Optimizing Systems at District Scale Presentation

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    Cole Roberts, PE, LEED AP 415.946.0287Brian Renehan, MBA 415.957.9445Bry Sarte, PE, LEED AP 415.677.7300

    Clark Brockman (Moderator) - 503.445.7372

    Optimizing Systems at District ScaleEcoDistrict ConferenceOctober 27, 2011

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    2

    (feel free to use, but please remember us)Copyright 2011 | Arup, Sherwood, Sera

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    3

    Overview of Session

    Introductions & Goals for TodayEmergent Questions

    Principles

    Process

    Tools (analytical optimization)

    Business Case (financial & value optimization

    Conclusion

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    4

    Goals for Today

    1. Synergy vs Efficiency (acrosssystems &scales)2. Effective Process

    3. Analytical Optimization

    4. Finance & Risk Optimization

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    5

    Emergent Questions

    When does it make sense to imagine systems at

    District scalecreating in effect a network ofbuildings?

    At what scale do select energy, water, and wastetechnologies make sense?

    What are the implications of systems optimizing atdifferent scales?

    What are the variables and tools that support

    decisions about how and when to proceed?

    What are the financial implications?

    Are these the right questions?

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    10 MILES

    FRACTAL SCALEREGION

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    10 MILES

    FRACTAL SCALEREGION + WATERSHED

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    FRACTAL SCALEREGION + WATERSHED + UGB (URBAN GROWTH BOUNDARY)

    10 MILES

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    FRACTAL SCALEUGB+ CITY

    10 MILES

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    FRACTAL SCALECITY

    1 MILE

    10 MILES

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    FRACTAL SCALECITY + DOWNTOWN

    1 MILE

    10 MILES

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    FRACTAL SCALEDOWNTOWN

    1/4 MILE

    1 MILE

    10 MILES

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    FRACTAL SCALEDOWNTOWN

    1/4 MILE

    1 MILE

    10 MILES

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    FRACTAL SCALEECODISTRICT

    1/4 MILE

    1 MILE

    10 MILES

    1/8 MILE

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    FRACTAL SCALEBLOCK

    1/4 MILE

    1 MILE

    10 MILES

    1/8 MILE

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    FRACTAL SCALEBLOCK

    200 FEET

    1/4 MILE

    1 MILE

    10 MILES

    1/8 MILE

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    FRACTAL SCALEBUILDING

    200 FEET

    1/4 MILE

    1 MILE

    10 MILES

    1/8 MILE

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    FRACTAL SCALEBUILDING

    100 FEET

    200 FEET

    1/4 MILE

    1 MILE

    10 MILES

    1/8 MILE

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    FRACTAL SCALEBUILDING

    100 FEET

    200 FEET

    1/4 MILE

    1 MILE

    10 MILES

    1/8 MILE

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    FRACTAL SCALEBUILDING

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    PRINCIPLES

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    The Ecological ShedWhats the problem?

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    The Ecological ShedWhats the problem?

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    Yosemite National Park

    Mariposa Grove of Giant Sequoias

    Mariposa Grove of Giant Sequoias Yosemite, CA

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    The Ecological ShedWatershed

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    Eastshore State Park(Strawberry Creek Outfall)

    Strawberry Creek Watershed

    Strawberry CreekRestoration and

    Bank Stabilization

    UCB School of Law

    UniversityBotanicalGardens

    Lawrence BerkeleyNational Laboratory

    UC Berkeley Berkeley, California

    UCB Student CommunityCenter/Lower Sproul Plaza

    Th E l i l Sh d

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    The Ecological ShedEcological Footprint

    Th E l i l Sh d

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    The Ecological ShedEcological Footprint

    Th E l i l Sh d

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    The Ecological ShedEcological Systems

    Th E l i l Sh d

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    Water and Energy Linkages

    The Ecological Shed

    The Ecological Shed

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    The Ecological ShedWater and Power

