order to achieve a good energy savings result in municipal buildings, motivated and appropri- ately skilled operation technicians INFORMATION and managers, the people actually operating the buildings, are essenti- al. These professionals traditionally The projects in Sør-Østerdal have received much On two occasions, public «Energy Days» were held attention and publicity, and we have been invited in Sør-Østerdal: have a diverse background, and have to talk about them on numerous occasions, both in • In 2011 with Hamar Nature School in Elverum often acquired much of their basic Norway and abroad. In total, we have attended • In 2012, organized as a tour with energy advice to nearly 60 different events, totaling almost 2000 all municipalities, in cooperation with the Norway knowledge through years of experi- listeners. Among these, were ManagEnergy Inland Energy Agency and the Energy Agency in ence. (EUSEW) Brussels, ENOVA’s annual conference Kil () in Trondheim, ESCO 2014 in Barcelona, and the conference ByggEnergi (Building Energy) 2015 in The projects have established Sør-Østerdal as a Hamar. future oriented region.

A website has launched (ensamb.no), six electro- nic newsletter were sent, a presentation brochure TRAINING AND in Norwegian and English produced, and we were invited to join projects cooperating with Sweden (Interreg – FEM, Interreg – ecoINSIDE, Gräns- komiteen Hedmark – , etc.). The project also initiated «Tips for Saving Energy», published MOTIVATION every 14 days on the municipal website, produced by the Norway Inland Energy Agency.

The project contributed to Elverum Municipality winning the ZERO Award in 2010. Early on in the project, improving basic skills, espe- The training program was conducted twice, cially the ability to see energy systems in a larger consisting of lectures, discussion and technical context, was identified as a key to good results. A inspections. Between 25 and 60 technicians (out training program consisting of all-day specialist se- of a group of 75) participated on both occasions. minars teaching practical matters was therefore put Additionally, organized courses for teachers in in place. The following technical topics were taught energy (Rainmaker School), and specialist courses and discussed: in the use of IR cameras were held. • Buildings as an energy system • Ventilation and heat recovery • Energy control, management and monitoring • Heat production • Building enveloping • Modern light sources and lighting

10 11 Calculated energy savings per year:

TECHNICAL IMPLEMEN- NUMBER OF PROJECT TYPE ENERGY SAVINGS ENERGY SAVINGS OBJECTS (kWh) (%)

Elverum Municipality 39 EPC + other measures 5 500 000 26,7 TATION AND RESULTS in the same buildings Engerdal Municipality 11 EPC + other measures 1 250 000 32,8 in the same buildings Energy analysis has been performed in 133 muni- Measurements for Hedmark Stor-Elvdal Municipality 14 EPC 1 500 000 26,5 cipal buildings, and close to 1,000 various measu- res have been implemented. The projects have led County Council Trysil Municipality 19 EPC + other measures 2 325 000 29,0 to energy saving investments of over 142 million Results, HFK existing buildings: in the same buildings NOK in buildings belonging to the municipalities Energy efficiency measures have been imple- Åmot Municipality 16 EPC 2 215 000 33,8 of Sør-Østerdal and Hedmark County Council. This mented via internal projects, mainly using call-offs then triggered an investment support (subsidies) on framework agreements. Occasionally, public Åmot Municipality 4 Other measures 620 000 - from ENOVA of around 15 million NOK. competitions are conducted in accordance with HFK purchasing policy. Hedmark County Council 8 + Conventional measures 2 500 000 - Local SMEs have won contracts initiated by the HFK utilizes the energy monitoring system ENTRO EPC in the five Sør-Østerdal municipalities worth in the operational phase, enabling benchmarking of Hedmark County Council 2 Integrated measures 900 000 - approximately 50 million NOK, in addition to a the energy consumption compared to other muni- considerable amount of work and engagements cipalities and counties. SUM 113 ca. 17 000 000 following Hedmark County Council’s investments. Measurements show energy savings of over 20% Estimated energy savings are at almost 17 GWh a compared to consumption prior to the project. This year, representing an annual energy cost saving of is mostly thanks to increased motivation and impro- Results, HFK new buildings: Other positive outcomes: over 10 million NOK. Future savings are dependent ved skills, as well as various other measures. Energy efficiency measures in new buildings are on the energy price. The energy savings represent implemented as integrated measures in larger The proficiency level has been raised for many When the effect of the larger investments can an emissions reduction of 3,400 tonnes CO2e (ba- investment projects. HFK serves as internal project professions, and a far-reaching and knowledgeable be measured, we anticipate a significant further sed on a Nordic energy mix). management, and projects are conducted as a pu- network of professionals has been established, improvement. Statistics also show that we have blic competition in accordance with HFK’s procure- especially on the technical side. The municipalities For the EPC contracts, new measurements confirm lower energy consumption in school buildings in ment policy. Most of these new buildings are not and HFK now have a network of contacts and the calculations. As expected, based on the experi- HFK, compared to other similar school buildings in finalized, and separate meters for individual techni- partners both nationally and internationally for ences of others, we have not reached the target Norway. The database also provides an opportunity cal measures are not installed. We can therefore future energy work. We are more experienced in from day one. An initial adjustment period, with to compare consumption from year to year, and not see the effect as of today, nor see the detailed a variety of funding schemes, both Norwegian and technical calibration and other similar measures, is information on energy saving measures has yielded effect of these energy saving measures in ENTRO. European. In addition, Sør-Østerdal municipalities necessary. the expected returns. Nonetheless, the largest of HFK’s new projects, a and HFK have established themselves as offensive new wing at Storhamar High School, was recently and proactive in the energy context. Measurements for EPC Elverum: Measurements for EPC in 2015 certified Energy Class A. This is according to the in Engerdal, Stor-Elvdal, Trysil HFK requirements, and represents a halved energy • Q1 2014 was significantly worse than promised, consumption compared to the minimum TEK 10 but a steady improvement was measured for and Åmot regulations. Q2, Q3 and Q4 2014. For 2014 overall, the result exceeded the guaranteed value of 90% of the Like for Elverum, underlying analysis for the other calculated savings. municipalities show a positive trend from quarter to quarter. The data is not temperature adjusted, nor • This positive trend continued in 2015, and analyzed in detail. Indications for the year suggest better-than-promised values are indicated. that for Trysil, Engerdal and Stor-Elvdal, compen- sation (fines) may be triggered.

