Reducing Budget Deficits through Energy Efficiency Projects in Florida Schools

1
Reducing Budget Deficits through Energy
Efficiency Projects in Florida Schools

• FEFPA Pre-Conference Workshop
• Boca Raton, Florida
• June 30, 2003

2
Presentation Outline

• Florida Energy Services Coalition (FESC)
• (Tracey Gallentine)
• Floridas Energy Efficiency Laws and Programs
• (Michael Ashworth)
• Energy Contracting in the U.S. and Florida
• (Patti Donahue)
• How to Save Energy and Costs in New Construction
• (Brian Frost)
• Case Studies (Brian Frost/Graydon Howe)

3
Florida Energy Services Coalition (FESC)

• Presented by Tracey Gallentine
• Progress Energy Solutions and
• FESC Private Sector Co-Chair

4
Florida Energy Services CoalitionWho We Are

• State chapter of the National Energy Services
  Coalition
• Florida chapter established in June 2002
• Public private sector co-chairs
• Governed by a 13-member charter board

5
Florida Energy Services CoalitionWho We Are

• Comprised of individuals from
• Schools
• State agencies
• Local governments
• Energy companies
• Engineering firms
• Finance companies
• Energy consulting firms

6
Florida Energy Services Coalition What We Do

• Promote and encourage energy performance
  contracting . . .
• In both public and private sectors in Florida . .
  .
• To reduce energy consumption and save energy and
  operating dollars

7
Florida Energy Services Coalition How to Reach Us

• Visit the ESC Web site
• http//www.escperform.org/
• And click on Florida for more information!

8
Energy Efficiency in Florida State Law and
Programs

• Presented by Michael Ashworth
• Department of Community Affairs and
• FESC Public Sector Co-Chair

9
Energy Contracting Legislation Background

• 1992 Energy contracting legislation for schools
  (s. 235.215) enacted
• 1994 Energy contracting
• legislation for state agencies
• and local governments
• (s. 489.145) enacted

10
Energy Contracting Legislation Background
(continued)

• 1997 School energy EPC law substantially
  amended during Special Session on schools
  (November)
• 2002 Educational facilities statutes
  transferred from chapter 235 to chapter 1013
  (part of K-20 Education Code)
• See specifically s. 1013.23

11
Energy Conservation Measures

• A training program or a facility alteration or
  equipment used in new construction or as an
  addition to an existing facility that reduces
  energy costs

12
Energy Conservation Measures(continued)

• Insulation
• Storm windows doors
• Lighting
• Heating, ventilating and A/C
• Energy recovery systems
• Automatic energy control systems

13
Energy Conservation Measures (continued)

• Co-generation systems
• Measures which reduce long-term operating costs
  and Btus
• Renewable energy systems (solar, biomass, wind)
• Water or sewer
• consumption reductions

14
Key Provisions of the Law

• Savings fuel, energy, OM costs new
  construction
• Must use competitive procurement
• Requires an annual written savings guarantee
• Contract includes design and installation, OM,
  actual annual savings, financing charges

15
Key Provisions of the Law (continued)

• Allows for 3rd party financing
• Contract term up to 20 years
• 100-percent public
• construction bond required
• Payback based on building life-cycle costing
  calculations

16
Key Provisions of the Law (continued)

• Contractor performs annual
• reconciliation of savings
• Energy contractor liable for shortfalls
• Excess savings cannot cover shortfalls in future
  contract years

17
SMART Schools

• SMART (Soundly Made, Accountable, Reasonable, and
  Thrifty) school design for K-12 schools
• Section 1013.41, Florida Statutes
• Purpose To substantially increase States
  investment in school construction

18
School Infrastructure Thrift(SIT) Funds
(continued)

• Authorized in SMART schools legislation
• SIT Program was converted to an incentive award
  program to encourage functional and frugal
  facilities practices
• Requires approval by Commissioner of Education
  for receipt of funds
• Not available for charter schools

19
School Infrastructure Thrift(SIT) Funds
(continued)

• Program was sunset on June 30, 2001
• SIT awards will continue (of total 350 million,
  only 58.9 million left as of April 2, 2003)
• Remaining SIT dollars awarded from Lottery Bond
  Proceeds and MUST be expended on bondable
  projects

20
School Infrastructure Thrift(SIT) Funds
(continued)

• Application for funding is available from DOEs
  web site
• http//sun6.dms.state.fl.us/smartschools/forms.htm
  l
• SMART Schools Clearinghouse staff in Room 1004
  Turlington Building, Tallahassee, Florida
• E-mail janet.burns_at_fldoe.org

21
State Energy ProgramInvitation to Negotiate
(ITN)

• In August, 2001 Governor Jeb Bush announced his
  goals for energy efficiency for the State
• Require a comprehensive review of state
  facilities by energy experts
• Reduce energy consumption by state agencies of 5
  annually
• Prepare annual report on state agency energy
  consumption

