Consultation on Local Energy Supply Contract (LESC)

April 14, 2014

As part of the National Energy Services Framework, SEAI have developed a draft Local Energy Supply Contract (LESC) to finance, design, build, supply fuel, operate and maintain Biomass and CHP projects.SEAI wish to undertake some consultation with clients and operators in the ESCO market and would greatly appreciate your feedback on the contract with particular focus on the specific issues outlined in the documents attached.

 

There are 4 documents for review :

  • Overview of Local Energy Supply Contracts (LESC)

  • Appendix 1 - Draft LESC Contract with Finance

  • Appendix 2 – Comment Form

  • Appendix 3 - Specific considerations in relation to CHP.

 

The Overview of Local Energy Supply Contracts (LESCs) document explains three contract models with a comparison of the benefits of each model and provides examples of each approach for Biomass and CHP projects. The proposed contract structure is explained together with the public procurement process and presents the award criteria for tender evaluation.Initially only one form of contract has been developed which is a LESC with Finance, from which the contracts for the other two models can be derived by removing the irrelevant clauses. The draft Contract for LESC with Finance is presented in Appendix 1.

 

Specific areas where SEAI are seeking input and responses are outlined below. However they would also appreciate any comments or feedback you may have on other clauses in the contract. The comment form is provided in Appendix 2.

  • Guaranteed standards of performance – what might be included in the schedule relating to these (by way of examples from those being consulted) and how should they tie in with the failed service payment?

  • Equipment value at end of contract/handover – how should this be calculated – can a figure be determined ‘up front’ at the start of the contract or can the market value of the equipment be negotiated or calculated at the end of the contract?

  • Indexation – the contract currently provides that certain agreed percentage of the supply price is indexed against CPI with a further agreed percentage indexed against Platt’s market data – would welcome feedback on this mechanism or any alternative indexation mechanisms.

  • The payment structure that incentivises high efficiency CHP is presented in Appendix 3 attached. Specific feedback would be appreciated on this approach including answers to the questions.

  • The specific mechanisms by which guarantees can be provided by ESCOs in the market (warranties, insurance)?

 

SEAI would really appreciate if you could return any comments in the form provided by Friday 25th April to business@seai.ie. While SEAI recognise that the timescale is short they are trying to move the process along to support the on-going delivery of exemplar projects. If you have any questions please let me know fiona@zesco.ieAll the above documents are accessible on the SEAI website at http://www.seai.ie/Your_Business/National_Energy_Services_Framework/

 

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