Funding Infrastructure Investments

with Guaranteed Performance

Kevin Bell

Kimberly Albertson

Schneider Electric

August 21, 2013

Water & WastewaterAlternative Project Delivery Option (PC)

Leverage Guaranteed Savings with Risk Transfer

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The challenge is to sustain water quality and cut operating costs…

Energy consumption is the single largest variable expenditure item in water and wastewater treatmentIt is also the largest opportunity to scale down operating costs by scaling up energy efficiencyEPA Challenges, Consent Decrees, Energy Neutrality Goals

25%Just making real-

time energy intelligence available to

operators and managers can help

to cut operating costs by as much

25%.

30%On average, energy

consumption accounts for up to 30% of a

water plant’s operating costs.

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87%Pumping can account

for up to 87% of a water system’s total

energy costs.

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Challenges

Capital Dollar Competition - InternalProperty values down, sales tax revenue down, etc

Escalating Energy CostsIncreasing over the next 20 year horizon

Staff Attrition – Voluntary or DirectedLess personnel required to accomplish more

Regulatory ImpactsUnfunded mandates, consent decrees, complex technologies

Operational Efficiencies & Performance EnhancementDo more with less with aged infrastructure

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Our Solutions

Capital Dollar Competition – Internal on - Internal

Tax revenue receipts are down – Systems must operate and provide service

PC offers opportunity to generate savings to offset capital needs

Staff Attrition – Voluntary or Directed

Do more with less Solutions that employ technology and automation to achieve results

Escalating Energy CostsAbsence of long term power purchase agreements

Solutions reduce energy costs – 20 – 40% over status quo

Regulatory Impacts Unfunded mandates and system corrections

Solutions mitigate regulatory impacts

Operational Efficiencies & Performance Enhancement

Systems aged – inability to extract operational efficiency and performance enhancement

Implementation of technology and automation

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How to Overcome Challenges?

• Alternative Project Delivery Mode – Performance Contracting

• Legislatively Approved and Regulated

• Significant National Precedence in Water Sector

• 15 to 30% Efficient ($) in Contrast to Traditional Procurement

• 20 to 40% Operational Cost Savings through Solutions

• Owner Protected through Solution Risk Transfer

• Guaranteed Savings Supported by ESCO Balance Sheet

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Definitions: • ESPC – Energy Savings Performance

Contract

A partnership between a Municipality or Water Wastewater (W/WW) District and an ESCO to accomplish energy savings projects without up-front capital costs.

• ESCO – Energy Services Company

A company that develops, installs and arranges financing for projects to improve energy efficiency and reduce operation and maintenance costs at a Municipality or W/WW facilities with guaranteed results.

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Facility / Plant improvement & infrastructure renewal program

Energy savings created by: Energy Conservation Measures (ECM’s) = installing efficient pumps, motors, blowers, drives, process optimization, automation, energy monitoring, self generation of power including renewables and CHP, aeration & oxygen transfer, solids stream management, etc.

Savings are guaranteed by Energy Services Company

What is Energy Savings Performance Contracting?

Reductions From:

• Less Electricity• Less

Chemicals• Less

Maintenance• Biogas Reuse

• Less Natural Gas

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Long Payback

Cost Savings

Quick Payback

Cost Savings

A comprehensive approach

• Fine Bubble Diffusers

• SCADA System

• VFDs

• Aeration System Optimization

• Biogas for CHP

• Optimize Digester Performance

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Energy Bill

Energy Efficiency Improvements

Reliability Improvements

Equipment Replacements / Repairs

Goal = Budget Neutrality

After performance contracting, the budget remains the same or less, and energy savings pay for the facility improvements.

Example of Annual Energy Budget:

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• Develop, design and arrange financing for projects• Install and maintain the energy efficient equipment • Typically works with preferred consulting engineers• Measure, monitor and verify the project’s energy savings• Guarantees both the maximum project cost and the projected

energy savings

What does the ESCO provide?

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Capital Investment – Leveraging Financial Options

General Obligation Bonds

Capital Lease Purchase Agreement

Revenue Pledge – Enterprise Fund Pledge

Performance Contracting allows for attractive financing options –

Customer’s investment back into the Customer’s water enterprise

Turnkey energy efficiency solutions

Performance Risk assumed by ESCO

Fixed price contract

Payment and Performance Bonds

Savings Guarantee by ESCO● ESCO provides flexibility for Customer to choose budget neutral results OR

Customer to focus on much –needed improvements that could not previously been paid for except for the blend of measures that provide net savings available.