22
State Energy ITN (continued)

• Establish a State Employee Conservation Awareness
  Program to reduce energy consumption
• Create a State Energy Office to help develop
  energy policy
• Create the Florida Next Generation Energy
  Partnership to increase use of next generation
  energy technologies (such as fuel cells) between
  the State and the industry

23
State Energy ITN (continued)

• Based on the Governors Initiative, the
  Department of Management Services issued an
  Invitation to Negotiate (ITN) in Fall 2001

24
State Energy ITN (continued)
Purpose of ITN Establish a state term contract
for a comprehensive statewide energy plan for use
by all governmental entities
25
State Energy ITN (continued)

• 11 ESCOs responded 8 were awarded the state
  term contract in Spring 2002
• Each ESCO was assigned 1 or more state agencies
  based on energy consumption needs
• Current status Model documents for state
  agencies are still pending approval by Department
  of Financial Services

26
State Energy ITN (continued)

• Progress of ITN
• New DMS Secretary Bill Simon supports ITN
• DMS staff are proceeding
• Yet to be posted on DMS website
• FEO at DCA was transferred to DEP

27
State Energy ITN (continued)

• How are schools affected by the ITN?
• A school can select from the 8 ESCOs on the ITN
  without bidding (as per ch. 287, F.S., optional
  purchase from state term contracts) as long as it
  complies with local procurement rules

28
Need Help? Available Services

• Assistance in Customizing and Preparing the RFP
• Provision of ESCO Bid List
• Instructions for/Assistance with Preparing
  Technical Facility Profiles
• Provision of Comparative Evaluation Methodology
• Evaluation Training Services
• Full Participation on Evaluation Team
• Technical Review Services
• Review of Project Economics
• Contract Development and Negotiation Assistance

29
Energy Contracting in theU.S. and Florida

• Presented by Patti Donahue
• President, Donahue Associates

30
Historical Performance of the ESCO Industry

• Results from the NAESCO Project Database
• 60 participating companies
• 1500 projects
• 76 based on some type of performance contracting
  arrangement
• 2.6 billion capital investment for all sectors

31
Historical Performance of the ESCO Industry
(continued)

• 74 institutional projects
• 27 K-12 schools
• 16 state/local governments
• 14 health/hospital
• 10 universities/colleges
• 7 federal facilities
• 26 commercial, industrial, residential other
  projects

32
ESCO Projects byMarket Sector
33

Project Descriptions

• 95 of the projects installed lighting or HVAC or
  both
• Project costs typically are in the range of
  600,000 to 2 million although trending to
  larger volumes over several phases
• 23 average reduction in electric savings

34
Florida Public Sector Survey

• Conducted in 1998
• 22 public sector respondents executed 21 energy
  performance contracting projects during 5-year
  period (1993-1998)
• Additional 9 projects in various stages of
  implementation
• 7 ESCO survey respondents had a total of 79
  projects in various stages of implementation in
  ALL market sectors

35
Florida Survey Results
36

Florida Survey Market Activity Results
37
Florida - One Projects Impact

• A Florida school district implemented a 9
  million project in 45 facilities (3.5 million sq.
  ft.)
• Projected annual cost savings 1,570,000
• Annual reduction in CO2 emissions 17.3 million
  pounds, equivalent to removing 1,634 cars from
  the U.S. highways each year

38
EPC Can Reduce Air Emissions

• Estimated savings potential from 1990-2010 for
  1400 energy performance contracting projects
  implemented by a national ESCO
• 18 billion on energy bills
• 352 million tons of CO2 -- equivalent to
  eliminating emissions from 4 million cars

39
Energy Performance Contracting Manual
40
Energy PerformanceContracting Manual (continued)

• Serves as a how-to guide to assist Florida
  public agencies implementing energy projects
• Provides guidelines on procuring, implementing,
  and managing energy performance contracts in
  order to reduce energy consumption/costs in
  public facilities
• Funded through a grant from the U.S. Department
  of Energy and Florida Energy Office updated 2003

41
Manual Contents

• Part One What is Performance Contracting
• Part Two The Procurement Process
• Part Three Evaluation Process
• Part Four Audit Process Final Contract
  Development
• Part Five Project Commissioning, Savings
  Measurement and Verification and Project
  Monitoring

42
Manual Case Studies

• Brevard Community College Florida Power Light
• City of Miami Beach Johnson Controls, Inc.
• Cape Canaveral Air Force Station NORESCO
• Arbor Shoreline Office Park Progress Energy
  Solutions
• Broward County Libraries Sempra Energy Solutions
• Jacksonville University Siemens Building
  Technologies
• Florida Department of Corrections TECO Solutions
• Hernando County School District Tampa Bay Trane
• City of Jacksonville Viron Energy Services

43
Manual Appendices

• Florida Statutes for performance contracting
• Sample Model RFP
• Instructions for preparing technical facility
  profiles
• Evaluation forms
• Sample letter of invitation for oral interviews
• Sample investment grade energy audit contract
• Sample model energy services agreement

44
Want a Copy?

• Electronic version available from ESC web site
  (click on State Chapters, Florida, under
  Resources)
• www.escperform.org
• Hardcopies available from Florida Department of
  Community Affairs
• 850-922-6075

45
Saving Energy and Costs in New School
Construction

• Presented by Brian Frost
• Energy Reapers, Inc.
• Dynamic Synergies, Inc.