MUNICIPALITY Q1 Q2 Q3

Engerdal Worse than guarantee Slightly worse than guarantee Close to guarantee

Stor-Elvdal Close to guarantee Close to guarantee Close to guarantee

Trysil Slightly worse than guarantee Slightly worse than guarantee Within guarantee

Åmot Slightly worse than guarantee Within guarantee Better than guarantee

12 13 A large project spanning over six years will naturally encounter obstacles and challenges along the way. So did we, but we have tried to resolve them by working together, and staying flexible and solution- oriented. There have not been any conflicts along the way, neither among municipalities nor people.

LESSONS LEARNED

Our main challenges, with associated The process concerning support from EASME lessons learned, have been the following: 3(EU) took longer than expected. We applied in May 2011, but at the same time the political Technical mapping and descriptions of the processes concerning EPC Elverum moved forward 1buildings took too long. The reason is partly a quickly. The contract was signed in April 2012. This lack of reliable documentation of the buildings, in was outside (before) the project period, and could particular updated documentation in connection therefore not be approved. with remodeling and reconstructions. Different After a remarkable effort from the municipalities, municipalities also had different practices with and especially Hedmark County Council, we succe- regards to document parameters, and a number eded in offsetting the loss of EPC Elverum with of other key figures. Also, data and descriptions other investments. were often not suited to function as a contractual basis. The solution was to add personnel to update, ADVICE: Progress in political processes is control and assure the data. difficult to predict. When a political invest- ment window opens, it must be exploited. ADVICE: Take this challenge seriously, and Take this into consideration when applying Completion of the EPC contracts. Delays in allocate enough resources. for funding. 5connection with large contracts are not un- common, and we experienced them in all the EPC In many cases, the municipalities have had deliveries. Contractually, a delivery is not complete 2multiple roles, both as buyer of energy, and Good data communication between the varius until everything is delivered and works technically, (part-) owner of energy companies. In the latter 4buildings is paramount for an energy control training is completed, and all documentation is role, they have sometimes had a history of both system. In this case, preparation was insufficient, available and approved. It has taken the ESCO nearly contractual and political bonds that were not and the solutions were not communicated well an additional year to reach a 100% completion. The communicated well enough internally. In two of our enough to SÅTE, our internal inter-municipal IT technical installations were 90% completed on time, municipalities, this led to politicians wanting other provider. When problems were discovered, ex- but there has been a lack of calibration, training and solutions than originally planned. In both cases this tensive clarifications were initiated with SÅTE, documentation. In all our contracts, the supplier resulted in extra work, less energy savings, and in who at that time was under reorganization. We also acknowledges that the energy guarantee applies as one case completed energy wells not being put engaged external expertise in this matter, and we agreed in the initial contract (from January 1, 2014 in into in use – i.e. additional cost. reached a solution acceptable to all parties. The Elverum, from January 1, 2015 in the other muni- solution did not result in any major additional costs, cipalities). Municipalities have therefore not suffered ADVICE: Increased transparency and but a lot of extra work internally, and some minor any direct economic losses due to this, but it has communication. delays on some plant components. led to extra work and demotivation among those involved. ADVICE: Clarify the data communications at an early stage. ADVICE: Provide a tighter and more direct project management.

14 15 CONTACTS AND SUPPORTERS

CONTACT TELEPHONE E-MAIL

Sør-Østerdal Regional Council Enger, Alf Kristian +47 920 52 621 [email protected]

Elverum Municipality Nyhus, Svein Arild +47 907 21 813 [email protected]

Engerdal Municipality Pettersen, Markus +47 915 14 841 [email protected]

Stor-Elvdal Municipality Budal, Elin Grete +47 915 81 651 [email protected]

Trysil Municipality Elgshøen, Ståle +47 474 76 022 [email protected]

Åmot Municipality Johnsen, Tor Yngve +47 404 21 666 [email protected]

Hedmark County, Property dept. Løvjomås, Anette +47 977 31 165 [email protected]

Hedmark County, Property dept. Inge Engh-Halstvedt +47 905 50 618 [email protected]

HEDMARK ELVERUM ENGERDAL STOR-ELVDAL TRYSIL ÅMOT COUNTY MUNICIPALITY MUNICIPALITY MUNICIPALITY MUNICIPALITY MUNICIPALITY COUNCIL joss.as

Co-funded by the Intelligent Energy Europe Programme of the European Union

IEE/11/801/S12.616384 - MLEI ENSAMB

The sole responsibility for the content of this publication lies with the authors. It does not necesseraly reflect the opinion of the European Union. Neither the EASME nor the European Commission are responsible for any use that may be made 16 of the information contained therein