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1 | ESPC Technical Assistance Team eere.energy.gov
Welcome to today’s “Ask the Expert” Sessionfor state and local grantees on
Energy Savings Performance Contracting (ESPC)
Some tips before we get started…
• Session will be recorded• All attendee phone lines are muted• Please submit your questions via the Questions window• As many questions as possible will be answered during the session• Presentation slides along with the summary of ALL questions and
answers will be sent to attendees a few days after the training
2 | ESPC Technical Assistance Team eere.energy.gov
The Parker Ranch installation in Hawaii
DOE Technical Assistance Program
Ask the Experts About Energy Savings Performance Contracting Date: March 24, 2011
ARRA EECBG Recipient
Webinar Series
3 | ESPC Technical Assistance Team eere.energy.gov
What is TAP?
DOE’s Technical Assistance Program (TAP) supports the Energy Efficiency and Conservation Block Grant Program (EECBG) and the State Energy Program (SEP) by providing state, local, and tribal officials the tools and resources needed to implement successful and sustainable clean energy programs.
4 | ESPC Technical Assistance Team eere.energy.gov
How Can TAP Help You?
TAP offers –• One-on-one assistance • Extensive online
library, including – – Webinars– Events Calendar– TAP Blog– Best practices and
project resources– Facilitation of peer
exchange
Topics include –• Energy efficiency and
renewable energy technologies
• Program design and implementation
• Financing• Performance
contracting• State and local
capacity building
5 | ESPC Technical Assistance Team eere.energy.gov
Provides a platform for state, local, and tribal government officials and DOE’s network of technical and programmatic experts to connect and share best practices on a variety of topics.
The TAP Blog
Access the TAP Blog!http://www.eereblogs.energy.gov/tap/
6 | ESPC Technical Assistance Team eere.energy.gov
Accessing TAP Resources
3) Ask questions via our call center at 1-877-337-3827 or email us at
http://www1.eere.energy.gov/wip/solutioncenter/default.html
We encourage you to –
1) Explore our online resources via the Solution Center
2) Submit a request via the Technical Assistance Center
7 | ESPC Technical Assistance Team eere.energy.gov
The Parker Ranch installation in Hawaii
Ask the Experts About Energy Savings Performance Contracting
Today’s Experts:Karl Berntson, Doug Dahle, David McGeown, Linda Smith
ARRA EECBG Recipient
Webinar Series
8 | ESPC Technical Assistance Team eere.energy.gov
• Long Term Partnerships (10-15 years)• Persistent Performance is Success Factor• Customer Champions & Commitment• “Reallocating Excess Energy Expense into
Infrastructure”• No Capital Cost – Contractor Revenues from $ Savings• Determine Energy and $ Savings• Risks & Responsibility – Key focus for both parties• Measurement & Verification – Verify Savings
ESPC Principles
9 | ESPC Technical Assistance Team eere.energy.gov
Karl Berntson
SRA International
Doug Dahle
National Renewable Energy Laboratory
David McGeown
SRA International
Linda Smith
9Kft Strategies in Energy
Today’s Experts
10 | ESPC Technical Assistance Team eere.energy.gov
Polling Question
11 | ESPC Technical Assistance Team eere.energy.gov
ESCO Selection
12 | ESPC Technical Assistance Team eere.energy.gov
A qualified ESCO puts many different pieces
together in a turnkey approach:
Identify and evaluate project opportunities
Design, install, commission and manage projects
Help arrange for financing
Measure and verify savings
Train staff, provide ongoing maintenance services, and more.
And, guarantee the savings will cover all project costs
ESCO Selection –What defines an ESCO?
13 | ESPC Technical Assistance Team eere.energy.gov
• Key ESCO organizations– National Association of Energy Service Companies
(NAESCO)
www.naesco.org– Energy Services Coalition (ESC)
www.energyservicescoalition.org• State energy office or state administrative agency that oversees state buildings may have a prequalified ESCO list
ESCO Selection –How do I find an ESCO?
14 | ESPC Technical Assistance Team eere.energy.gov
ESCO Selection Process•Provide background information on your facilities •Solicit proposals through a formal competitive process •Set-up an evaluation team•Review proposals and select the top proposers•Interview the top proposers•Select the finalist
ESCO Selection – How do I select an ESCO?
