Michael Cecchini - New Mexico - Energy, Minerals and ...€¦ · and operational savings solutions,...

75%

25%

Sample Facility Costs

Energy

Maintenance

50%35%

15%Sample Facility Costs

Energy

Cost Avoidance

Maintenance

75%

25%

Sample Facility Costs

Energy

O&M

• Inefficient Building Issues• Lighting• Water• HVAC

• Aging Equipment• Emergency funding needed

for repairs & Deferred Maintenance.

• Spare parts expensive

• Budget Funds reducing• Costs going up

• Maintenance cost increasing• Spare parts cost increasing• Energy cost going up.

50%

35%

15%Sample Facility Costs

Energy

Cost Avoidance

O & M

• Replace the old Equipment• Put Cost Avoidance in place

• Building Automation • High efficiency HVAC• High efficiency Lighting• Increase building envelope

efficiencies.• Water conservation• Renewable Energies

• Reduce Maintenance• Increase Comfort levels

1. Provide a “Self-Funded” solution for an Energy and operational savings Project.

– The “Cost Avoidance “ dollars will actually “PAY” for the Project.

2. Provides additional funding to “Leverage” the energy project.

–The “Cost Avoidance” dollars, “Leveraging ” the budget dollars present to increase the Project Scope.–The Scope can be increased on the project with the additional “Cost Avoidance” dollars.

• ESCO- Energy Services Company• An ESCO is a commercial business that

provides and arranges financing for a broad range of comprehensive energy and operational savings solutions, including energy audits, design, and implementation, training, commissioning, measurement and verification.

Example Actual Project: Self-Funded Project w/ Positive Cash flow

• Project “Cost Avoidance” (12 year term)• 12 year Total Cost $7,611,026• 12 year Total Savings $8,011,190• Positive $400,164 Actual Cash Flow over life of the project

Definitive Scope of

Work

Definitive Term

Definitive Cost

Avoidance

1993

Sep 2011 PCPath Set for NM

Developing Pilot Programs

House Bill603 July 2009PC Legislation

PC EnablingLegislation Passed in NM.

2004

PC Projects CompletedThru 2004

Selection of ESCO

Audit the Facility

Verify the savings

Implement ECM’s

EMNRD Contact : Brian Johnson(505) 476-3313brian.k.johnson@state.nm.us

EMNRD Contact : Michael McDiarmid(505) 476-3319michael.mcdiarmid@state.nm.us

FinanceThe Project

Agency contactsEMNRD

Agency gathers data on the facilities to Support RFP Process

Issue RFP for Investment Grade Audit & Project Proposal to ESCO’s

Provide Walk thru and opportunity for questions for the ESCO’s

Enter Data in Energy Star Portfolio Manager to reference in the RFP

Building Sq. Footage

Building Utilities Data for 12 months

Building AgeAnd History

Building IssuesAsbestos, Etc..

Building AddressOr Location

Agency Selects short List of ESCO’s for final Interviews

Agency Awards Contract

Agency Selects ESCO

EMNRD Approves ESCO

The start pointis for the Agency to contact EMNRD

NM Energy Minerals and Natural Resources Department. (EMNRD)

An “Agency” is a School, Higher Ed, Municipality, County or State agency.

EMNRD is available to assist the agency with developing a Request for Proposal (RFP) to ESCO’s thru a bidding process.• EMNRD has sample RFP documents to use.

The Agency will need to compile the following info for the RFP Document:• Building age and history with environmental issues (Asbestos, etc.)• Square footage of each building on the RFP. • At least 12 months of utility data for each building.• Building name, locations and addresses.

The Agency will Request Bid responses from ESCO’s for the RFP.

The Agency will provide a Pre Bid Walk thru for the ESCO’s to walk the site(s) and ask questions.

The Agency Selects the ESCO through Agency procurement EMNRD Certifies the ESCO.

• The ESCO is a Qualified Provider for this project only. The Contract is awarded to the ESCO only After EMNRD

Approval.

EMNRD will provide a Model IGA Contract to Agency

EMNRD Reviews and certifies the completed IGA and Project Proposal from the ESCO.

Financing by ESCO provided thru a competitive process

ESCO Provides the IGA with Project Proposal.NOTE: Agency must have funding for IGA Costs

Utility Cost savings must meet or exceed cost of the project

Upon Approval From EMNRD the Project Proposal then moves to the Agency for approvals.

Process for Schools

Process for MunicipalitiesCounties, High Ed and State

EMNRD will Provide a Sample Investment Grade Audit (IGA) Document for the Agency to submit to the ESCO.

The Agency must have funding for the IGA cost in the event that they decide not to move forward with the project. (DON’T WORRY!)

The ESCO will provide the Audit per the IGA Document. The ESCO will Identify & list ECMs (Energy Conservation Measures) EMNRD will oversee the competitive financing process for the Final

Proposal that will be turned in with the IGA.

The ESCO Completes the Investment Grade Audit which includes:• A “shovel ready” Project

Proposal• Financing• Guaranteed terms• Guaranteed Scope

The EMNRD Reviews and approves the proposal

• The Path after EMNRD Approval.

• Determined by Agency

Superintendent and School Board gives approvals

School District budgets for the succeeding fiscal year are approved during the regular legislative session

PED compiles a list of school districts’ proposed projects, including information on annual payments and guaranteed savings.

Once this Special Fund has been set up and funded, the Implementation can begin in the succeeding fiscal year.

The Annual Performance Contract amount will be removed from the School’s SEG (School Equalization Guarantee) Account and placed into a “Public School Utility Conservation Fund” to fund the Performance Contract with.

