Creating Business Plan for establishing an ESCO
Knowledge for the Promotion & Establishment of an ESCO
Industry in Jamaica
Agreement No. C0037-12
Based on TECHNICAL ASSISTANCE IN THE PREPARATION OF ESCO BUSINESS PLANS that Fundación
Chile contracted from ECONOLER, as part of the program “Promotion of Market Opportunities for
Clean Energies”, co-financed by IDB-MIF (ATN/ME-9862 CH)
Ana María Ruz – January 23rd, 2013
Contents
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
Introduction
Contents of a Business Plan
BACKGROUND
 THE ESCO’s VISION
 THE ESCO’s MISSION
 TARGET MARKET (DEMAND)
 THE ESCO ENVIRONMENT
 OFFER (ESCOs Products and Services)
 OBJECTIVES AND GOALS
 FINANCIAL ANALYSIS
 RISK ANALYSIS



Jamaican EE Target Market
ESCO Environment
Introduction

Fundación Chile provided technical assistance to the project’s
Chilean ESCOs (3) in the preparation of their own business
plans

A guide was created to allow the Chilean ESCOS to define
their business plans. Available.

Summary of that guide was presented on Oct 2012

Now we propose to work below two schemes:
 Individual work by company or
 Joint work for developing common aspects of ESCOs business plans
Introduction
Contents of a Business Plan
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BACKGROUND
THE ESCO’s VISION
THE ESCO’s MISSION
TARGET MARKET
THE ESCO ENVIRONMENT
OFFER
OBJECTIVES AND GOALS
MARKETING
ORGANIZATION
RESOURCES
FINANCIAL ANALYSIS
RISK ANALYSIS
SHAREHOLDERS
TIMELINES
Contents


Introduction
Contents of a Business Plan
BACKGROUND
 THE ESCO’s VISION
 THE ESCO’s MISSION
 TARGET MARKET (DEMAND)
 THE ESCO ENVIRONMENT
 OFFER (ESCOs Products and Services)
 OBJECTIVES AND GOALS
 FINANCIAL ANALYSIS
 RISK ANALYSIS



Jamaican EE Target Market
ESCO Environment
Background
This section should describe the entrepeneur’s general idea.
Relevant elements could be:
•
•
•
•
The history of the company
The company’s most important current products in terms of sales
Internal or external events that led to the creation of the ESCO
Definition of the ESCO adopted
From the typical ESCO model and adapt it to the circumstances.
The simple definition of an ESCO is: "a unit or company that offers one or more of the
following services: 1 –a comprehensive service that is a one-stop shop for the
implementation of a full EE project, 2 - a way of sharing a project’s technical risks with a
performance contract, and 3 - help a client to obtain investment financing.
• Why the ESCO model is being adopted and why is it an interesting
business opportunity?
Contents of a Business Plan - Background
About Us
Ameresco, Inc. is a leading independent provider of comprehensive
energy efficiency and renewable energy solutions for facilities
throughout North America, delivering long-term value through
innovative systems, strategies and technologies. Ameresco's solutions
range from upgrades to facility's energy infrastructure to the
development, construction and operation of renewable energy plants
combined with tailored financial solutions. We work with customers on
both sides of the meter to reduce operating expenses, upgrade and
maintain facilities, stabilize energy costs, improve occupancy comfort
levels, increase energy reliability and enhance the environment.
The Company was founded in 2000 by George Sakellaris, a pioneer in
the energy service business. To best serve its wide-ranging clientele,
Ameresco has regional offices located throughout North America.
With dedicated energy and business professionals with years of
experience and strong commitment to customer satisfaction and
service, Ameresco offers you the resources needed to successfully
plan, execute and even finance the energy program that will create
real, sustained economic and operating benefits to fulfill your unique
requirements.
Contents of a Business Plan - Background
Contents of a Business Plan - Background
Background
This section should describe the entrepeneur’s general idea.
Relevant elements could be:
•
•
•
•
The history of the company
The company’s most important current products in terms of sales
Internal or external events that led to the creation of the ESCO
Definition of the ESCO adopted
From the typical ESCO model and adapt it to the circumstances.
The simple definition of an ESCO is: "a unit or company that offers one or more of the
following services: 1 –a comprehensive service that is a one-stop shop for the
implementation of a full EE project, 2 - a way of sharing a project’s technical risks with a
performance contract, and 3 - help a client to obtain investment financing.
• Why the ESCO model is being adopted and why is it an interesting
business opportunity?
Could you write in one to three paragraphs your Company
Background?
(10 minutes)…. or share with us…….
ESCOs Vision
This section should describe the ESCO’s aspirations.
 The vision is a short text (a sentence less than half page).
 It is a good strategy to present the vision to employees and
customers in a way that generates pride
 It should also be presented to suppliers and trade associations in
such a way that it creates a brand image
 For example:
• “The ESCO fights climate change sustainably for the benefit
of future generations”
 A list of the values of the company can be developed: a series of
words that characterize the ideals of the enterprise or the unit.
For example: "excellence", "quality", "thorough",
"professionalism", "commitment", "innovation", etc.
Contents of a Business Plan – ESCOs Vision
Contents of a Business Plan – ESCOs Vision
ESCOs Vision
This section should describe the ESCO’s aspirations.

