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LED SCALE-UP: Connected Lighting –Investing in the Future
In partnership with
December 11, 2019
THE CLIMATE GROUP
OUR GOAL is a world of no more than 1.5°C of global warming and greater prosperity for all.
HOW WE DO IT• We bring together powerful networks of businesses and
governments, which shift global markets and policies, towards this goal.
• We act as a catalyst to take innovation and solutions to scale. And we use the power of communication to build ambition and pace.
• We focus on the greatest global opportunities for change.
AGENDALED Scale-Up introduction (5 mins)
Toby Morgan - LED Program Manager
The Climate Group
Utility company perspective (12 mins)
Justin Harmond - Assistant to the Executive Vice President
Georgia Power
Regional Street Lighting Procurement Program (12 mins)
Michael S. Fuller – President Keystone Lighting Solutions/consultant
Delaware Valley Regional Planning Commission
Private financing initiatives (12 mins)
David J. Clamage - Managing Director
Saulsbury Hill Financial and Consultant to Generate Capital
Moderated discussion and questions (15 mins)
LED Scale-Up
We are working to transform the way we light our world.
Lighting accounts for nearly 6% of global CO2 emissions.
We can make a considerable dent in emissions by making
lighting more energy efficient..
WHY LEDs?
This is unprecedented for a direct replacement technology.
In 2015, in partnership with Signify (formerly Philips Lighting), we launched an ongoing global consultation toaddress regional barriers and help accelerate scale-up of LEDs in cities around the globe.
LED CONSULTATIONS
Connected, Smart
lighting controls can
serve as a platform for
future smart city
services and the IoT.
Smart cities are
anticipated to have a
market value of over $2
trillion by 2025*
FLEXIBILITY + INTEROPERABILITY +
FUTURE SCALABILITY + SECURITY
OUTDOOR LIGHTING
*Frost & Sullivan, 2018
SMART CITIES & CONNECTIVITY
Offers integration of city services.
New data opportunities with potential for future revenues.
But who owns city data ?
CMS Centralized Management
System
STREET LIGHTING
PEDESTRIAN MONITORING
CCTV SECURITY MONITORING
WEATHER SENSORS
RADIATION MONITORING
SMOKE / FIRE SENSORS
TRAFFIC MONITORING
EVENT RESPONSE
EMERGENCIES
POLLUTION MONITORING
Eg. GUNSHOT TRIANGULATION
SUPPORT AT STATE AND REGIONAL LEVEL A KEY DRIVER FOR LED ADOPTION
UTILITY COMPANY PERSPECTIVE
Justin Harmond Assistant to the Executive Vice President
Georgia Power
10
LED Scale-UP
Georgia Power’s Approach to
Lighting as a Service
Justin Harmond
A little about us…We are Georgia Power, A Southern Company
Provides electric service to
2.6 million customers in the state of Georgia
One of the most active utilities in the US in expanding
non-carbon generation, including solar, wind, and nuclear
Electricity rates are 16% below the national average
Own, operate and maintain nearly 1 Million street and area
lights within the regulated and unregulated business
A Utility that Operates at the Speed of a Startup
27 COMMISSIONED
STATEWIDE SALES EMPLOYEES
AS A SERVICE BUSINESS MODEL
NO UPFRONT INVESTMENT
UNREGULATED MARKET PRICING
SELF CONTAINED BUSINESS
INCLUDING - SALES, DESIGN,
ENGINEERING, PROCUREMENT, CONSTRUCTION,
BILLING
$300 MILLION IN ANNUAL REVENUE
SUCCESS PROVIDED
OPPORTUNITY FOR PRODUCT
EXPANSION
Lighting & Smart Services
Georgia Power’s Lighting Assets
• Changing HID municipal roadway lighting to LED with Smart Controls
• 500,000 LEDs installed in the field
• 300,000 NLCs installed in the field
Infrastructure
• 3000K Roadway 4000K Area
• Reduce light pollution/light trespass
• All Roadway LED fixtures equipped with smart controls
• No up front cost; no increase in service costs
Requirements
• Our customers wanted it!
• 50% Energy Reduction – CO2 Reduction
• Better visual acuity with LED than HPS
• Aging fleet of HID fixtures
Justification
Smart Controls are Smart Lighting
Installation of smart controls on all LED Fixtures
• Auto-commissioning via DALI drivers
• GPS location auto populates mapping
• Control acquires fixture characteristics from driver and reports to
Centralized Management System
Asset Management
• Allows a better public experience with lights / fewer lights out
• Identification of issue before light goes out
• Actively rolling trucks on self reported outages
Maintenance
• All outdoor lighting energy consumption will be metered
• Time of Use Rate – Early off savings and reduced cost while
dimming
Capturing Usage Data
Geographic Information Systems
• Mobile Inspections
• Submeter Location Accuracy
• Realtime GIS data updates
• Storm Restoration
Lights, Cameras, Antennas Oh My!
