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					                  Defense Transformation Institute

Annual Meeting
San Antonio, TX




            Energy Conservation: Projects Using Performance
                              Contracting
                                            Mark K. Krog
                                             Account Executive
                                           Siemens Industry Inc.
                            Joint Base Sustainable Energy Workshop, San Antonio, TX
                                                 June 9, 2010




          June 9, 2010
          Slide 1
                  Defense Transformation Institute

Annual Meeting                                       Agenda
San Antonio, TX




  •    Introduction
  •    Brief Comparison of Delivery Methods
  •    Project 1 – Energy Security
  •    Project 2 – Demand Side Management
  •    Project 3 – Effluent Irrigation
  •    The Process
  •    Conclusions


          June 9, 2010
          Slide 2
                   Defense Transformation Institute

Annual Meeting                                                                   Introduction
San Antonio, TX



        • Performance Contracting
                  – Utilizes legislation to address infrastructure issues in a proactive manner
                  – Allows for modernization to occur when capital funds are limited or restricted
                    through Energy and Cost Savings
                  – Re-directs operational expense towards capital improvements with a
                    Neutral/Positive Cash Flow
                  – Turnkey Project Performed Now
                  – Guaranteed Results
                  – Alternative Financing using private sector funds
                      • Avoids U.S. Government increasing its debt (taxpayers)
                      • U.S. Government has flexibility on payment(s)



          June 9, 2010
          Slide 3
                   Defense Transformation Institute

Annual Meeting                                                                 Introduction
San Antonio, TX



        • What is Performance Contracting?
                  – Preliminary evaluation of opportunities with the ESCO 100% at risk
                  – Letter of Authorization outlining project goals and constraints
                  – Detailed/Investment Grade Audit to define final costs and savings to meet
                    goals within constraints
                  – Contract that includes scope, guarantees, financial solution and ongoing
                    division of responsibilities
                  – Turnkey Project Implementation
                  – Performance period including Measurement & Verification, Service, On-going
                    Maintenance



          June 9, 2010
          Slide 4
                      Defense Transformation Institute

Annual Meeting                                                Delivery Methods
San Antonio, TX



        • Bid & Spec
                  –    Generally Least Expensive in initial price
                  –    Potentially largest cost overruns
                  –    Owner knows exactly what they want
                  –    Least measureable in performance
        • Design/Build
                  – Some price protection
                  – Owner knows goal, but flexible on exact method to obtain the goal
        • Performance Contracting
                  – Not necessarily a delivery method as much as a financing tool to
                    get some operational benefits implemented
                  – More being performed with capital funds under new tool
                  – Elements of Design/Build, but most applicable for measurable
                    goals (maintain and operate)


          June 9, 2010
          Slide 5
                      Defense Transformation Institute

Annual Meeting                                                Delivery Methods
San Antonio, TX



        • Bid & Spec
                  –    In federal government usually small energy projects
                  –    Otherwise large projects (typically new construction)
                  –    Capital Budget
                  –    A/E may be used
        • Design/Build
                  – Small to large projects
                  – Bonds, Capital Budget
                  – Integrated Design/Construction Team
        • Performance Contracting
                  – Relatively medium to large projects
                  – Operating Budget or alternative financing
                  – Results oriented, incorporate measurable objectives

          June 9, 2010
          Slide 6
                   Defense Transformation Institute

Annual Meeting                                        Case Studies
San Antonio, TX



        • Three projects illustrate potential benefits and
          opportunities:
                  – Scope Outline
                  – Project Results
                  – M&V Approach




          June 9, 2010
          Slide 7
                      Defense Transformation Institute
                                                                 Project 1 – Energy
Annual Meeting
San Antonio, TX                                                             Security
  • Scope
         – Virtual Chiller Plant
                  •    Elimination of $10 million in capital funding
                  •    Redundancy in SCIF area
                  •    Cool 9 facilites with 2 – 4 chillers instead of 15 chillers
                  •    Extend equipment life of major equipment
                  •    Reduction in maintenance costs and required manpower
                  •    Cost to implement just over $1 million
         – Upgrade to energy management control system
                  • Remote Monitoring and Control
                  • Reduced Travel and Labor
         – Pump Motor Replacements
                  • VFD rated hi-efficiency motors
                  • Hi-efficiency motor replacements
         – Synthetic turf (football field) – meet PT needs
         – DOE’s Energy Security Project of the Year in 2007
                  • Also recognized by MAJCOM for 2008