    Th E l i l Sh d

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    FoodshedThe Ecological Shed

    San Jose

    Fresno

    Sacramento

    Oakland

    Chico

    Modesto

    Vallejo

    Santa Rosa

    Napa

    SanFrancisco

    Vacaville

    Tracy

    Merced

    Gilroy

    Salinas

    Livermore

    MantecaDavis

    Madera

    San Rafael

    Santa Cruz

    Woodland

    Monterey

    Yuba City

    King City

    Stockton

    5

    80

    5

    880

    205

    80

    1

    152

    4

    99

    4

    1

    99

    50

    101

    101

    F R E S N OF R E S N O

    B U T T EB U T T E

    L A K EL A K E

    M A D E R AM A D E R A

    M O N T E R E YM O N T E R E Y

    G L E N NG L E NN

    M E N D O C I N OM E N D O C I N O

    Y O L O Y O L O

    S O NO MAS O NO MA

    T E H A M AT E H A M A

    T U O L U M N ET U O L U M N E

    P L U M A SP L U M A S

    NAP ANAP A

    C O L U S AC O L U S A

    P L A C E RP L A C E R

    M A R I P O S AM A R I P O S A

    E L D O R A D OE L D O R A D O

    S T ANI S L AUSS T ANI S L AUS

    Y UBA Y UBA

    S A N B E N I T OS A N B E N I T O

    S A N J O A Q U I NS A N J O A Q U I N

    S O L A N OS O L ANO

    S ANT A CL ARAS ANT A CL ARA

    NE V ADANE V ADA

    C A L A V E R A SC A L A V E R A S

    M A R I NM A R I N

    S UT T E RS UT T E R

    A L A M E D AA L A M E D A

    S A C R A M E N T OS A C R A M E N T O

    A M A D O RA M A D O R

    S I E RRAS I E RRA

    CO NT RA CO S T AC O N T R A C O S T A

    S AN MAT E OS AN MAT E O

    S ANT A CRUZS A N T A C R U Z

    M E R C E DM E R C E D

    100 mile radius

    50 mile radius 50 mile radius

    100 mile radius

    MontereyBay

    P a c i f i c O c e a n

    Brentwood

    Data Source:Farmland Mapping& Monitoring Program 2004& 2006No FMMPdata available for Calaveras,Mendocino and Tuolumne counties

    Developedlands

    Prime, Unique,andFarmlandofStatewide Importance

    Grazing Land and Farmlandof LocalImportance

    Farm and Other Land Use, 2006

    The San Francisco FoodshedThe San Francisco Foodshed

    www.greeninfo.orgAugust 2008

    Study Area

    Th E l i l Sh d

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    The Ecological ShedTransportation shed

    Th E l i l Sh d

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    The Ecological ShedTransportation shed

    Th E l i l Sh d

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    The Ecological ShedSewershed

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    O i l S l

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    Optimal Scales

    O ti l S l

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    Optimal Scales

    Key Variables

    O ti l S l ENERGY

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    Optimal Scales - ENERGY

    Key Variables

    O ti l S l ENERGY

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    Optimal Scales - ENERGY

    Key Variables

    O ti l S l ENERGY

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    Optimal Scales - ENERGY

    Key Variables

    O ti l S l WASTE

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    Optimal Scales - WASTE

    Key Variables

    O ti l S l WATER

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    Optimal ScalesWATER

    Key Variables

    O ti l S l

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    Optimal Scales

    E t bli h E d O ti i M i i

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    Establish, Expand, Optimize, MaximizeWATER

    Establish Expand Optimize Maximize

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    Establish, Expand, Optimize, MaximizeWATER

    Establish Expand Optimize Maximize

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    Establish, Expand, Optimize, MaximizeENERGY

    Establish Expand Optimize Maximize

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    Establish, Expand, Optimize, MaximizeWASTE

    Establish Expand Optimize Maximize

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    Establish, Expand, Optimize, MaximizeCARBON

