What is ESCO?
Energy Services Contracts (ESCO) project, developed by Quintagroup in cooperation with EBRD Energy Efficiency Unit and commenced in 2016, is designed to develop energy efficiency services in public procurement of Ukraine, implementing a set of innovative Open Data tools. Energy Services Contracts mechanism is functioning within the ProZorro electronic public procurement system and is realized with the OpenProcurement system, an open-source e-procurement toolkit developed by Quintagroup.
ESCO specifics
Energy Services Contracts mechanism offers an ability to combine the interests of the customers and providers of energy-saving activities. The most significant modification in the tendering process, in comparison with other Prozorro e-procurement procedures, is the introduction of the awarding criteria. While previously implemented procedures regard the lowest cost, suggested by an energy service company during an auction, as the defining criteria, for ESCO tenders it is the energy service contract performance indicator. This indicator is automatically calculated with the NPV formula (net present value), elaborated in conjunction with the EBRD.
The multivariable auction in ESCO procedure
ESCO procedures are carried out through the 3-round multivariable auction developed as a part of the OpenProcurement Auction module. This auction type is a more complex one, as compared to the classic descending or ascending auctions. Here, the lot value and the auction participants’ bids depend on a set of non-price criteria, for example, the terms of contract delivery, the contract duration, the investment-profit correlation, and other factors that may be important for the implementation of energy-saving measures. Each of these criteria can be assigned its individual rate, or weight, based on its importance for the service ordering party, which is also included in the NPV formula calculations. The multivariable auction bidders compete by adjusting their energy service provision conditions to the optimal criteria value combination which may best fit the contractor’s needs.
The gains of ESCO procedures
The ESCO tender winners will renovate heating systems or heat insulation at the expense of investors. Therefore, energy resources costs may be reduced, usually at least by 20%, and a loan may be serviced with the saved money. Thus, the ESCO project is aimed at increasing the visibility of energy efficiency horizontal policy in the national public procurement processes and better transparency and better insights into the efficiency of public procurement.
The core technologies
The OpenProcurement toolkit encompasses a Central database (CDB), the Auction module, and an API enabling interaction between the third-party web platforms and the CDB. Commercial web platforms interact with the CDB via the OpenProcurement API, the web interface based on the JSON notation. This way, they give the procuring entities, suppliers and regular visitors access to the system and provide suppliers with temporary credentials to access the Auction module for participation in the auction. The toolkit implementing the OpenProcurement API has been developed using powerful open-source web technologies such as Python, Pyramid, AngularJS, Bootstrap, Flask, CouchDB, and PouchDB to ensure reliable functionality and secure workflow.
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