PPP in Germany: street-lighting
and other sustainability projects
Luxembourg, 16th December 2010
www.partnerschaften-deutschland.de
Framework conditions for street-lighting in Germany (1)
 Street-lighting is a public service by state law
 Further street-lighting obligations arise from general and specific traffic safety
obligations
 In many municipalities street-lighting is also used for artificial illumination of squares,
buildings, fountains and other buildings or places of interest
 Installations, operation and maintenance of street-lighting is traditionally tendered in
different packages without a lifecycle approach
 O&M service contracts are typically short-term without incentives to improve lightingstandards or major replacements of facilities
 In many cases contracts are signed with Stadtwerke or regional utility firms
PPP is a new approach for street-lighting projects in Germany ÖPP Deutschland AG has
developed a package of tender documents which are published:
www.partnerschaften-deutschland.de/verdingungsunterlagen-beleuchtung
2
Framework conditions for street-lighting in Germany (2)
 There are huge investment needs all over Germany to upgrade old street-lighting
 Many municipalities are unable to finance major upgrade/replacement schemes
 Facilities are typically very inhomogeneous in terms of age and technical standards
 Huge energy consumption (about 9% of generation capacity) and CO2-emissions, new
technologies, organisation-models and contract-strategies offer major savings
 Photometric requirements of DIN EN 13201 standard are often not fulfilled
 EU regulation 2005/32/2G and2008/28/EG to phase out old technologies
3
Background on German energy sector
 Four major energy suppliers E.ON, RWE, Vattenfall and EnBW who
 own/operate power plants (about 80% of generation capacities)
 own/operate high voltage grids
 supply energy to regional energy firms and local utility firms
(Stadtwerke)
 have major shares in regional energy firms and Stadtwerke
 About 40 regional energy firms supply in larger areas to Stadtwerke and
customers and have ownership of about 10% of generation capacity
 More than 600 Stadtwerke who deliver power, heat, gas, water and
other services to customers (ownership of about 10% of generation
capacity), Stadtwerke are traditionally owned by municipalities but today
many of them have private sector minority shareholders
 Street-lighting is traditionally operated by Stadtwerke or other local
service-companies operating with local sub-contractors
 Major energy suppliers and specialised service companies step into
street-lighting services in Germany as a new business field
4
Light emitting diode (LED)
 Short development-cycles and continuous improvement of energy-efficiency
 Close to become a mature and cost-effective technology
 The installation of LED’s offers huge saving potentials for energy and CO2-emissions
 Some municipalities have already installed test-projects to collect reference data
 Investment costs are still high and the lifecycle is still unpredictable as suppliers don’t
guarantee the lifetime LED’s
 Currently there is still uncertainty about
 Lifetime of 40.000 - 50.000h
 O&M costs, energy-consumption
 Possible effect of dimming, temperature and environment on life-time
 Major political interest to develop and implement LED technology
5
Number of lights
Typical age structure of street-lighting facilities
in Western Germany
Columns
Lights
Year of
installation
6
Number of lights
Typical age structure of street-lighting facilities
in Eastern Germany
Columns
Lights
Year of
installation
7
PPP-model for street-lighing in Germany
Shareholder
Shareholder
agreement
PPP-contract
SPV
Large projects: debt finance of
replacements and new installations
Small projects: replacements and new
installations financed by cash-flow
Lending
agreement
Authority
Bank
Supply, construction,
operation and
maintenance contracts
Large projects: > 8.000 street-lights
Small projects: 3.000 – 8.000 street-lights
Supply,
construction,
operation and
maintenance
companies
8
Key elements of PPP street-lighting model
 Contract period of 20 years (15 years for small projects)
 5 years core investment-period for large projects (no investment-period for
small projects)
 For small projects replacements are financed from annual payments by the
authority
 Operation and maintenance of facilities
 Energy supply
 Ownership of existing facilities remain with the municipality
 Transfer of ownership of new assets to municipality once they are operational
 Need for documentation of existing facilities, technologies, age and their status
 Output-based specification
9
Risk transfer of PPP street-lighting model
Municipality

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Price risks of energy, personal, material
Changes in tax-regulation
Change of legal and technical standards
Vandalism above a fixed annual amount
Costs of accidents above a fixed annual
amount
Private Sector

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
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Energy consumption-risks
Planning risks
Effects of delay and cost overruns
Financial risks
Availability of facilities
Operation and maintenance risks
Vandalism up to a fixed annual amount
Costs of accidents up to a fixed annual
amount
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Potential savings from replacements
Annual
costs
Operation and maintenance
Operation and maintenance
Energy
Energy
Replacement
Time
Source: Zentralverband Elektrotechnik- und Elektronikindustrie e.V. (ZVEI)
11
Payment mechanisms


