ESCO Model

In the context of rising energy costs impacting production efficiency, businesses need optimal solutions for electricity usage and long-term cost control. The ESCO model opens up a flexible collaborative approach, supporting businesses in implementing energy saving and renewable energy projects through investment mechanisms, benefit sharing, or energy efficiency guarantees.

What is the ESCO model?

The ESCO (Energy Service Company) model is a business model where an ESCO invests in, designs, installs, and operates energy-saving or renewable energy solutions (such as rooftop solar power) for customers, without requiring the customers to make any initial investment.

The ESCO model ensures that investment costs are offset by energy savings for businesses.

A key feature of the ESCO model is its performance-based collaboration mechanism and agreed-upon terms between the parties. Instead of undertaking the entire investment process independently, businesses can partner with an ESCO to access technical solutions, financial resources, and specialized management expertise.

The ESCO model is applied in many fields, including energy consumption system modernization, equipment upgrades, operational system optimization, and rooftop solar power development. This is an approach that helps businesses gradually improve energy efficiency while supporting emission reduction and sustainable development goals.

The role of the ESCO model for businesses

The ESCO model not only provides technical solutions but also helps remove barriers related to investment capital, expertise, and energy management. The specific role depends on the scope of services and the chosen cooperation method.

• We provide the best consulting engineers to ensure that the evaluation activities at the enterprise achieve optimal results. This is always guaranteed, and businesses don’t need to worry, because when participating in the ESCO market, the energy savings benefits at the enterprise are also linked to the benefits that the ESCO will achieve.
• The main point of contact and responsible for negotiating with energy suppliers to ensure the type of energy supplied is compatible with the equipment systems at the enterprise.
• Ensure that energy usage activities within the enterprise comply with legal requirements regarding energy conservation and efficiency.
• Directly search for and work with suppliers of energy-saving equipment, with the task of selecting the most suitable equipment for the company’s energy saving project.
• Work with contractors to select the appropriate contractor for the installation, operation, and handover of energy-saving equipment for the project.
• Commitment to savings or sharing of savings: With the two forms of ESCO business, the role of the ESCO differs in each case.
  • The form of guarantee for energy savings commitment: ESCOs will commit to the amount of energy saved by implementing the solutions, while businesses will work with financial institutions and secure funding for the project.
  • Savings-sharing model: ESCOs are responsible for negotiating with financial institutions to arrange funding for the project.

>> See more: https://vets.energy/dien-mat-troi-esco-toi-uu-chi-phi-nang-luong/

Benefits of the ESCO model

The solar ESCO model benefits both businesses and society.

For Businesses

• We provide comprehensive energy solutions including energy audits, planning, construction, installation, operation, and maintenance of energy infrastructure;
• No initial investment is required to build energy infrastructure;
• The ESCO company shares in the profits from the energy cost savings.
• They will have full access to the energy equipment system that ESCO has invested in after the agreed-upon period for reimbursement of the initial investment costs between the two parties.
• Guaranteed electricity consumption and cost savings throughout the contract period;
• Reduce energy costs, maintenance costs, legal risks, and avoid penalties;
• Control production levels and increase competitiveness.

For society

• Reduce greenhouse gas emissions into the environment and conserve natural resources.
• Creating jobs for the people, improving the trade balance, and reducing the need for infrastructure to produce energy;
• Contributing to ensuring national energy security and reducing price fluctuations;
• Reducing investment costs, decreasing load, minimizing losses, and increasing profits for power plants.

>> See more: https://vets.energy/esco-thuc-day-tiet-kiem-nang-luong/

Decrees and policies for developing the ESCO model in Vietnam.

ESCO service packages at VETS | EnE

VETS | EnE offers ESCO-based cooperation options aimed at addressing diverse needs for investment, energy saving, and energy system development within businesses.

The ESCO model ensures that investment costs are offset by energy savings for businesses.