    Comprehensive Prioritized STRATEGY

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    1. LoadReduction

    2. PassiveStrategies

    3. EfficientSystems

    4. EnergyRecovery

    5.Renewables

    6. Offsets

    Comprehensive Prioritized STRATEGY

    St f d U i it O ti i ti

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    Stanford University Optimization

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    Changing in PhasesSource: Stanford University

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    Source: Stanford University

    Draft Energy & Climate Plan (April 2009)

    Energy and ClimateSolution Wedges

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    Acknowledge changes in the energy and economic efficiency of cogeneration; Moving towards Regeneration

    via heat recovery Cost savings of $639 million over business-as-usual; Reduction in greenhouse gas

    emissions of 80% below 2000 baseline levels by 2050; Total campus water savings of 15%

    S Effi i

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    Synergy vs Efficiency

    WATER

    ENERGY

    TRANSPORT

    CARBON

    SOCIETY

    ECONOMY

    MATERIAL

    WASTE

    LANDSCAPE

    WEATHER

    HUMAN

    COMFORT

    RATINGSYSTEMS

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    PROCESS

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    Land Use

    Buildings

    Finance &Procurement

    District

    Systems

    Eff ti P

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    Effective ProcessLand Use Choices

    Building Design & Retrofit

    District Systems

    Eff ti P

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    partneringmeetings

    Builders

    Operators

    Agencies

    Owners

    TechnologyAnalysis

    (OptionsShortlist)

    B

    value & contextdiscussion

    Vision

    Focus Areas

    Value Criteriaand KPIs

    ConceptModeling ofBuildings &

    District

    A

    Plant Concept

    FinancialConcept

    Site Walk

    City Meetings

    designworkshop

    Procure, Build,Operate

    D

    Financial/RiskAnalysis

    (OptionsShortlist)

    C

    Effective ProcessLand Use Choices

    Building Design & Retrofit

    review

    Review ExistingInformation(Function &Financial)

    District Systems

    Workshop Discussions

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    63 63

    p

    Prioritization

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    64 64

    Prioritization

    Prioritization

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    65 65

    Prioritization

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    5. Central Plant + Tri-Gen | System Diagram

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    Electric Grid

    Gas Mains Tri-GenerationPlant

    Elec Eff:

    35-40%

    Thermal

    Eff: ~40%

    Gas Boilers

    Eff: 80%

    Absorption Chillers

    COP: 1.2

    Non-Cooling Elec

    Space Heating

    DHW

    Space Cooling

    Grid Block Equipment End UseDistrict

    Electricity

    Natural Gas

    Chilled Water

    Hot Water (120 + 0F )

    Hot Water (90 + 0F )

    Waste/Process Heat

    Heat Exchanger

    Electric Chillers

    COP: 6

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    Supply

    Baseline

    Existing Plant

    Existing Plant + CHP

    Existing Plant + CCHP

    Demand

    Baseline

    Gold +

    Deep Green

    Review Existing Conditions

    Sustainability, Risk, Financial

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    TOOLS

    Program

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    ProgramAssumption

    Central

    Plant

    Central

    Plant

    Heating Load Profile Projections

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    Heating Load Profile Projections

    2010 2015 2020 2025

    Phase 1

    Heating Load Profile Projections

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    2010 2015 2020 2025

    Phase 2

    Heating Load Profile Projections

    Heating Load Profile Projections

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    2010 2015 2020 2025

    Phase 3

    Heating Load Profile Projections

    Heating Load Profile Projections

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    2010 2015 2020 2025

    Phase 4

    Heating Load Profile Projections

    Heating Load Profile Projections

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    2010 2015 2020 2025

    Phase 5

    Heating Load Profile Projections

    Heating Load Profile Projections

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    2010 2015 2020 2025

    Phase 5

    Heating Load Profile Projections

    Reduced summer heatdemand

    Peak heat demands in Winter

    Reduced mid-day heatdemand

    Morning heat demandpeak(Showers, washing)