• Colocation and Connectivity
• Cameras are 24/7 providing priceless peace of mind and valuable evidence.
Parking
Attach cameras / sensors to provide on-street parking surveillance and analytics
Gunshot Detection
Attach audio sensors to detect gunshots and provide notification
Digital Signage
Attach digital signs
to provide advertising
and notification capabilities
Traffic
Attach sensors to provide traffic surveillance with video data and analytics
Colocation – Monetizing Space
2015“Smart Grid” Street Light
▪ Network Lighting Control
▪ 0-100% Dimming
▪ On-Demand Light Levels
SiteView
(Security Surveillance)
2017
2018 Colocation
(small cells)
City of Atlanta
Smart Cities Pilot
2018
2019
Fiber for
Colocation
Digital Signage
Gunshot Detection
Traffic management
Smart Parking
Smart
Solutions
2019
Monetizing our vertical assets
Community Collaboration – Expand Product Offerings – Economic Development
It’s Not Just a Light Pole Anymore…
2020+Water/ Environmental
Detection
Concealed Placement Speaker (CPS) TM
Public Wi-Fi
EV Charging
• Accurate Energy Billing
• Customer Service and Enhanced Products and Services
• Reduce Overall Maintenance Costs
Construct a Clear Vision
• Maintenance Savings are REAL!
• Fewer Complaints to Call Centers
• Real-Time Asset Management
Growing Profitability
• Emphasize Energy Savings
• Public Safety and Customer Service
• Accurate Metering and the ability to offer a Time of Use Rate
Collaborate with Customers and Regulators
Insights and Recommendations
IF YOU DON’T DECIDE HOW,
SOMEONE ELSE WILL DECIDE
FOR YOU!
23
LED Scale-UP
DVRPC - REGIONAL STREET LIGHTING PROCUREMENT PROGRAM
Michael S. Fuller
President - Keystone Lighting Solutions/consultant
Delaware Valley Regional Planning Commission (DVRPC)
25
Metropolitan Planning Organization
for Greater Philadelphia Region
Bi-state, nine counties surrounding
and including Philadelphia.
5.6 million residents
Planning areasTransportation Planning, Air
Quality, Smart Growth Planning,
Environmental Planning, Housing
and Economic Development,
Population and Employment
forecasts, Long Range Planning,
Energy Planning
Municipal Energy Management
Challenges:
Where do I start?
Who do I trust?
What solutions are right for me?
How do I pay for it?
How do I convince my elected officials this is a
good idea?
How do I track the progress?
238 municipalities
average population of 10,220
2.5 million people (44% of region’s population)
Municipal Energy Management
Streetlight conversion projects present a particular challenge to municipalities:
▪ Visible, long-term project
▪ Design considerations▪ Controls
▪ Color temperature
▪ Illumination levels
▪ Distribution types
▪ High upfront cost
▪ For some communities, taking on Operations and Maintenance
Regional Streetlight Procurement Program
▪ >90% of municipalities in southeast PA own their streetlights
▪ Streetlight service is unmetered, and Utility has a straightforward billing update process based on algorithm allowing savings to easily be achieved.
▪ Incentives or funding streams available from local utility and through state transportation agency▪ Don’t solve “upfront cost” but do allow stream
for long-term payment
Regional Streetlight Procurement Program
Small-medium sized municipalities in southeastern PA pool their decision making and purchasing power to convert their entire street lighting
systems to LED by utilizing DVRPC-led/provided procurements, standardized contracting, finance,
and technical assistance
RSLPP Round One (2015- present):
▪ 35 municipalities
▪ >25,000 streetlights + Traffic signals
(5,700), Exterior (1K), 1 network
control system
▪ $13.9 M total project size
RSLPP Round Two (November 2018- ?):
▪ 26 municipalities
▪ ~15,000 streetlights + traffic signals,
exterior, wireless controls
▪ $4.9 M estimated project size
RSLPP – How it Works Turnkey: ability to access all aspects of an LED conversion process (designer, manufacturer, distributor, installer), access to financing, and post-conversion operation and maintenance support, will be available.
All solicitations are issued jointly by DVRPC so municipalities do not procure services, products, or labor on their own.
Pooled purchasing power results in best products and service solutions at lowest possible price provided to the program.
Products & services are evaluated and managed by experts –munis achieve highest quality at the lowest possible price.
