Energy Savings Performance Contracting by iei21258

VIEWS: 7 PAGES: 27

									Energy Savings Performance Contracting
    ESPC and State of Nevada Partnership




         Nevada State Office of Energy
     http://www.energyservicescoalition.org/chapters/NV/index.html



        Joint Military Affairs Committee Meeting
                       August 22, 2007
                     Presentation Outline

•   Energy Efficiency: Issues and Problems.

•   What is Energy Savings Performance Contracting (ESPC)?

•   How does ESPC Work?

•   ESPC / ESCO Program (Objectives, Evolution, Funds and Capabilities).

•   ESPC / ESCO Program Process Steps.

•   Potential ESPC Program Savings (examples).


          • Nevada ESPC:
              1. NRS 332 & 333A
              2. Process Flow
              3. Performance-Based Retrofit Projects


• ESPC Opportunities for DoD Installations in Nevada?
                  The Energy Efficiency Opportunity

            Energy Efficiency: America's Greatest Energy Resource
      Geothermal, Solar, and Wind                                           Energy Savings
                                                                            Domestic Production
                     Hydroelectric
                                                                            Net Imports
        Wood, Waste, and Alcohol

                   Nuclear Power

                             Coal

                      Natural Gas

                        Petroleum

Energy Efficiency and Conservation

                                     0     5     10    15     20       25    30    35    40       45
                                                            Quads (2004)

                                     Source: Alliance to Save Energy
Energy Efficiency for Public Facilities:
    Common Issues & Problems

  Limited budgets
  Maintenance problems and comfort complaints
  Limited expertise on technologies
  Utility Costs on the rise
  Limited Funding sources

  The Vicious Cycle does not seem to end!
            The Vicious Cycle
                                                More
                                                breakdowns
Declining             Deferred
revenues             maintenance
                         and
                                                Reduced
                        repair                  comfort
Higher
                      of aging
costs
                      building
                      systems                   Higher
                                                energy
                                                consumption




   Break the downward spiral…….Participate in ESPC Programs.
 Performance Contracting Program: An Overview
Program Objectives
To conserve electricity, natural gas and water. To modernize equipment, improve comfort and
maximize staff productivity. To implement the program on a self-funding basis by reductions in the
existing facilities budget.

Self-Funding
The program uses three funding sources: energy savings, operations savings and utility company
rebates to cover all program costs.

Guaranteed
The Program will be self-funding or a check will be issued to cover the difference between guaranteed
amount and actual amount saved.

Range of Services
Energy Efficient Lighting          Indoor Air Quality Analysis         HVAC Automation
Modernizing Temp. Controls         Thermal Storage                     Solar Panels
Lighting Controls                  Irrigation Management Systems       Training Services
Frequency Drives                   Tower Free Cooling                  Chiller Modernization
Fire/Security Systems              Fuel Cell Technologies              Co-Generation

Delivery of Services
The ESPC delivers the program on a design/build basis. All elements of engineering, equipment
selection, installation and equipment maintenance are included in the offering.
     What    ESPC has to offer?
• Contracting vehicle to turn wasted energy and
  operating costs into capital improvements
• Improvements/Operational Cost-Savings
  Measures (OCMs) are financed through
  installments
• Annual payments paid with utility and energy
  related O & M savings
• Agency budget is not affected
• Savings and performance are guaranteed
• At the end of contract, agency retains 100% of
  the future energy savings
(continued) What   Performance Contracting has to offer?

• Energy Service Company (ESCO)
• ESCO Expertise from onset to completion
   • Energy efficiency
   • Operation and maintenance of buildings
   • Project cost assessment
   • Project financing
   • Construction management


• Comprehensive, whole-building approach

• Training for building staff

• Ongoing project monitoring and trouble-shooting to
  ensure sustained savings
              How ESPC Works

                                  G
              S    CASH FLOW      U
                    M&V COSTS
              A                   A
              V     DEBT          R   CASH FLOW
              I                   A
                   SERVICE            TO OWNER
              N                   N
OPERATIONS    G                   T
  BUDGET      S                   E
                  OPERATIONS      E
                                      OPERATIONS
                                  D
                    BUDGET              BUDGET



   Before              During              After
Performance         Performance        Performance
  Contract            Contract           Contract
         FROM ANOTHER ANGLE




                         Money otherwise
                         owed to the gas,
                         electric or water
                         utility pays for
                         equipment!