    Evening heat demand

    peak(Space heating, showers)

    Heating Load Duration Curve Projections (Without

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    Heating Load Duration Curve Projections (Withoutabsorption cooling)

    2010 2015 2020 2025

    Phase 1

    0

    5

    10

    15

    20

    25

    30

    35

    0 2000 4000 6000 8000

    MBH

    Hours/Year

    Load Duration Curve

    Heating Load Duration Curve Projections (Without

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    2010 2015 2020 2025

    Phase 2

    Heating Load Duration Curve Projections (Withoutabsorption cooling)

    0

    5

    10

    15

    20

    25

    30

    35

    0 2000 4000 6000 8000

    MBH

    Hours/Year

    Load Duration Curve

    Heating Load Duration Curve Projections (Without

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    2010 2015 2020 2025

    Phase 3

    Heating Load Duration Curve Projections (Withoutabsorption cooling)

    0

    5

    10

    15

    20

    25

    30

    35

    0 2000 4000 6000 8000

    MBH

    Hours/Year

    Load Duration Curve

    Heating Load Duration Curve Projections (Without

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    2010 2015 2020 2025

    Phase 4

    Heating Load Duration Curve Projections (Withoutabsorption cooling)

    0

    5

    10

    15

    20

    25

    30

    35

    0 2000 4000 6000 8000

    MBH

    Hours/Year

    Load Duration Curve

    Heating Load Duration Curve Projections (Without

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    2010 2015 2020 2025

    Phase 5

    Heating Load Duration Curve Projections (Withoutabsorption cooling)

    Run Criteria Potential CHP size

    4,500 Full Output

    Hours/Year

    8.3 MBH(2.5 MWth)

    0

    5

    10

    15

    20

    25

    30

    35

    0 2000 4000 6000 8000

    MBH

    Hours/Year

    Load Duration Curve

    Heating Load Duration Curve Projections

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    2010 2015 2020 2025

    Phase 5

    (With absorption cooling)

    Run Criteria Potential CHP

    Size

    4,5000 Full Output

    Hours/Year

    11.8 MBH

    (3.5 MWth)

    0

    5

    10

    15

    20

    25

    30

    35

    0 2000 4000 6000 8000

    MBH

    Hours/Year

    Load Duration Curve

    Water-Energy Nexus

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    Pilot, Expand, Optimize, Maximize(4 dimensions)

    DistrictEnergy Pipe

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    Case Studies

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    Case Studies

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    Case Studies

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    90 Mantri Lake Agara Development

    Bangalore, India

    Case Studies (India)

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    Potable Water StrategiesCase Studies (India)

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    Onsite Wastewater StrategiesCase Studies (India)

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    All wastewater will be captured and reused on site. Additionally, a portion of thewastewater will be used to create a demonstration wetland on the edge of the sitenear Belandur lake to enhance the habitat of the lake edge and expand theecological function of the region.

    Case Studies (India)

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    Three strategies combine to reduce the projects energy demands:passive, active and onsite generation. While each is manifested differentlydepending on use type they combine for a dramatic reduction in totalenergy use, energy costs and related carbon emissions in perpetuity.

    SITE UTILITY OVERVIEWCase Studies (India)

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    UTILITY STRUCTURE / ROOM

    NON-POTABLE STORAGE TANK

    PRETREATMENT STORAGE TANK

    POTABLE WATER STORAGE TANK

    LEGEND

    STORMWATERCase Studies (India)

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    STORM DRAIN LINE

    PUMPED STORMWATER DISCHARGE

    INLET

    PERENNIAL WATER FEATURE / STORAGE

    SEASONAL IRRIGATION STORAGE

    LEGEND

    Case Studies

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    99 Mantri Lake Agara Development

    Bangalore, India

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    Integrated Resource Modeling

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    Aholistic quantitative model forimproved understanding of urbansystems and theimpact of

    decisions

    waste materialwatertransportationenergy carbonland use

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    102

    s

    Integrated Resource Management (IRM)