Transparency on all products, labor, pricing, and design strategies can boost municipal decision making confidence.
Common timeline of project steps will ensure munis can confidently proceed through the LED conversion process.
LEDs in the Region: Before and After the RSLPP
County
%LED
Pre-
RSLPP
% LED
Post –
RSLPP R1
Bucks 1% 36%
Chester <1% 25%
Delaware <1% 15%
Montgomery <1% 41%
Total <1% 28%
Structuring the RSLPP
RSLPP Round One (2015- 2018):
Energy Performance Contracting: DVRPC issues RFP
for an ESCO that contracts with each muni and
executes project.
▪ Turnkey for DVRPC – only needs to identify an ECSCO for municipalities and ESCO manages all subcontracting processes.
▪ Municipalities hold a “Guaranteed Savings Agreement” with the ESCO (some also have a third-party owners agent)
RSLPP Round Two (Nov. 2018- Dec 2020):
Design-bid-Build: DVRPC hires a “Design Services
Professional” who designs each project under
contract with munis and works with DVRPC to
develop and manage vendor solicitations
▪ Construction contracts are managed by Design Services Professional
▪ Explained on next slide…
Development of Construction Contract (RSLPP Round 2)
Final Project Scope of Work
Mfg. Material Distribution
Financing
Preferred Bill of Material
Installation
• Performance Specifications
• Mfg. Solutions• Pricing• TCO+ Evaluation
• Required Services & Reporting
• Material Markup
• Preferred Products• Mfg. Pricing + Dist. Markup• Integrated into Installation
Contract
• Installation Pricing by Fixture Type• Typical Service Adders• Full Responsibility for Material & Labor• Installation Reporting Requirements
RSLPP Financing
Value Proposition to Financial Partner(s)▪ Establish relationships and exposure to new municipal customers
▪ Secure investment:
▪ Straightforward and reliable equipment replacement w/long-term warranties expected.
▪ Municipalities receive significant project management support during and post construction
▪ Municipalities have a low default rate, streetlights are highly visible
▪ Low-risk and straightforward Savings: PECO bill updates and maintenance savings demonstrated with past LED streetlight projects in this region.
RSLPP FinancingRSLPP financing goals:▪ Flexible and extended financing terms: Municipalities choose term of loan so that
energy and maintenance cost savings meet or exceed the finance payments each year
▪ Subject to appropriation debt: Does not count against a municipality’s debt limit - no need for state approval
▪ Keeps program moving quickly.▪ Low cost of borrowing▪ Removes barrier to entry for non-rated, fiscally strapped municipalities
▪ Low and fixed interest rates ▪ No risk for another community’s default▪ Reimbursement of upfront consulting, design and auditing costs associated
with the project.▪ Ability to lend to un-rated munis, and/or munis with small project sizes
Challenge of Achieving Finance Goals
But achieving these goals…▪ Private lenders may be unable or unwilling to unable to provide some
of these aspects, such as extended finance terms on subject to appropriation debt
▪ Arranging a pool of financing this way is challenging from a timing perspective: municipalities in the program will likely not be able to decide on financing until they bring the decision to enter into a construction contract before their elected bodies – meaning that your program must identify a financial partner before it can guarantee municipal participation
▪ Smaller project size
RSLPP Financing (What we did)RSLPP Round 1:
▪ Pennsylvania Sustainable Energy Finance Program (PennSEF): A partnership between PA Treasury and the Foundation for Renewable Energy And the Environment. ▪ PennSEF was designed to partner with organizations to facilitate use of Energy Performance
Contracting, including financing▪ Establish program goals▪ Took lead for program in structuring financing▪ Support from Pennsylvania Treasury in helping meet some aspects of financing goals that
could not be provided by private lenders
RSLPP Round 2: ▪ Financial Partner: Delaware Valley Regional Finance Authority (DelVal)DelVal was
created by Bucks, Chester, Delaware, and Montgomery Counties in 1985 to provide funding for projects of local government units
▪ DelVal has originated more $3.3 billion loans (525 loans to 200 local governments)
RSLPP FinancingAll Program finance goals met. Reliance on unique partnership with financing team
RSLPP Round 1:
▪ Pennsylvania Sustainable Energy Finance Program ▪ Arranged private loans through Univest Bank (2.95%)▪ PA Treasury agreed to finance longer-term loans at 12 years (3.05%)▪ PennSEF arranged all underwriting requirements and closing paperwork,
charged nominal fee to munis
RSLPP Round 2: ▪ Delaware Valley Regional Finance Authority (DelVal)
▪ DelVal provided GO financing to counties who served as as a “conduit”. Counties provided “subject to appropriation debt” to its municipalities
▪ First transaction achieved 1.57% interest rates
Bucks
DelVal
Chester MontCoDelaware
muni muni muni muni
Financing Structure
G.O. Debt
Subject to Appropriation Loans
Wells Fargo Bank
Paym
ents
1.500%
1.750%
2.000%
2.250%
2.500%
2.750%
3.000%
3.250%
3-Aug-1
8
2-Sep-1
8
2-Oct
-18
1-Nov-
18
1-Dec-
18
31-Dec-1
8
30-Jan-1
9
1-Mar
-19
31-Mar-1
9
30-Apr-1
9
30-May-
19
29-Jun-1
9
29-Jul-1
9
DelVal Loan Rates for the Past Year, Level Debt Amortization
20-year maturity, fixedrate, 10 year option
15-year maturity, fixed
rate, 7 year option
10-year maturity, fixed
rate, 5-year option
5-year maturity, fixed
rate, no option
Variable loan rate
RSLPP Finance Outcomes
Round One Outcomes:
▪ 24 out of 35 municipalities utilized financing (11 used internal funds)
▪ Total Program Cost: ~$15 Million
▪ Total finance pool: $9.9 Million
▪ Finance rate: 2.95% for <12 years, 3.05% > 12 years
▪ Individual project cost ranged from $24K - $2.2M
▪ Payback range:
▪ 3-20 yrs.