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Fixed monthly payments on the basis of availability of facilities and services
Investments: payment starts in year six after investment-period (large projects)
Fixed monthly payment per street-light starts in year one (small/large projects)
>
>
>
>

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

Replacements
Operation
Maintenance
Energy
Annual adjustments for energy, personal, material with indices
Annual adjustments according to number of street-lights
Penalties for poor performance: number of replacements, average age of lights
and columns, energy-saving targets, helpdesk-services, reporting obligations,
98% availability
Incentives for private partner and municipality to achieve further savings
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PPP street-lighting model for large projects
(> 8.000 street-lights)
Major replacements during
core investment-period
Pre-financing
Annuity financing
Replacements and new installations from monthly payments
Operation, maintenance and energy supply
Investment-period (5 years)
O&M-period (20 years)
End of contract
13
PPP street-lighting model for small projects
(3.000 - 8.000 street-lights)
Replacements and new installations from monthly payments
Operation, maintenance and energy supply
O&M-period (15 years)
End of contract
14
Advantages of the PPP street-lighting model for municipalities

Fast replacement of old facilities to improve traffic safety and security

Use artificial lighting for the attractiveness of municipalities

Achievement of energy- and CO2-savings

Opportunity for major replacement under restricted public budget

Major efficiency gains in comparison to traditional delivery

Risk transfer to private sector

Use of provided procurement package reduces transaction costs
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Conclusion

There are huge investment needs for street-lighting in Germany

Upgrade of street-lighting facilities offers major energy-savings and costreductions

PPP is a new model for street-lighting in Germany

ÖPP Deutschland AG has published a procurement package for street-lighting

To prepare a project for tendering the following steps are necessary
> Definition of objectives
> Set up a database with existing facilities and standards
> Adjustment of procurement package with project details to prepare the tender

The street-lighting procurement-package will reduce transaction costs and
promote the tender of street-lighting projects as PPP
www.partnerschaften-deutschland.de/verdingungsunterlagen-beleuchtung
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Steps to implement PPP street-lighting projects in Germany
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Model-documents are published
Workshops to present the model and reference projects to municipalities
> 01/2011 workshop in Saxony
> 02/2011 workshop in Lower Saxony
> 03/2011 workshop in North Rhine-Westphalia
> 06/2011 workshop in Baden-Württemberg
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Proposal to select municipalities for a street-lighting programme e.g. in NorthRhine-Westphalia
Support tender preparation and tendering process as external advisor of
municipalities, currently PD is in touch with a number of municipalities
Possible PPP street-lighting working group to exchange know-how, experiences
and standards with other countries
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PPP is used in Germany already in many sectors
Infrastructure
Network
harbours
harbour facilities
Water
Power
fresh water energy,
waste water gas,
heating
Waste
Tracks (network)
rolling stock
stations
light rail projects
Generation,
distribution
Generation
distribution
canals
WTP
?
Telecom
Air
Rail
Roads (network)
bridges, tunnels
service stations
tolling-systems
E-mobility ?
Water
Roads
Transportation
Other systems
Administration
Supply/ disposal
Transportation
Airports
Public Real Estates
?
?
Health
?
Collection
disposal, re-use
waste-to-energy
Landlines
mobile networks
Street lighting
signaling
IT-projects
• Town halls
• Ministry buildings
• Public administration
• Kindergartens
• Schools
• Universities
Security
• Hospitals
• Cancer therapy centres
• Old people homes
Culture, leisure
• Sport facilities
• Museums
• Theatre, opera buildings
• Other cultural projects
?
Education
• Police buildings
• Fire stations
• Prisons
• Military projects
Others
• Fair areas
• Court buildings
• Social housing
• Military housing
• Post buildings
• Embassies
PPP‘s implemented
In preparation
New opportunities
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Development of new sectors for sustainability projects

Traffic-signaling (proposal submitted to MoF and MoT)
> similar to street-lighting model
> provision of standardized tendering documents scheduled for summer 2011

Electric vehicles/charging-infrastructure for public fleets (proposal submitted to
MoT)
> analysis of framework conditions
> PPP model
> market testing
> development of standardized tender documents
> provision of standardized tendering documents scheduled for autumn 2011

Waste-to-energy plants (proposal to MoF in preparation)

Geothermal-district-heating (proposal to MoF in preparation)
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Thank you for your attention!
Dr. Clemens Elbing
ÖPP Deutschland AG
Telefon: +49 30 / 25 76 79-338
E-Mail: clemens.elbing@partnerschaften-deutschland.de
www.partnerschaften-deutschland.de/verdingungsunterlagen-beleuchtung
www.partnerschaften-deutschland.de