15 | ESPC Technical Assistance Team eere.energy.gov
• Ensure firm qualifies as an ESCO – Scope of Services (guarantee, auditing, M&V, financing assistance, project
management, construction/installation, commissioning)– Scope of Measures (HVAC, lighting, renewables, water efficiency, plant upgrades &
specialty systems that relate to your facility
• Project History – Quantity, scope and scale of ESPC projects (with guaranteed savings)– Relevant projects in your market sector, your locale, and similar in scale
• Technical Approach– Review a sample audit – Expertise/experience in similar building types and with measures you anticipate.
• Management Approach– Organizational structure– Local staffing and support vs non-local– Resumes and roles of staff to be assigned– Subcontractors vs in-house staff– Scheduling plans
ESCO Selection – Is this ESCO a good fit?
16 | ESPC Technical Assistance Team eere.energy.gov
• Compare apples to apples • Audit cost• Request markups on each element• Request other fees and how/when fee is to be applied• Ensure commitment to open book pricing throughout the process
ESCO Selection – How do I evaluate ESCO costs?
17 | ESPC Technical Assistance Team eere.energy.gov
Look to your ESCO to provide best value •Capture the maximum level of savings
– A comprehensive approach– No cherry picking of projects
•Ensure measured, sustained savings– Rigorous measurement and verification process (with an up-
front plan) to ensure ongoing savings
•Leverage funds – capture utility incentives, grants, etc.
•Economy of scale – address all buildings
•Disclose ALL cost elements up-front (markups, margins, fees up-front – show how they will be applied – and then negotiate)
ESCO Selection – How can I select an ESCO to get the best value?
18 | ESPC Technical Assistance Team eere.energy.gov
Investment Grade Audit
19 | ESPC Technical Assistance Team eere.energy.gov
• Negotiate the terms of IGA and project development agreement (owner and ESCO)
• Provide utility bills (owner)• Perform facility audit (ESCO)• Review the audit results (owner and ESCO)• Select final ECMs to implement (ESCO and owner)• Develop implementation proposal (ESCO)
Investment Grade Audit (IGA) – Division of Responsibilities
20 | ESPC Technical Assistance Team eere.energy.gov
• Investment Grade Audit (IGA) components
– Baseline measurements
– IGA schedule
– IGA cost
– Overhead and Profit mark-ups for
overall ESPC
Investment Grade Audit (IGA) Components
21 | ESPC Technical Assistance Team eere.energy.gov
• Scope of work– Baseline establishment– Facility(s) walk-through– Modeling– Develop list of ECMs– Provide audit report– Develop ESPC proposal– Prepare preliminary installation layouts
• Time of completion
IGA Components – cont’d
22 | ESPC Technical Assistance Team eere.energy.gov
Polling Question
23 | ESPC Technical Assistance Team eere.energy.gov
ESPC Financing
24 | ESPC Technical Assistance Team eere.energy.gov
“Reallocating Excess Energy Expense into Infrastructure”
Pay a lower utility bill and energy system O&M cost Dollar Savings: Payments to ESCO & Financier Achieve cost savings for the customer
ESPC Financing
25 | ESPC Technical Assistance Team eere.energy.gov
Agency Energy and O&M Bills
Cost Savings
Where the Money Comes From and Where It Goes
Customer Funds for Energy and Related O&M
26 | ESPC Technical Assistance Team eere.energy.gov
• State/Local Bonds• Tax-exempt Bank Financing • Master Lease for Financing (tax-exempt credit line)
– Bid Financier– Block of Projected Financing $– Project Specific Interest Rate
• Lease/Purchase
ESPC Financing Types
27 | ESPC Technical Assistance Team eere.energy.gov