          June 9, 2010
          Slide 8
                  Defense Transformation Institute
                                                     Project 1 – Energy
Annual Meeting
San Antonio, TX                                                 Security
  • Results
         – System are working close to design
         – Savings are “greater” than predicted (Electrical cost reductions of up
           to 15% by site)




          June 9, 2010
          Slide 9
                  Defense Transformation Institute
                                                     Project 2 – Demand
Annual Meeting
San Antonio, TX                                       Side Management
  • Scope
         –    Lighting Retrofits
         –    Controls Upgrades with open protocol
         –    Water Fixture Retrofits
         –    HVAC Upgrades
                  • Plant additions to accommodate future expansion
                  • Thermal storage to provide redundancy and load shaping
         – Rebate Procurement




          June 9, 2010
          Slide 10
                  Defense Transformation Institute
                                                      Project 2 – Demand
Annual Meeting
San Antonio, TX                                        Side Management
• Results
       – Lighting (reductions of 30%) is straightforward for energy (utility rebate programs
         typically provide this assurance) – ensure performance is included
       – HVAC – Performance is guaranteed by measurements of energy but also
         ongoing ability to address loads efficiently. Thermal storage and central plant
         work provide not only energy savings but future cost reductions for expansion
       – Rebate Procurement (seven figures) - provides an immediate funding source.
         The use of load management techniques (Controls and Thermal Storage)
         provide a more attractive load profile to CPS




          June 9, 2010
          Slide 11
                   Defense Transformation Institute
                                                       Project 2 – Demand
Annual Meeting
San Antonio, TX                                         Side Management
        • M&V Approaches
                  – IPMVP Option A for Lighting
                     •   Baseline sampling measurements of lighting energy
                     •   Post-installation sampling measurements lighting energy
                     •   Stipulated operating hours
                     •   Light level measures to ensure performance
                  – IPMVP Option B for HVAC and Controls
                     • Baseline modeling or measurements of system loads/energy
                     • Periodic measurements of HVAC and Controls systems to
                       ensure ongoing performance criteria are sustained




          June 9, 2010
          Slide 12
                  Defense Transformation Institute
                                                     Project 3 – Effluent
Annual Meeting
San Antonio, TX                                                 Irrigation
  • Scope
         – Two 11M gallon ponds (one acts as a water
           hazard on the golf course) for effluent storage
         – Two pump stations and 3 miles of piping
         – Negotiations for effluent water delivery and
           design and routing of piping for the City




          June 9, 2010
          Slide 13
                  Defense Transformation Institute
                                                     Project 3 – Effluent
Annual Meeting
San Antonio, TX                                                 Irrigation
• Results
       – System is working as designed
       – Savings are greater than predicted
         (155,000 kgal of effluent for the 11+
         months compared to the predicted
         160,000 kgal/yr)
       – Irrigation loads still being added
       – 2003 Presidential Award for
         Leadership in Federal Energy
         Management Award for “Results”
       – Three subsequent task orders (to
         date)

          June 9, 2010
          Slide 14
                  Defense Transformation Institute
                                                     Project 3 – Effluent
Annual Meeting
San Antonio, TX                                                 Irrigation
    • Strengthened ties between the City and largest
      customer
    • M&V Approach
           – IPMVP Option C
           – Baseline identification of irrigation needs
           – Ongoing post-installation whole bill monitoring with
             comparison to the irrigation needs projections.




          June 9, 2010
          Slide 15
                  Defense Transformation Institute

Annual Meeting                                                                         The Process
San Antonio, TX


                                                Federal Agency
                                           Building Owner/Operator
        Authorization for Audit   Task Order           Contract Closure              Change of usage,
                                                                                  consumption, accounting




                  Cursory          Investment Grade                                        Final
                                         Audit               Implementation
                  analysis                                                                 Phase




                                                                                       Energy saving,
                                                        Planning, installation,         measurement,
             Cursory Study          Detailed Study      project management        verification, operations
                                                                                     and maintenance

                                                  Siemens
                                        Siemens Building Technologies



          June 9, 2010
          Slide 16
                   Defense Transformation Institute

Annual Meeting                                        Conclusions
San Antonio, TX



        • Performance contracting is a possible tool
        • Measures can be energy, utility or cost reductions
        • Measures can be revenue enhancing
        • In other cases, measures can be politically
          motivated
        • Regardless, the projects should be goal oriented
          and measurable
        • Financing should be considered as one of the
          primary drivers

            June 9, 2010
            Slide 17
                  Defense Transformation Institute

Annual Meeting
San Antonio, TX




                                           Questions




          June 9, 2010
          Slide 18

				
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