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Performance Contracting Savings Potential

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									 STATE OF ALASKA
 DEPARTMENT OF TRANSPORTATION AND PUBLIC FACILITIES



ENERGY SAVINGS
PERFORMANCE
CONTRACTING




Energy Savings Performance Contracting
    Introductions


   Joel St. Aubin, P.E.: Chief, Public Facilities
   State of Alaska
   Department of Transportation & Public Facilities




Energy Savings Performance Contracting
    Topics


    Energy Saving Performance Contracting (ESPC)
          Define Performance Contracting
          Discuss Performance Contracting Process/Methodology
          Summarize State of Alaska Performance Contracting Project
          Discuss Project Financing
          Questions




Energy Savings Performance Contracting
   Performance Contracting


   • An innovative method for purchasing energy
     saving improvements in buildings
   • Single procurement to purchase complete
     package of services
   • Includes financing of all project costs
   • Payments to contractor are contingent upon
     actual level of savings


Energy Savings Performance Contracting
   Performance Contracting


      Traditionally, ESPC projects do not rely
      upon capital monies to fund facility
      infrastructure improvements (i.e. they are
      “self-funding”).




Energy Savings Performance Contracting
 Building Cost over 40 Years: Real World Costs*

                                                Construction
             Operation                             11%
               50%

                                                            Financing
                                                               14%




                                                 Alterations
                                                     25%

*ASHRAE - American Society for Heating, Refrigeration & Air Conditioning Engineers



Energy Savings Performance Contracting
 PC Methodology

          Performance Contract Phases


    Preliminary         Investment –        Engineering         Construction
    Energy              Grade Audit         Design/Build        Management
    Analysis




                                 Owner/Occupant       Monitoring
              Commissioning                           Measurement
                                    Training
                                                      Guarantee




Energy Savings Performance Contracting
    Project Specifics
                  Commercial Buildings - Energy Use Comparison

     ASHRAE 1995 HDD>7000

      State of AK Aggregate

      Public Safety Building

        Dimond Courthouse

       State Office Building
                                                                              32%
           Aviation Building                                                Potential
     Douglas Island Building                                                Savings

       Court Plaza Building

    DOT&PF Annex Building                                                   DDC
      Alaska Office Building                                                (Siemens)
                               0   50,000   100,000     150,000   200,000       250,000

                                              BTU/SQ. FT./YR


 Energy Performance Contracting
Energy Savings Performance Contracting
    Project Specifics




Energy Savings Performance Contracting
    Project Specifics




Energy Savings Performance Contracting
Energy Performance Contracting
    Project Specifics




Energy Savings Performance Contracting
    Project Specifics




Energy Savings Performance Contracting
    Project Specifics




Energy Savings Performance Contracting
    Project Specifics




Energy Savings Performance Contracting
    Project Specifics




Energy Savings Performance Contracting
 Energy Performance Contracting
    Project Specifics




Energy Savings Performance Contracting
Project Specifics
ECM Feasibility Matrix                                 0 - 5 Year Payback       5-10 Year Payback    10+ Yea




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   ENERGY CONSERVAT ION MEASURE




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                                                   D
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            BUILDING ID                        1          2      3        4       5        6      7      8
         CONST RUCT ION YEAR                  1949      1979   1975     70's    1973     80's   70's   60's
       GROSS SQUARE FOOT AGE                 57,652    40,128 79,116   41,974   214,426 63,000 43,000 24,000

Cooling Plant Upgrades
Heating Plant Upgrades
Lighting Systems
Energy Management System/ DDC
Upgrades
Ventilation Management/Demand Control
Utility Data Acquisition & Analysis System
Electric Motors/ Drives/ Pumps and Fans
Mechanical Equipment Upgrades
Water Conservation
Building Envelope Improvements
Domestic Hot Water Heating Systems
Office Equipment & Machine Load
Controllers

Notes:
  1. T he simple payback ranges above are for discussion purposes only. Savings and construction costs a
  Siemens' knowledge of the identified buildings, professional experience with similar facilities and sound e




Energy Savings Performance Contracting
Project Financing:

   Funding Solutions

     Financing:
       Capital Financing Arrangements
             Up to 25 Year Terms
             Aggressive Rates
             Multiple Funding Sources: 1st or 3rd Party Financing
      Capital Budget Allocations:
       Allocate Capital Dollars for All or Part of Each Project



Energy Savings Performance Contracting
 Financing: Business Methodology

      Identify & confirm financing early in audit
      process
      1st or 3rd party financing in agency’s best interest
      Guarantee 100% of documented savings
      NO SHARED SAVINGS—all savings above
      guaranteed amount are returned to Owner.




Energy Savings Performance Contracting
 Financing: Business Methodology (cont’d)

       Engineer the financial solution—No
       Surprises
       All unused construction contingencies will
       be returned to the Owner
       Siemens offers Industry-best interest rates
       Debt payments: monthly, quarterly, semi-
       annually, annually
       Open-book/Guaranteed Maximum pricing

Energy Savings Performance Contracting
 Questions?




Energy Savings Performance Contracting
 Implementation Costs
 Two Guarantees: Performance and Cost


   Construct the Performance Contracting scope
   as a Design-Build project with a cost-plus,
   fixed-fee/markup to a guaranteed maximum
   (GMAX) price, enabling contractor to manage
   the “first-cost” impact and minimize true life-
   cycle costs.



Energy Savings Performance Contracting
   Implementation Costs
   Cost of Audit: Cost-Plus (Inclusive in PC)
   Cost Category                          Percent of Project Construction Cost

     Overhead                                         10%
     Profit (EBIT)                                     8%
     Markups on subcontractors                         [1]
     Markups on equipment/supplies                     [1]
     Markups on self-performed work                    [2]
     Design                                            8-12%
     Construction Management                           5-8%
     Commissioning                                     2%
     Monitoring and verification                       2%

    No. of Note:
    [1] Siemens only marks up subcontractors, equipment/supplies that we procure directly.
    [2] Siemens SELF-PERFORMED work (Professional Services or EMCS Systems) is
        fully burdened inclusive of overhead & Profit

Energy Savings Performance Contracting

								
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