Energy Savings Performance Contracting · Energy Savings Performance Contracting “a vehicle for...
Transcript of Energy Savings Performance Contracting · Energy Savings Performance Contracting “a vehicle for...
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Energy Savings Performance Contracting “a vehicle for public facility retrofits”
Dale L. Hahs Energy Services Coalition 913-488-7208 [email protected]
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Who is ESC?
Energy Services Coalition • 501(c)(3) • Nearly 400 public and private
sector members nationwide – Financiers, ESPC administrators, end
users, ESCOs, manufacturers reps, utility representatives
• Outreach and Education • Code of Conduct • Technical Assistance Provider
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Resources
• 10 Key Attributes of Successful Programs
• Race to the Top - illustration of success
• Nation’s case study database • Papers – webinars • HANDS ON SUPPORT
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What is it?
“The use of guaranteed savings from the maintenance and operations budget (utilities) as capital to make needed upgrades and modernizations to your facility environmental systems, financed over a specified period of time.”
-United States Department of Energy
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A diversion of utility dollars to effect . . . Infrastructure Modernization Long term reduction in energy
consumption Environmental Stewardship
and A way to reach your efficiency goals
Another Perspective
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Public Facility Retrofits
Options for upgrades and improvements A. Funded by capital improvements B. Funding grants C. Funding by efficiency
i. not new ii. not sexy iii. very different
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What’s the rub?
Costs too much Loss of control Savings aren’t real Savings aren’t persistent Guarantees are worthless Risk of poor project
And here’s a new one
… is it debt????
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Costs too much
Studies say no Full transparency – NOT OPEN
BOOK Some states bid the
subcontractors – not the most desirable but it can work
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Loss of control
Who’s project is it anyway Oversight from the program Oversight from state landlord
agency Oversight from owner’s
representative
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Savings aren’t real
Program integrity is at risk when savings are stipulated Understand M & V costs up front M & V costs must be in the IGA Why reclaim the risk
Escalation factors
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Guarantees are worthless
Stipulate the savings – I concur Deploy a program per best
practices – expect success
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Risk of poor project
Selecting the provider you’ve known the longest
Use their RFQ/RFP Use their contract Accept the stipulated savings Don’t worry about M & V Have no oversight Your odds just keep going up
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Capitalization is debt
Tax exempt municipal lease Non appropriations clause Capital lease not operating lease
?
What do you call the income generated from the sale of potable
water?
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Solutions
Templates – all 10 key attributes State program extended to local
governmental entities Leadership Oversight The value of technical assistance Outreach and education
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Remaining Challenges
Moody and Fitch Small and rural projects Measuring success Third party measurement and
verification
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Questions
Unresolved . . . Raises another thought . . . But what about . . . Tell me more about . . . Thank you!
Dale L. Hahs
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Client
Finance ESPC Project
Finance Repayment
Finance
Savings from Improvements
Excess Savings
Utility and operations budget
How Does The Money Flow?
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Results
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To Do What?
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Contro
ls
Lighti
ng
Distrib
ution
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Chiller
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Water c
onse
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Other M
easu
res
Variab
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eed d
rives
(VSD)
Boilers
High-ef
ficien
cy m
otors
Geothe
rmal
heat
pumps
Water h
eater
s
Miscell
aneo
us
Buildin
g env
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Packa
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Other H
VAC
Indus
trial p
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Renew
ables
Other D
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Air qua
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Backu
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Dispersion of Technologies in Energy Saving Performance Contracting
by ESCOs (2005)Adapted from ERNEST ORLANDO LAWRENCE
BERKELEY NATIONAL LABORATORY LBNL-55002Public and Institutional Markets for ESCO Services:
Comparing Programs, Practices and Performance
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Project Commissioni
ng
Training
Measurement & Verification
Performance Management
Comprehensive Energy Audit
Engineering and Design
Funding Coordination
Workshops and Interviews
S
Project Development
Construction Installation Construction
Management
Implementation
Equipment
Selection
Typical Process
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Financing Vehicles
Municipal Lease http://energyservicescoalition.org/resources/financing.htm
Bonds Traditional Tax Credit Bond Financing Community Development Bonds
Grants and Incentives Utility Incentives American Recovery and
Reinvestment Act Incentives
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Why Use Energy Performance Contracting?
Speed of the process from beginning to post construction
Single Point Accountability before, during, and after the construction period.
Quality Assurance – Performance and savings are guaranteed
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Benefits
Contractually guaranteed measured savings
Integrated project analysis, design, and construction
Long term monitoring of savings and performance
Up-to-date training for facility operating personnel
Services and materials based upon quality and life cycle value, rather than on lowest first cost
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Pitfalls
Overzealous savings projections It’s my project, not yours We’ll work that out later Only we can pick products Training, who needs training Commissioning vs. Start-up Energy cost escalations Savings based on averages Who do I call when What assumptions Facility dynamics
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Energy Service Company’s Role
Identify and evaluate opportunities Design systems (engineering),
specify & purchase Manage construction Arrange for financing without upfront
costs Provide long-term energy
management services Guaranteed performance!
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Energy Services Companies
How do I pick one?
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Owner’s Role
Oversight Clear Understanding Savings Project Scope What If Assumptions Information Sharing
Win, Win or No Deal
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Measurement and Verification
A. Retrofit Isolation: Key Parameter Measurement
B. Retrofit Isolation: All Parameter Measurement
C. Whole Facility
D. Calibrated Simulation
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Resources
www.energyservicescoalition.org Performance Contracting and Energy Efficiency in the State Government
Market http://eetd.lbl.gov/EA/EMP/reports/lbnl-1202e.pdf Introduction to Energy Performance Contracting http://www.energystar.gov/ia/partners/spp_res/Introduction_to_Performan
ce_Contracting.pdf Emerging Technologies for Energy Savings Performance Contracting in
the Federal Sector http://www1.eere.energy.gov/femp/pdfs/emerging_technologies_ase_repor
t.pdf Emerging Technologies for Energy Savings Performance Contracting in
the Federal Sector http://www1.eere.energy.gov/femp/pdfs/emerging_technologies_ase_repor
t.pdf Funding Options and Financial Incentives for On-Site Renewable Energy
Projects - Introduction to Energy Performance Contracting http://www.naco.orhttp://www.osti.gov/bridge/servlets/purl/796107-
9vxYdG/native/796107.pdfg/cffiles/ggi/webinars/pdfs/CatalystFinancialGroup_NeilZobler.pdf
Assessing U.S. ESCO Industry Performance and Market Trends: Results from the NAESCO Database Project http://www.osti.gov/bridge/servlets/purl/796107-9vxYdG/native/796107.pdf