Next, PED notifies the Legislative Finance Committee of the proposed projects, during budget hearings preceding the regular legislative session.

The Contract is presented for approvals of the Governing Council, Commission or agency head.

Once the Governing Council or Commission has approved the contract a Special Fund is set up for the sole purpose of paying the Performance Contract Costs.

Special Fund Appropriated from Operating Budget to Pay for the Performance Contract.

Once this Special Fund has been set up and funded, Implementation can begin.

The Performance Period for the Contracts begins at customer approval and sign off of project completion.

The Project does not have change orders unless there are changes that the customer requires.

The Project with All Energy Conservation Measures (ECMs) is ready to start Implementation

The ESCO is responsible for Managing the Project.Providing Training, Ensuring the Design and development of the project

The Project must have a Measurement and Verification (M&V) program to track and verify the savings of the performance Guarantee.

The ESCO can also be responsible for O&M if required for the project.

For Information on Performance Contracting, Go to:HTTP://www.CleanEnergyNM.org

Select Link: Clean Energy Performance Financing

Q: How Long can you finance an EPC Project?A: Up to 25 years, depending on the equipment Life expectancy.

Q: What types of Projects qualify for an EPC Project?A: Almost all retrofits projects that save energy.See (6-23-2 Item B of the Statutes)

Q: Who provides Financing for an EPC Project?A: The ESCO provides the financing as part of the EPC Project.

Renewable Energy for Schools

Michael CecchiniDirector of Business Development

Benefits of Renewable Energy for Schools

• Energy Cost Savings – Operating Budget

• Reduced Peak Demand Charges

• Clean Energy

• Curriculum Opportunity

Ways for Schools to Implement a Solar Project

• CES Procurement

• Design/Build/Own – GO Bond Funding

• Power Purchase Agreement – Third Party Funded & Owned

• Performance Contract – Incorporate Solar in with other Energy Conservation Measures (ECM’s) with a Guaranteed Savings Agreement which will self fund the project.

Installation Options for Schools

Installation Options for Schools

Parking Lot Shade Structures

Using New Mexico’s Energy Performance Contracting Law

Brian JohnsonESC Public Co-Chair

Facility Managers Training WorkshopOctober 31, 2012

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Basic Features of the Law

• schools, state agencies, municipalities, universities• energy savings are guaranteed• up to 25-year term allowed• all types of efficiency & renewable measures• EMNRD oversight:

– “Qualified Provider” certification– Energy savings are accurate and reasonable

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New Mexico’s Energy Performance Contracting Law• Where can I get help?

The Public-Private Partnership• How do I get started?

ESCO Selection• Your Future:

Projecting Utility Costs vs. Financing Costs• The Guarantee:

How Schools are Protected

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Where can I get help?

The Public-Private Partnership• EMNRD –

www.CleanEnergyNM.org• Energy Services Coalition –

www.EnergyServicesCoalition.org

• Schools: PED, PSFA

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www.CleanEnergyNM.org

Clean Energy Performance Financing• Model documents:

– Request for Proposals (RFP)– Energy Audit Contract– Guaranteed Utility Savings Contract

10/31/2012 New Mexico Energy, Minerals and Natural Resources Department

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School Capital Project Resources

Public School Facilities Authority• Bob Gorrell, Director• rgorrell@nmpsfa.org• 505-988-5989

Public Education Department• Antonio Ortiz, Director, Capital Outlay Bureau• antonio.ortiz1@state.nm.us• 505-827-661310/31/2012 New Mexico Energy, Minerals and

Natural Resources Department41

Energy Services Coalition

Brian Johnson, Public Sector Co-Chair• brian.k.johnson@state.nm.us• 505-476-3313

Boone Birdsell, Private Sector Co-Chair• boone@yearoutenergy.com• 505-270-1831

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How do I get started?

Contacted by an ESCO or heard from EMNRD about Energy Performance Contracting?• Contact EMNRD• OK for ESCO to offer school unsolicited proposal,

but…• Want ESCO hired competitively• Deemed “Qualified Provider” by EMNRD

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Competitive Selection

• Stand-alone RFP• Federal GSA

(www.gsaelibrary.gsa.gov; Schedule 03FAC; Category 871 202)

• Statewide Price Agreement (2013)

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Your Future

Utility Costs vs. Financing Costs• Electricity prices are trending up• Natural gas is trending down…future volatility?• Propane is expensive

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The GuaranteeHow Schools are Protected• We want energy $$$ savings• Guarantee is for energy BTU savings• Baseline-to-current-year energy comparison• Baseline adjustments needed• Utility bill accounting vs. avoided energy costs• Model documents

– strong language for savings calculations and measurement & verification plan

– Need to enforce

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Sample Contract LanguageProposed Energy and Water Savings Calculations and Methodology • Provide detail description of analysis methodology used. Describe

any data manipulation or analysis that was conducted prior to applying savings calculations.

• Detail all assumptions and sources of data, including all stipulated values used in calculations.

• Include equations and technical details of all calculations made. (Use appendix and electronic format as necessary.) Include description of data format (headings, units, etc.).

• Details of any savings or baseline adjustments that may be required. • Detail energy and water rates used to calculate cost savings. Provide

post-acceptance performance period energy and water rate adjustment factors.

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Baseline Adjustments……shall only be made for any of the following changes in conditions affecting the facility: • utility rates• number of days in the utility billing cycle• floor area• operational schedule• facility temperature• weather• amount of equipment or lighting used in the facility• space types in the facility• material changes to the facility. 10/31/2012 New Mexico Energy, Minerals and

Natural Resources Department51