Annual
Budget




                     Annual
                     Budget
 Types of Cost Saving Measures: Many Options

Lighting Retrofit             Micro-Turbine/ Solar Retrofits
Air Quality Survey            All Mechanical Equipment &
                              Component Replacement & Repair
Duct Cleaning/Air-Balancing
                              Energy Management/Automation
Economizer Installation
                              Control
Field Turf Retrofits
                              Fire/Life Safety Systems & Services
Irrigation Retrofits
                              Co-Generation Systems
Chiller Optimization
                              Maintenance/Training Services
Adjustable Frequency Drive
                              Chiller/Boiler and Package HVAC
Roof Replacement              Replacement
Emergency Generator           DDC, Electronic, Electric and Pneumatic
Replacement                   Control Repair and Replacement
                    Which one is better?
Conventional Bid/Spec vs. Performance Contracting: Differences


                     Bid/Spec         Performance Contracting

    Financial        Capital/Bond     Current Budget

    Relationship     Only during      Continuous throughout the life
                     installation &   of the contract (15 years)
                     warranty

    Upfront Fees     Yes              No

    Performance      No               Operational and financial
    Guarantee                         performance is Guaranteed


    Change orders    Yes              No
                   What about risks?
  Performance Contracting projects are significantly lower risk than
              traditional construction/retrofit projects

  Annual Budget          • Design build process gives agency
AFTER Improvements         control of outcome
                         • Single point of responsibility
                           eliminates finger pointing
                         • Guaranteed Results
                             • The equipment will perform as
                               intended
                             • The project will perform financially
                               as intended
                             • The ESCO is obligated contractually
                               by a performance guarantee
Performance Contracting: The End Results


• Better Buildings! Improved Comfort!
  Maintenance Problems Solved!

• Cuts energy cost up to 25% or more

• Pay for projects with no up-front funds
  (your utility budget pays for the projects)

• One-stop shopping (single contract for
  multiple projects)
              ESPC: How Can I Get Started?

    Qualify Opportunity

     Preliminary Audit
Benchmark     Gather data,            Initial
 facilities    visit sites           Proposal



                Execute Energy Audit Agreement

                      Comprehensive Analysis
                Define specific            Develop costs   Prepare EAR and
               projects in scope            and savings       Agreement


                                         Implement Performance Contract

                                           Program Implementation
                                                               Equipment
                                   Engineering design,                         Monitor/
                                                             procurement,
                                    project scheduling                       Verify Savings
                                                              construction
         Implementation Plan

• Select a 3rd Party Consultant and an ESCO
• ESCO Conducts a Financial Grade Audit
• Agency/ESCO Enter into a Contract
• Design/Construct/Install/Commission
• Post-installation Measurement and
  Verification
• Operation/Maintenance performed by the
  ESCO
       Energy Saving Companies (ESCO) Role



                                                                                      Net Savings
•   Reduce total operating costs;
     • Electricity
     • Gas                                                                            M&V, Support
     • Water                                                                          Services




                                                      Total Savings
•   Replace aging energy assets
•   Enhance water revenue




                                                                      Lease Payment
    streams
•   Provide real-time energy                                                          Performance
    monitoring                                                                        Guarantee to
                                                                                      Cover Lease
•   Guaranteed performance
                                                                                      Payment




                            “We understand your challenges.”
 ESCO puts the pieces together

Identify and evaluate opportunities (energy audit)
Design systems (engineering), specify & purchase
Manage construction
Arrange for financing
Provide long-term energy management services
Guarantee performance!
            Fund Sources: Who Will Pay?

                      State Grants &
                      Loan Programs

Federal Grant &                         Bonds, Special
 Loan Program                          Assessments, etc.