    Energyconsumption

    CO2

    emissions

    (indirect,

    direct,

    mobile)

    Wastegenerated

    & diverted

    Comp

    osi

    tion

    Genera

    tion

    Landuse

    deman

    d

    Em

    issionra

    tes

    Em

    ission

    factors,

    trip

    length,%

    Wa

    ter

    consump

    tion

    rates

    Des

    ign

    life

    ,ma

    teria

    l

    consump

    tion

    Supply

    EmbodiedCarbon in

    Materials

    VMTs

    compare baseline

    and design across

    multiple indicators

    compare baseline

    with designcompare

    alternatives

    B a s l e

    M i a t n

    compare with comparable

    everyday items (e.g. wastegeneration measured in # of

    garbage bins)

    Land

    take

    Densi

    ty

    Un

    its

    Waterconsumption/w

    astewater

    generation

    detect hotspots

    of resourceconsumption

    across the plan

    waste materialwatertransportationenergy carbonland use

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    103

    s

    Integrated Resource Management (IRM)

    Energyconsumption

    CO2

    emissions

    (indirect,

    direct,

    mobile)

    Wastegenerated

    & diverted

    Comp

    osi

    tion

    Genera

    tion

    Land

    use

    deman

    d

    Em

    issionra

    tes

    Em

    ission

    factors,

    trip

    length,%

    Wa

    ter

    consump

    tion

    rates

    Des

    ign

    life

    ,ma

    teria

    l

    consump

    tion

    Supply

    EmbodiedCarbon in

    Materials

    VMTs

    compare baseline

    and design across

    multiple indicators

    compare baseline

    with designcompare

    alternatives

    B a s l e

    M i a t n

    compare with comparable

    everyday items (e.g. wastegeneration measured in # of

    garbage bins)

    Land

    take

    Densi

    ty

    Un

    its

    Waterconsumption/w

    astewater

    generation

    detect hotspots

    of resourceconsumption

    across the plan

    waste materialwatertransportationenergy carbonland use

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    s

    Integrated Resource Management (IRM)

    Energyconsumption

    CO2

    emissions

    (indirect,

    direct,

    mobile)

    Wastegenerated

    & diverted

    Comp

    osi

    tion

    Genera

    tion

    Land

    use

    deman

    d

    Em

    issionra

    tes

    Em

    ission

    factors,

    trip

    length,%

    Wa

    ter

    consump

    tion

    rates

    Des

    ign

    life

    ,ma

    teria

    l

    consump

    tion

    Supply

    EmbodiedCarbon in

    Materials

    VMTs

    compare baseline

    and design across

    multiple indicators

    compare baseline

    with designcompare

    alternatives

    B a s l e

    M i a t n

    compare with comparable

    everyday items (e.g. wastegeneration measured in # of

    garbage bins)

    Land

    take

    Densi

    ty

    Un

    its

    Waterconsumption/w

    astewater

    generation

    detect hotspots

    of resourceconsumption

    across the plan

    waste materialwatertransportationenergy carbonland use

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    s

    Integrated Resource Management (IRM)

    Energyconsumption

    CO2

    emissions

    (indirect,

    direct,

    mobile)

    Wastegenerated

    & diverted

    Comp

    osi

    tion

    Genera

    tion

    Land

    use

    deman

    d

    Em

    issionra

    tes

    Em

    ission

    factors,

    trip

    length,%

    Wa

    ter

    consump

    tion

    rates

    Des

    ign

    life

    ,ma

    teria

    l

    consump

    tion

    Supply

    EmbodiedCarbon in

    Materials

    VMTs

    compare baseline

    and design across

    multiple indicators

    compare baseline

    with designcompare

    alternatives

    B a s l e

    M i a t n

    compare with comparable

    everyday items (e.g. wastegeneration measured in # of

    garbage bins)

    Land

    take

    Densi

    ty

    Un

    its

    Waterconsumption/w

    astewater

    generation

    detect hotspots

    of resourceconsumption

    across the plan

    Greenhouse Gases and Emissions

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    Optimized and Informed Planning

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    - Plan evolution- Performance

    optimization

    IRMmodel

    Develop

    strategies

    Refine

    strategies

    IRM

    model

    Optimize

    Strategies

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    GIS Integration

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    g

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    Results

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    Chose 284 KPIs.