▪ 10.4 yr. average
Round Two Estimated Outcomes:
▪ 5 – 8 out of 26 municipalities will utilize program-arranged financing
▪ $45K to $1.4M
▪ Finance rate (first 3) = 1.57%
▪ Reasons for lower participation rate compared to Round 1:
▪ Lower Upfront cost: Round 2 achieved ~18% lower pricing due to more transparent procurement method/low service costs
▪ Smaller overall project size
▪ Clarity on state funding
Finance Takeaways
▪ Out of the box partnerships are required for financing multi-municipalities and small projects
▪ Pooling helps achieve economies of scale and lowers cost of borrowing
▪ Look to local partners
Thank you!
Liz Compitello Manager, Local Initiatives
DVRPC215.238.2897
[email protected]/rslpp
Michael S. FullerPresident
Keystone Lighting Solutions, LLC814.237.0091 (o)814.880.7747 (c)
Lucien Calhoun Delaware Valley Regional Finance Authority
Calhoun Baker Inc.(215) 402-0270
[email protected]://delval.us/
46
LED Scale-UP
PRIVATE FINANCING INITIATIVES
David J. Clamage Managing Director
Saulsbury Hill Financial and Consultant to Generate Capital
This material is confidential and proprietary to Saulsbury Hill Financial, LLC.
• The MUSH Market• Municipal University School & Hospital
• Bundled Solutions• MUSH
• Market Diversity• Solutions & Customers
David J. ClamageSAULSBURY HILL FINANCIAL
Government
State and Local Governments
•All shapes and sizes
•Cities
•Counties
•School Districts
•Special Districts
•Higher Education
•50 States = 50 Sets of Rules
155,057 Governments
•3,050 Counties
•16,220 Municipalities
•18,919 Townships
•108,579 School Districts
•8,229 Special Districts
Important Concepts
•Non-appropriation
If the monies allocated to a project, debt, lease, etc. are no
longer available due to a budget contraction,
non-appropriation – termination - is their right!
Government
State and Local Governments
Key Benefits
•Low Tax-Exempt Interest Rates
•No voter requirement
•Special accounting treatment
•Cash flow matching
•Prepayable
•$1 Purchase Option
•Very High Approval Rate
•Administratively efficient
Government
State and Local Governments
Conduit Finance for Non-Profits
“They might be non-profit but, they’re not tax-exempt”
• Tax Exempt• The concept of tax-exemption for the interest
income a lender/lessor receives from a financing is reserved for state and local governments
• The Conduit is the Alternative for a 501(c)(3)• A non-recourse lease or loan to a government
or authority• A sub-lease or loan to the non-profit
• Two Sets of Documents• Three Sets of Attorneys• Two Public Hearings• 2% Fee Cap
“As A Service” – Off Balance Sheet
• OpEx v. Cap Ex
• Debt v. Service
• Guaranty the “nameplate” or “cut sheet”
• Continuing O&M
• Cash Sale
• Customer Retention
“As A Service” – OpEx vs. CapEx
The Basics really are simple…
Some IMPORTANT Resources
http://www.dsireusa.org/
http://www.naseo.org/
Thank you for listening.
Any Questions?
For more information on the program please contact:
Toby Morgan – LED Program Manager
Email: [email protected]
www.TheClimateGroup.org
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