  Utility Rebates                         Operational
   & Incentives                            Savings


                    Utility Savings
    POTENTIAL PROGRAM SAVINGS (EXAMPLE)

  Utility          Annual Cost               Proposed        Reduction(%)
  Type                ($)                 Annual Savings ($)

Electricity      $200,000                $50,000                 25
Natural Gas      $150,000                $45,000                 30
Water            $25,000                 $5,000                  20
__________________________________________________________________________
Total             $375,000                $100,000                   27%

        + Projected Annual O&M Savings:   $5,000

        TOTAL ANNUAL SAVINGS:             $105,000
        Pay Back Period:                                 3-7 years

        Lease Purchase Agreement:                        $300,000-700,000
        Capital Contribution:                                ??
        Grants and Rebates:                              $10,000
        POTENTIAL PROJECT SIZE:                          $310,000-710,000
        15 YEAR TERM AT 4.25%             $45,000/year
    STATE OF NEVADA (NRS 333A TEAM)
Operational Savings Performance Contracting


       •   Nevada State Office of Energy
       •   Treasurer’s Office
       •   Attorney General Office
       •   State Bond Counsel-Swendseid &
           Stern
       •   Nevada State Purchasing Division
       •   State Public Works Board
       •   Buildings and Grounds
       •   Energy Services Company
                        NRS 333A PROCESS FLOW

                            FIVE STEPS PROCESS

            1                            2                               3


          RFQ                         RFP                     Audit Contract Execution
Pre-qualify 3rd Party         Preliminary Audit Reports        Investment Grade Audit
Consultant & ESCO            Cash Flow/Finance Options        M & V Savings Guarantee
                                   Project Schedule               Project Financing



             Notice to Proceed
                                                  Implementation
            Complete Engineering
                                                     Training
              Prepare Bids for
                                                    Post M & V
                Subcontracts
                                                  Commissioning
               and Equipment
                        4                                 5
    PERFORMANCE-BASED RETROFIT PROJECTS
               PROCURED PURSUANT TO NRS 333A and NRS 332
                                As of August 22, 2007

•   STATE PILOT PROJECTS
        1.   Western Nevada Community College (1.7M, 2005, 6%+)
        2.   Northern Nevada Correctional Center (4M/8.5M, 2005/2007, 1%+)
        3.   West Charleston Campus Project ( 3M, 2007,NA)

•   FUTURE STATE PROJECTS
        1.   Department of Corrections (Statewide 6 prisons)

•   COMPLETED NON-STATE PROJECTS
        1.   Pershing County School District (1.3M, 2005, 12%+)
        2.   White Pine County School District (3.4M, 2005, 6%+)
        3.   White Pine County (68K,2005, 5%+)
        4.   Pershing County (128K,2005, 6%+)
        5.   Lincoln County School District (660K, 2005, 6%+)
        6.   Mineral County school District (2M, 2007, NA)

•   OPEN NON-STATE PROJECTS
        1.   Clark County School District
        2.   Washoe County School District
        3.   Churchill County School District
        4.   Humboldt County School District
        5.   City of Henderson (2.8M, 2007, 8-10%+)
ESPC Opportunities for DoD Installations in Nevada
White House Directs Agencies to Submit ESPC and UESC Assessments


  The White House Council on Environmental Quality has issued a
          memo directing federal agencies to significantly
     increase their use of energy saving performance contracts
       (ESPCs) and utility energy services contracts (UESCs).

    Agencies are required to inform the U.S. Department of
   Energy about their initial assessment of ESPC and UESC
               opportunities by Sept. 18, 2007.

                  FEMP will help agencies establish
     energy efficiency investment targets, a percentage of which
                shall be through ESPCs and UESCs.


                Source: http://www1.eere.energy.gov/femp/
   Energy Savings Performance
           Contracting



Projects pay for themselves!




         Savings stack up over time…
Energy Savings Performance Contracting
    ESPC and State of Nevada Partnership




             QUESTIONS?
        Joint Military Affairs Council Meeting
                  August 22, 2007

								
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