46
Purpose of Presentation

• Demonstrate use of
• energy performance contracting and district
  cooling to improve energy efficiency and stretch
  construction budgets for new school construction
  or major renovation projects

47
Why Use EPC for New Construction in Schools?

• Capital budget challenges
• Limited funding
• Lengthy approval process
• Functional scope creep
• Energy measure vulnerability
• Will reduce the operating costs of newly
  constructed schools

48
Why Use EPC for New Construction in Schools?
(continued)

• Better integration between architects, engineers,
  builders, owners, and operations and maintenance
  staff
• Incentive to the design and construction
  community to exceed minimum code requirements
• Excellent return on investment/low risk
• An additional funding source

49
Benefits

• Reduces total building life cycle costs
• Offers client economic incentives to upgrade
  equipment before purchase and installation
• Involves higher efficiency equipment which pays
  for itself over time

50
Benefits (continued)

• Offers incentives for commissioning
• Energy efficient, productive and enjoyable work
  spaces and
• teaching environments

51
How to Identify Savings

• New construction Modeled/projected reduction in
  utility and/or OM costs when compared with
  modeled/projected costs of current design or
  minimum standards of the Florida Building Code
• Compare savings of installing higher efficiency
  equipment/building material to original standard
  equipment/material that would have been installed

52
How to Identify Savings (continued)

• Model baseline condition
• Value engineer design from energy and OM
  standpoint
• Model energy efficient design
• Energy base Energy eff. Level of
• Alternative Financing Available

53
Baseline Development

• Modeled energy usage from systems meeting minimum
  energy code standards or from existing design
• EPC financing is through the annual projected
  savings leveraged to fall between a 2-20 year
  term
• Based on additional savings generated by
  improving systems (M, E, P, insulation, windows)

54
Baseline Development Inputsto Modeling Program

• DOE and TRACE 600 700
• Current design for new building or minimum
  building code standards
• ASHRAE 90.1 standards
• Energy performance of current location
• Typical, recent experience of customer (sq.
  ft./energy cost of another building)
• Combination of above

55
Baseline Development

• Whatever is used as baseline must be agreed to
  by parties and able to withstand audit!

56
Design Interface

• At what point do you involve ESCOs in the
  project?
• How is ESCO involvement handled?
• How do energy recommendations get incorporated
  into the final building design?

57
Design Interface

• Usually all design is done before ESCO gets
  involved
• Recommend getting ESCO involved in the project
  design EARLY

58
Possible ESCO Roles in New Construction

• Financing
• Design and installation of ECMs
• Preparation and implementation of energy-related
  scope of work
• Coordinator for design and installation
• Subcontractor/general contractor for energy
  systems of entire building

59
Possible ESCO Roles inNew Construction
(continued)

• Warranty only (savings measurement and
  reconciliation)
• Operate and/or maintain ECMs installed either by
  ESCO or in entire project
• Full building operation maintenance
• Subcontractor to CM/GC

60
Project Organizational Structure
Owner
Contract for stipulated utility savings, optional
OM services or chilled water purchase agreement
CM/GC
A/E design team
ESCO or district cooling supplier
Subcontractors
61
What is District Cooling?

• Produces a commodity chilled water at a nearby
  or onsite chiller plant
• Local air conditioning utility
• Circulates water through
• facilities to provide
• cooling

62
What is District Cooling (continued)

• Approximately 5,800 district energy systems in
  U.S.
• Used in institutional systems serving several
  buildings owned by one entity
• Also used in downtown areas and other
  high-density urban locations

63
Potential Customers for District Cooling

• Large campuses universities,
• colleges, hospitals, theme
• parks, industrial complexes
• Office buildings, shopping malls, hotels
• New commercial facilities in high density areas
  with third-party owned cooling systems

64
Reasons for District Cooling

• No hassle and expense of operating and
  maintaining chiller plant
• More available facility space (no on-site
  chillers, pumps, etc.) for occupation
• No capital to repair and/or expand existing plant
  or to build new plant
• Has capital to repair and/or expand, but wants to
  spend money on something else

65
Reasons for District Cooling (continued)

• Split system condenser and roof top equipment
  placed in separate building and hidden from view
  (aesthetics)
• