Reduction of Energy bills with the OesteLED ESCO project

Developed in 2019 by the Oeste Regional Energy Agency – Oeste Sustentável, the OesteLED streetlighting ESCO project was implemented in 12 municipalities. All together, they constitute an Intermunicipal Community, NUT III region in Portugal, with a population of approximately 365 000 inhabitants. The project is the biggest LED streetlighting project ever launched in Portugal, and among the 10 biggest in the world.

Implementation of the project:

This project is characterized by the replacement streetlight system by others with LED technology. The objective of the project is to improve the energy efficiency of Public Lighting, reduce the costs costs associated with the consumption and maintenance of electricity, reduce GHG emissions and create a Social Energy Fund. 

Before the implementation of the Project

After proceeding to LED installation

The project consisted in the replacement of 68,487 high pressure sodium luminaires with LED lighting technology. It amounted to an overall estimated 84% reduction in the streetlight electricity consumption for the whole region. The project has been supported by a financing model based on an ESCO energy contract. Such model is based on a relation between Energy Services Companies (ESCOs) and their clients, most of the time underpined by energy performance contracts (EPCs). The EPC commits the ESCO to installing the necessary equipment, provides a performance guarantee and establishes the terms of any upfront or ongoing payments, which are intended to be less than the financial savings realised by the project.

The project is a result of approximately 12,5 Million EUR investment over a 12 year contract. The contract enables an annual 3,4 Million EUR in energy savings where 58,85% is kept for the beneficiaries. The 12 municipalities were therefore free of any capital investment. The investment benefited from a large critical mass, due to the wide impact of the project. It resulted in the implementation of better and more attractive conditions for potential investors, but also more competitiveness. On the technical perspective, the technological risk was minimised by the compliance of streetlighting standards, as well as other national references such as the ones recognized by the current streetlight management and municipal concession.

Impact of the project:

This scenario resulted in large energy savings. This provided more space and a bigger capacity to distribute a higher percentage of savings in benefits for the municipalities. The municipilaties received a share of 58,85%, which is the biggest percentage of savings that was ever reached through the signature of an ESCO contract in Portugal (which is usually around 30%). The project is a major step regarding Energy Perfomance Contract experience in Portugal. Indeed, it enabled for the first time to have a cooperation between several municipalities for a common investment through the ESCO model. It also permitted the establishment of 12 independent concerted contracts for the 12 Local Authorities.
Beyond the innovative aspect of the financing scheme, the project also presents huge environmental benefits. It allowed for a reduction of around 1000 tonnes of Co2 on GHG emissions. It also contributes to the fulfillement of national and international strategies the Country/Region are involved in such as the PNAEE, the Energy-Climate Package and the Pact of Mayors.

The project has now been achieved, but it will still have a play in the "Smart Region" strategy that is implemented in West Portugal, complying with the designs of the Covenant of Mayors, for which all 12 municipalities are signatories.