    Found all reference input (52,000 cells)

    Found 1224 actual inputs

    Packett-Burman Sensitivity Analysis

    Integrated Resource Management (IRM)

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    Anaerobic

    Digestion

    13% wastediversion

    5% energyreduction

    ElectricVehicles

    3% carbonsavings

    10%reduction in

    parking

    6% energydemand

    Integrated Resource Management (IRM)

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    Water EfficiencyStrategies

    Fixtures andAppliances

    15% waterreduction

    3% energysavings

    Energy EfficiencyStrategies

    District Water Loop

    40% water

    reduction

    4% energy

    savings

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    40000

    Total Operational Carbon

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    0

    200

    400

    600

    800

    1000

    1200

    1400

    1600

    1 2 3 4 5 6 7 8 9

    Operational Carbon per Person

    Scn2_Carbon_Primary

    Scn2_Carbon_Primary_New

    Scn2_Carbon_Primary_Existing

    -5000

    0

    5000

    10000

    15000

    20000

    25000

    30000

    35000

    40000

    1 2 3 4 5 6 7 8 9

    Scn2_Carbon_PrimaryScn2_Carbon_Primary_New

    Scn2_Carbon_Primary_Existing

    Higher density enables lower

    carbon per person. Existing

    starting at much higher carbon perperson. Need to both retrofit and

    design new build to effect low

    carbon strategies.

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    Different

    Synergy

    Ownership

    Scalability

    Focus

    Valuation

    FINANCABILITY

    RISK MANAGEMENT

    Buildability

    Entitleability

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    BUSINESS CASE

    Business Case Process - Moving TowardImplementation

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    p

    1. Initial Value Analysis- Life Cycle Cost Analysis - Does it pencil?- Qualitative Value

    2. Finance & Procurement AnalysisSelf-Perform or

    Third Party approach make sense?- Risk Analysis- Financing StrategyUse Project Finance?- Third Party Engagement- Final Net Present Cost Analysis

    3. Launch ProcurementRFQ, RFP

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    Life Cycle CostingDoes the System Pencil vs.Business As Usual?

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    Takes into consideration capital costs and energy savings only

    Assumes electric rate of $0.09/kWh and gas rate of $1.25/therm

    Business Case Process - Moving TowardImplementation

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    p

    1. Initial Value Analysis- Life Cycle Cost Analysis - Does it pencil?- Qualitative Value

    2. Finance & Procurement AnalysisSelf-Perform or

    Third Party Approach?- Risk Analysis- Financing StrategyUse Project Finance?- Third Party Engagement- Final Net Present Cost Analysis

    3. Launch ProcurementRFQ, RFP

    Procurement OptionsThird Party or Alt.

    Procurement Options

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    Increasing degree of third party involvement& use of performance incentives

    p

    IncreasingRiskTransfer

    DBB DB DBOM DBFOM BOO

    Design

    Construction

    O&M

    Financing

    Ownership

    Is a Third Party Option Right for You?