Energy Efficiency Guarantee Package

With this service package, businesses proactively invest in energy-saving solutions. VETS | EnE participates in consulting, implementing solutions, and committing to energy efficiency levels according to the conditions agreed upon in the contract.

This option is suitable for businesses that have the capacity to allocate investment capital but require professional support in selecting solutions, organizing implementation, and evaluating energy saving results.

Profit-sharing package

VETS | EnE provides consulting and investment in energy-saving equipment for businesses. Both parties have agreed on a profit-sharing mechanism based on achieved savings and cooperation terms.

After the agreed-upon repayment period for the investment costs, the equipment may be handed over to the enterprise for continued operation under the terms of the contract. The payback period and the method of benefit distribution should be determined based on the expected efficiency, investment costs, and characteristics of each project.

This model helps businesses access solutions to improve energy efficiency while linking the interests of all parties to the project implementation results.

Electricity purchase and sale package

VETS | EnE participates in consulting, investing in, and implementing energy systems according to the agreed-upon cooperation plan. Businesses use electricity from the system and pay according to the mechanism and price stipulated in the contract.

For rooftop solar power projects, this option can help businesses access on-site electricity without having to directly invest in the entire system upfront.

Economic efficiency should be assessed based on the contracted electricity price, projected electricity output, load characteristics, and related costs.

Financial guarantee package

For businesses that want to implement energy-saving solutions themselves but face difficulties with funding, VETS | EnE assists in connecting and arranging financing options with banks according to the project’s conditions.

This solution provides additional funding options, allowing businesses to consider implementing energy efficiency improvements that align with their investment plans and financial capabilities.

VETS| EnE first ESCO solar power project

Building on its expertise in energy auditing and consulting on energy-efficient solutions, VETS | EnE is progressively expanding its capabilities to meet the growing energy transition needs of businesses. The solar power ESCO project at KCC Vietnam Investment, Production and Trading Co., Ltd. is not only a milestone in the collaborative development between the two companies but also represents a significant shift from solution consulting to realizing energy saving opportunities in practical operations.

Inauguration Ceremony of the ESCO Solar Power Project at KCC Vietnam Investment Production Trading Company Limited

With a total capacity of 300kWp, the solar power system, once completed, will bring many practical benefits to the KCC Vietnam factory:

• Significant savings in electricity costs during the production process.
• Actively harness clean energy from sunlight.
• Reducing CO₂ emissions contributes to achieving green development goals.
• Increase investment efficiency and enhance the long-term competitiveness of businesses.
• Towards a sustainable production model in line with current energy transition trends.

The 300 kWp rooftop solar power project at KCC Vietnam Factory marks a significant step forward as VETS | EnE takes on the role of investor for a solar power ESCO project for the first time, affirming its development orientation from consulting solutions to realizing energy saving opportunities, accompanying businesses on their journey towards green energy transition and sustainable development.

>> See more: https://vets.energy/vets-ene-khanh-thanh-du-an-esco-dien-mat-troi-dau-tien-tai-kcc-viet-nam/

VETS | EnE – Consulting and implementation partner for ESCO solutions

With experience in consulting and implementing energy solutions, VETS | EnE continuously expands its capabilities, gradually realizing energy saving solutions and developing renewable energy through the ESCO model. In each project, VETS | EnE focuses on every step, from surveying and assessing electricity needs, designing solutions, to implementation, construction supervision, and operation, aiming to ensure technical quality, safety, and long-term operational efficiency.

VETS | EnE partners with businesses through a comprehensive process, from surveys and in-depth consultations to the design and implementation of solutions tailored to their specific needs.

Through collaborative initiatives, VETS | EnE aims to connect expertise, technical solutions, and investment resources to meet the specific needs of each business. Choosing the right ESCO model will provide businesses with additional options for accessing energy solutions, improving cost management capabilities, and gradually achieving emission reduction goals. This will create a foundation for businesses to increase their adaptability to ESG requirements, enhance competitiveness, and move towards sustainable development.