The vision is a short text (a sentence less than half page).

It is a good strategy to present the vision to employees and customers in a
way that generates pride

It should also be presented to suppliers and trade associations in such a
way that it creates a brand image

For example:
• “The ESCO fights climate change sustainably for the benefit of future
generations”

A list of the values of the company can be developed: a series of words that
characterize the ideals of the enterprise or the unit. For example:
"excellence", "quality", "thorough", "professionalism", "commitment",
"innovation", etc.
Could you write in one paragraphs/sentence your Company Vision?
(5 minutes)
ESCOs Mission
This section describes in a practical way what the ESCO’s role is.
 Examples of elements to include are:
•
•
•
•
•
•
•
what it sells and to whom
what economic area it belongs to
what its specialty is
what its target market is
who are its suppliers
what are its main activities
what will be its sources of investment financing, etc.
For example:
The ESCO’s Mission is to sell energy saving projects to organizations in Jamaica’s
public sector, such as hospitals and schools, including measures for saving energy
with medium and/or high levels of investment. The ESCO mainly sells engineering
services, including: energy efficiency audits, detailed engineering, construction
supervision, starting-up, and monitoring the measurement and verification (M&V)
of the equipment purchases and works together with a contractor; it takes the
technical risk with a "guaranteed savings" model and helps its clients in the search
for financing from commercial banks.
Contents of a Business Plan – ESCOs Mission
ESCOs Mission
This section describes in a practical way what the ESCO’s role is.
 Examples of elements to include are:
•
•
•
•
•
•
•
what it sells and to whom
what economic area it belongs to
what its specialty is
what its target market is
who are its suppliers
what are its main activities
what will be its sources of investment financing, etc.
For example:
The ESCO’s Mission is to sell energy saving projects to organizations in Jamaica’s
public sector, such as hospitals and schools, including measures for saving energy
with medium and/or high levels of investment. The ESCO mainly sells engineering
services, including: energy efficiency audits, detailed engineering, construction
supervision, starting-up, and monitoring the measurement and verification (M&V)
of the equipment purchases and works together with a contractor; it takes the
Couldtechnical
you write
in aone
paragraph/sentence
Company
Mission?
risk with
"guaranteed
savings" model and your
helps its
clients in the
search
for financing from
banks.
(5commercial
minutes)
… or share with us……
Target Market