    If Yes to All Three MoveIf No to any one

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    If Yes to All Three, Move

    Forward with Third Party

    Procurement

    If No to any one

    question, self

    perform

    Risk Management PreferencesRisk Risk Description Keep Shed Share

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    Design Risk that the design of the facility is incapable of delivering the services at the

    anticipated cost or that there are errors or omissions SCOPE DEFINITIONX

    Capital Cost

    Overrun

    Risk that the actual captial costs are higher than budgeted or anticipated X

    Contract Alignment Risk that design and construction execution results in O&M challenges that result in

    cost increases and poor performanceX

    Time to Completion Risk that the construction schedule is longer than anticipated X

    Technology Risk that (a) the design and its method of delivery do not keep pace, from a

    technological perspective, with Genentech requirements or (b) the design life of thefacility proves to be shorter than anticipated, thus accelerating refurbishment expense

    X

    Remediation Risk that soil contamination on site will require remediation, delay project X

    Pollution/Environmental

    Risk that ammonia storage could result in a leak that would require SAFETY NOTJUST AMMONIA IF AN ENVIRONMENTAL INCIDENT

    X

    Seismic (Force

    Majeure)

    Risk that contracted service delivery (pre- or post- completion) is not met because of

    a seismic eventX

    Fuel Risk that fuel prices escalate faster than anticipated (what about if they escalateslower than anticipated?)

    X

    Performance Risk that the unit cost of production is higher than anticipated RATIONALE? X

    Regulatory (changein law)

    Risk that regulatory requirements increase permit fees for constructing and operatingthe facility

    X

    Reduction in

    Occupancy

    Risk that Genetech demand decreases due to unforeseen changes to Genentech's

    business.X

    Exit Risk that Genentech needs to exit a contract AT ITS OWN DISCRETION X

    Risk Scoring

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    Weighting based on risk management priorities,(qualitative) probability of the risk occurring

    Scoring on a 1-5 scale

    The higher the points the more aligned the deliveryoption is with the preferred risk management

    approachRisk Risk Description Weight

    (1-5)DBB DBB+OM DBOM DBFOM BOO Comment/Rationale

    Design Risk that the design of the facility isincapable of delivering the services at

    the anticipated cost or that there are

    errors or omissions

    3 3 3 6 6 6 Design build most effectiveway to shed or share design

    risk

    Capital CostOverrun Risk that the actual captial costs arehigher than budgeted or anticipated 4 4 4 8 8 8 Design build most effectiveway to prevent change

    orders for out of scopeitems (up front planning,

    milestone payments,

    contract enforcement,

    external banks involved)

    Risks Caused by Third Party Approach

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    Risks inherent in transferring project delivery to a3rd party

    Negative scoring

    Same weighting approach

    Added to project delivery risks (to create a netreduction in the overall score)

    Risk Risk Description Weight

    (1-5)

    DBB DBB+O

    M

    DBOM DBFOM BOO Comment

    GMP ???????? 2 0 -2 -2 -2 -2 Risk to GMP certification; is this a

    showstopper?

    Long TermFlexibility

    Risk that changes to the long-range campus planning

    cannot be adjusted duerestrictions on a long-term

    contract

    4 0 -4 -4 -4 -8 3rd parties and lenders will want somecertainty regarding Genentech's ability to

    meet future payment obligations, but thisdoes not mean a loss of flexibility in the

    contract if obligations are being met.

    Total Risk Management Score

    Project risk + 3rd party risk + key market drivers =

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    Project risk + 3rd party risk + key market drivers =total risk management score

    Key Driver Driver Description Weight(1-5) DBB DBB+OM DBOM DBFOM BOO Comment

    Market Robustness Pool of qualified firms

    that can deliver full 3rd

    party service as required

    is insufficient.

    2 4 4 2 2 2 Acknowledge that there are fewer

    firms that can own and operate

    facilities than design and build

    them

    Contract

    Burden/Oversight

    Required

    Similar to contract

    alignment, Genentech

    gains efficient of

    contract oversight the

    more the services arewrapped into a single

    delivery.

    4 4 8 12 16 20 Contract enforcement risk cannot

    be avoided but question is - how

    much administrative burden can

    Genentech take on before it does

    not pay?

    Technology Innovation Genentech wants

    continual improvement

    on sustainability metrics

    and efficiency

    5 5 10 15 15 15 The more project delivery

    components that are wrapped into

    a single contract the more

    opportunities there are to

    incentivize efficiency and

    performance.