• ESCO Project Investment Thresholds– Transaction Costs vs. Rate of Return– Common target ≥ $1 M investment– Economy of scale – Consider:
• Bundling energy efficiency & renewable projects– Public sector facilities attractive to ESCOs
• Low risk long term partner
ESPC Financing
28 | ESPC Technical Assistance Team eere.energy.gov
ECM Selection
29 | ESPC Technical Assistance Team eere.energy.gov
• Boiler and chiller plants• Energy management
control systems• Building envelope• HVAC• Chilled/hot water and
steam distribution• Lighting• Electric motors and
drives• Refrigeration• Distributed generation
Energy Conservation Measures (ECMs) All Technology Categories
• Renewable energy• Energy/utility distribution• Water and sewer • Electrical peak shaving/load
shifting• Rate adjustments• Energy-related process
improvements• Commissioning• Advanced metering• Appliance/plug load
reductions
30 | ESPC Technical Assistance Team eere.energy.gov
• $4.5M ESPC project 8.4 year payback– Replacing boilers with a steam production system, 5% steam
efficiency increase, no 24-hour staff – Evaluating the energy management control system, upgrading
controls, and installing a life safety supervision system – Replacing 25-horsepower air compressors with 40-horsepower
rotary air compressors – Replacing corroded cooling coils – Replacing 25,000 lamps, ballasts, and fixtures with high-
efficiency models and installing lighting controls
– Replacing electric motors..• 8 buildings and 1 million square feet• $1.8 million energy bill
Hospital Campus
31 | ESPC Technical Assistance Team eere.energy.gov
ActionElectricity (kWh)
Gas (therms) $ savingsPayback (years)
Boiler replacement 303,902 71,073 $311,702 8.4
Controls upgrade 156,253 81,880 43,552 7.7
Air compressor replacement
61,093 — 12,565 18.1
Cooling coils replacement
210,273 — 14,719 3.0
Lighting improvements
1,733,751 — 128,098 7.2
Motor efficiency upgrade
258,400 — 18,088 3.6
Total 2,723,672 152,953 $528,724 8.4*
Hospital Campus
32 | ESPC Technical Assistance Team eere.energy.gov
• Look at the FEMP models• http://apps1.eere.energy.gov/femp/training/
course_detail_ondemand.cfm/CourseId=42
• Use local contacting expertise– Just like regular ‘sticks and bricks’ – Use you own government estimators
• ESCO cost plus models– Verify how costs are determined– Are ‘costs’ burdened? If so how?
• Don’t wait until a final proposal– Work together as much as possible from project inception
• Understand financing costs
Negotiating a Fair Price
33 | ESPC Technical Assistance Team eere.energy.gov
ESPC Measurement & Verification (M&V)
34 | ESPC Technical Assistance Team eere.energy.gov
• An ESCO guarantees performance it can control – that rarely covers all risks in a project
• An effective M&V plan shares risks between the owner and the ESCO:– Risk of operating a facility is usually borne by the owner– Equipment performance is usually covered by the ESCO– Maintenance to ensure savings may be taken on by ESCO
and/or owner– Market price for energy can rarely be underwritten by the ESCO
Risk and M&V
35 | ESPC Technical Assistance Team eere.energy.gov
The M&V Plan:
IF YOU DON’T UNDERSTAND IT, DON’T SIGN IT.
36 | ESPC Technical Assistance Team eere.energy.gov
In accordance with IPMVP 2010, the M&V plan should cover 13 specific topics:
• ECM Intent• Selected IPMVP Option and Measurement
Boundary• Baseline: Period, Energy and Conditions• Reporting Period• Basis for Adjustment• Analysis Procedure• Energy Prices
The M&V Plan
37 | ESPC Technical Assistance Team eere.energy.gov
• Meter Specifications
• Monitoring Responsibilities
• Expected Accuracy
• Budget
• Report Format
• Quality Assurance
M&V Plan (cont’d.)