Succinctly state what economic sector or branch of
industry will be the ESCO’s target market
• Qualitative description
• Market size
• Determination of the sales goal (sector(s), client(s))
Case 1: Target Market & OFFER
Case 1: One specific new technology
(Heat recovery)
PRODUCTS
 Identified technologies from strategic
suppliers (partners)
M&V of savings
M&O
CONTRACTS
EPC
Support for getting financing leasing or
borrow
Medium term Performance Contract –
Guaranty Savings or Direct Loans
Long term Share savings or Fast Out
MARKET SIZE
3000 Boilers in Santiago Region with 1000
FINANCING
Industrial Boilers
Short Term direct financing from client
Market Target 100% in 10 years
or bank
Unknown market in Peru, Argentina & Bolivia
Medium Term after building a trust
relation with banks go to loans
Total or partial financing could be offer
Target Market and goals
Case 1: One specific new technology (Heat recovery)
Assumptions
•Based on products and associated services
•Market annual rate penetration of x%
•Loan by 80% of the invesment at 5 years
Target Market and Risks
Case 1: One specific new technology (Heat recovery)
Risk Analysis
1. Technical risks
•Suppliers must give valid warranties
•Equipment must have clear Minimum Performance levels
2. Project risks
• Good insurance
•Have credit lines “available” during construction, using contracts as backup with financing
institutions
3. Measurement and Verification Risks
•Client must understand and accept documented/signed M&V methodology
•Number of times than Measurements will be made (M&V) must be defined on
contracts
•Base line model and criteria also must be part of contracts
4. Financing risks
•Have preaproved/simultaneous financing with financing institution
•Take care of financing institution interest rate (could make less interesting/kill
the business)
Case 2: Target Market and Offer
Case 2: EE Chilean market
PRODUCT
EE Pre diagnosis
Energy Audits
Investment projects studies
Project profitability studies
Technical Inspection of construction
M&V of savings, M&O
CONTRACT
Consulting services
Contracts were supplier takes the risk
In the future ESCOs performance
contracts
MARKET SIZE
By sectors
General level
FINANCING
Now, payment direct
Medium term - Leasing ESCOs
Long term - Private Investment Fund
Contents


Introduction
Contents of a Business Plan
BACKGROUND
 THE ESCO’s VISION
 THE ESCO’s MISSION
 TARGET MARKET (DEMAND)
 THE ESCO ENVIRONMENT
 OFFER (ESCOs Products and Services)
 OBJECTIVES AND GOALS
 FINANCIAL ANALYSIS
 RISK ANALYSIS



Jamaican EE Target Market
ESCO Environment
Jamaican EE Target Market
Jamaican EE Target Market
Jamaican EE Target Market
Jamaican EE Target Market
Jamaican EE Target Market
1% 
11MMUSD/year
Source: JPS annual Report 2011
Jamaican EE Target Market
Source: PCJ annual Report 2010
1% 
11MMUSD/year
Important for ESCOs

Business size
 Be aware of real EE market size
 Utilities could be the best and worst partners

ESCOs market needs
 Technical trust
 Regulatory framework
 Financing options
Source: IFC Energy Service Company Market Analysis, ECONOLER 2011
Important for DBJ
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Business plans are highly confidential for ESCOs
Normally, ESCOs professionals are in the day by day work and
they have no time at all
International experience has not always local aplicability,
ecosystems are different in each country
Commercial Plans and Management on EE and ER SMEs has
low level of development
ESCOs can start with a LIGHT Business Plan
ESCOs can develop their own strategies, it is good to help them
improving EE ecosystem
The Esco Environment

For the understanding of the business environment
should be reviewed
•
•
•
•
•
•
•
Macroeconomics
Energy sector
The energy efficiency environment
Financial environment
Tax related issues
Technology environment
Competition
Creating Business Plan for establishing an ESCO
Knowledge for the Promotion & Establishment of an ESCO
Industry in Jamaica
Agreement No. C0037-12
Based on TECHNICAL ASSISTANCE IN THE PREPARATION OF ESCO BUSINESS PLANS that Fundación
Chile contracted from ECONOLER, as part of the program “Promotion of Market Opportunities for
Clean Energies”, co-financed by IDB-MIF (ATN/ME-9862 CH)
Thanks for your attention¡¡¡