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Water Distribution Energy Conservation Measures (ECMs)

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The primary ECM is for improving the efficiency of

water booster or high service pumps

SCADA

Leak Detection & Repair

Water Meters – AMR/AMI

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Water Treatment ECMs

Pump Optimization and Control

Power Conditioning, Power Factor Correction

Lighting, HVAC, Solar Power

Water Conservation, Smart Irrigation, Reclaimed Water

Demand Monitoring and Control Improvements

Motor Efficiency Upgrades

VFDs and Motor Controls

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Water ECM Metrics – Save 10-20%

Water Treatment Plants Energy SavingIncrease Pumping Efficiency (Optimization) 5-10%Replace Inefficient Motors and Install VFDs 5-10%Optimize Pump Efficiency 5-10%Demand Monitoring and Control Optimization 3-5% Power Factor, Harmonics, Power Quality 3-5%

Water Distribution System Reduce Water Loss (AMI/AMR/ Leak Management) 10-15%Reduce water flow resistance in pipes 10%Increase Pumping Efficiency at High Services Pumps 5-10%Replace Inefficient Motors and Install VFDs 5-10%Optimize Pump Efficiency 5-10%Demand Monitoring and Control Optimization 3-5%

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Wastewater Collections ECMs

Wastewater collection systems primarily lift water, therefore, VFDs have limited application

for energy efficiency.

Lift Station optimization is under development

SCADA, MCCs and pumps controls can be evaluated on a case by case basis.

Pump and Motor efficiency

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Potential ECMs – Wastewater Treatment

Aeration Improvements (Blowers, DO, Diffusers)

Digester Improvements (Mixing, FOG, HS Waste)

Cogeneration (CHP)

Demand Monitoring and Control Improvements

Power Conditioning, Power Factor Correction

Motor, Pump Efficiency, VFDs and Controls

Lighting, HVAC, Solar Power

Low Energy Mixing, CEPT

Water Conservation, Smart Irrigation, Reclaimed Water

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Wastewater ECM Metrics – Save 30-50%

Wastewater Treatment Plants Energy SavingsOptimize Pump Efficiency 5-10%Replace Inefficient Motors and Install VFDs 5-10%Aerobic (HE Blowers, Fine Bubble, DO Control, Mixing) 25-35%Demand Monitoring and Control 3-5%Power Factor, Harmonics, Power Quaility 3-5%Anaerobic (Cogeneration, HSW, FOG, LE Mixing) 30-70%

Wastewater Collection SystemReplace inefficient motors and Install VFDs 5-10%Optimize Pump Efficiency 5-10%Optimize Operating Schedule 5-10%

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Johnson Controls

Aeration Diffuser Upgrade Aeration Blower Upgrade Dissolved Oxygen Control &

Aeration Blower Control

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Johnson Controls

DIGESTER GAS TO ENERGY

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Solar PV

Solar PV mounted on carport, roofs, available acreage

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Wind Turbines

Wind has a real impact on power generation at a site and reduction in amount of power to be purchased

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Denison, TX population 25K, MGD plant operating at 3 MGD

Project Cost7,943,747

Guaranteed Annual Savings$217,727

Projected One-Time Rebate$195,000

• Lighting, EMS, HVAC• Improvements to their Aeration Basin & Aerobic Digester including new fine bubble diffusion grids

• Replacement of 750 hp of blowers and 400 hp of pumps• Replacement of 3 old switchgear/MCC’s

Project Scope

Project Enablers• Existing relationship with City Manager• Proposed improvements were already known issues• Budget $ already set aside for some improvements

City of Denison Case Study

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Slow Water and sewer rate increasesRedirect funds already being spent on utilities

A solution with multiple benefitsGuarantee performance and financials so that you are assured this is a good decision

Legislative mandatesReach energy requirements and defer mandates

Facility improvement & infrastructure renewal Tackle deferred maintenance Issues with no capital funding source

Energy Performance Contracts have helped Cities & Special Districts

Reach sustainability goalsReduce carbon footprint and provide GHG reporting

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Thank you!

Contact Information:

Kevin BellProgram Manager Schneider Electric – Professional ServicesPhone: 916-508-0535Email: kevin.bell@schneider-electric.com

Meet Our Specialists at WEFTEC 2013

October 7 – 9, 2013 McCormick Place South Chicago, ILBooth 3019