    Qualitative Score 13 22 29 33 37

    Combined Project &

    Third Party Risk Score

    44 40 53 57 53

    Total Qualitative Score 57 62 82 90 90

    Overview of Project Finance Structure

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    Investors

    Equity

    Lenders

    Debt

    Financing

    Contracts

    Project

    Company

    Off-taker

    Contract

    Design BuildContractor

    DB Contract

    Input Supply

    Contract

    Off-taker

    O&M

    Contract

    Operator

    Supplier

    Why use project finance?

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    Benefits Costs

    Owner/Off-Taker

    Perspective

    Avoid large initial capital costs

    Lower unit cost long-run

    Leaves room for additional investment

    Risk transfer

    Bank due diligence

    Long-term contract (20-30 yrs)

    Potential higher early unit prices

    More limited input on specifications

    Implementation Partners - Market Overview

    Utiliti

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    DB DBOM DBFOM BOO

    Construction

    Design

    O&M

    Financing

    Ownership

    EPC

    Contractors

    Technology Providers

    Operators

    Developers/ESCos

    Utilities

    Self Perform Case - Annual Cash Flow (US$)

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    (90)

    (75)

    (60)

    (45)

    (30)

    (15)

    -

    15

    30

    45

    60

    75

    90

    105

    120

    (90)

    (75)

    (60)

    (45)

    (30)

    (15)

    -

    15

    30

    45

    60

    75

    90

    105

    120

    2012

    2013

    2014

    2015

    2016

    2017

    2018

    2019

    2020

    2021

    2022

    2023

    2024

    2025

    2026

    2027

    2028

    2029

    2030

    2031

    2032

    2033

    2034

    2035

    2036

    2037

    2038

    2039

    2040

    2041

    2042

    2043

    2044

    2045

    2046

    2047- - - -

    Millions

    Millions

    Capital investment Cash outflows - Commodities Cash outflows - Maintenance Tax (-) creditor / (+) debtor Annual cash flow

    (Inflows)

    Outflows

    Alt. Procurement Cash Flow (US$)

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    (90)

    (75)

    (60)

    (45)

    (30)

    (15)

    -

    15

    30

    45

    60

    75

    90

    105

    120

    (90)

    (75)

    (60)

    (45)

    (30)

    (15)

    -

    15

    30

    45

    60

    75

    90

    105

    120

    2012

    2013

    2014

    2015

    2016

    2017

    2018

    2019

    2020

    2021

    2022

    2023

    2024

    2025

    2026

    2027

    2028

    2029

    2030

    2031

    2032

    2033

    2034

    2035

    2036

    2037

    2038

    2039

    2040

    2041

    2042

    2043

    2044

    2045

    2046

    2047-

    -

    -

    -

    Millions

    Millions

    Cash outflows - Procurement & Pre-Operations Cash outflows - Service payments Tax (-) creditor / (+) debtor Annual cash flow

    (Inflows)Ou

    tflows

    Net Present Cost (US$)

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    Alt. Procurement Self-Perform

    Is a Third Party Option Right for YouYES!

    If Yes to All Three, MoveIf No to any one

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    Forward with Third Party

    Procurement

    y

    question, self

    perform

    Business Case Process -Moving TowardImplementation

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    1. Initial Value Analysis- Life Cycle Cost Analysis - Does it pencil?- Qualitative Value

    2. Finance & Procurement AnalysisSelf-Perform orThird Party approach make sense?

    - Risk Analysis- Financing StrategyUse Project Finance?- Third Party Engagement- Final Net Present Cost Analysis

    3. Launch ProcurementRFQ, RFP...let theimplementation begin!

    Optimizing Systems at District Scale

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    Cole Roberts, PE, LEED AP 415.946.0287Brian Renehan, MBA 415.957.9445

    p g yEcoDistrict ConferenceOctober 27, 2011