38 | ESPC Technical Assistance Team eere.energy.gov
The M&V Reconciliation Report should include:• Energy data for the reporting period• Values of independent variables – weather,
occupancy and variables that affect energy usage• Justification for corrections made to any data • Handling of bad or missing data• Agreed estimated values for Option A• Energy rates used• Details on non-routine adjustments• Computed savings in both energy units and dollars• Emissions reduction
The M&V Reconciliation Report
39 | ESPC Technical Assistance Team eere.energy.gov
Cost Elements of ESPCs
40 | ESPC Technical Assistance Team eere.energy.gov
• Project Development– Surveys, audits, proposal
• Conservation Measures– Direct costs for design and implementation
• ESCO overhead and profit• Financing
– Interest– Procurement
• Performance Period Services
Cost Elements of ESPC
41 | ESPC Technical Assistance Team eere.energy.gov
Contract Administration
42 | ESPC Technical Assistance Team eere.energy.gov
• Contract Administration Activity after Award– Insurance and bonds before design– Review of Design and Installation Plans– Accept Design & Installation – Notice to Proceed– Coordinate access to facilities and lay down area– Witness Commissioning tests & M&V measurements– Accept Installation – Proceed with Performance– Review Annual M&V Reports & Invoices (Annual)– Contract Modifications as needed– Close out Contract
ESPC Contract Administration
43 | ESPC Technical Assistance Team eere.energy.gov
• OPEN COMMUNICATION with ESCO partner• Key Customer Personnel/Roles
– Contracting Officer (CO) Administration Official• Primary POC for ESCO Contract meetings/issues
– Contracting Officer’s Technical Representative• Primary POC for project review of ESCO work &
deliverables• General
– Document any and all agreements– File all project documents for future reference– Count on turnover of project personnel
• Access to past project documentation critical
Successful Contract Administration
44 | ESPC Technical Assistance Team eere.energy.gov
Parking Lot – McGeown
45 | ESPC Technical Assistance Team eere.energy.gov
• $71M savings performance contract for power from a combined heat and power plant Central Utility Plant
• Saves $5.8 M energy and $6.5 M in O&M• Almost 20 MW of cogeneration
– 5.6 MW dual fuel engine
– 3 x 4.5 MW natural gas combustion turbines
– 2 x 1130-ton absorption chillers
– 2 x1130-ton
– 3 x1980-ton electric chillers
– 3 x10 MMBtu/hr hot water boilers
– Integrated plant controls, building automation systems,
• 1,800 sf fixed solar array and a 300 sf single-axis tracking solar array.
FDA Campus Cogen
46 | ESPC Technical Assistance Team eere.energy.gov
• $3.6M for small BLM facilities in Colorado, Idaho, Montana, Nevada, Oregon, and Wyoming– Lighting and associated controls – HVAC controls – Digital HVAC control upgrades – New boilers – Ground source heat pumps – Advanced meter installations
Bureau of Land Management
47 | ESPC Technical Assistance Team eere.energy.gov
• Energy savings performance contract – Savings $300,000 a year– Reduces annual potable water consumption by 160 million
gallons (2 percent of City’s water supply)– Two 11-million-gallon holding reservoirs– Two pump stations– 3 miles of distribution pping
Air Force Water
48 | ESPC Technical Assistance Team eere.energy.gov
• $12M wind turbine Guantanamo Bay• Four wind turbines will generate 3,800kW
– 25% peak power for base operations– $1.2M/yr energy savings, 650,000 gallons diesel
Navy Renewable Energy
49 | ESPC Technical Assistance Team eere.energy.gov
• Federal on-line ESPC training http://apps1.eere.energy.gov/femp/training/
course_detail_ondemand.cfm/CourseId=43
• FEMP first Thursday seminarshttp://apps1.eere.energy.gov/femp/training/
first_thursday_seminars.cfm
The FEMP Online Oracle
50 | ESPC Technical Assistance Team eere.energy.gov
DOE Team Lead
Chani Vines: [email protected]
ICF Team Contract Leads
Deborah Miller, [email protected]
Brian Zaleski, [email protected]
ICF ESPC Technical Assistance Team Contacts
Karl Berntson: [email protected]
Dale Hahs: [email protected]
Irina Bulkley-Hopkins: [email protected]
Doug Dahle: [email protected]
David McGeown: [email protected]
Linda Smith: [email protected]
More Questions?
51 | ESPC Technical Assistance Team eere.energy.gov
Please join us again for additional webinars:
For the most up-to-date information and registration links, please visit the Solution Center webcasts page at www.wip.energy.gov/solutioncenter/webcasts
Upcoming Webinars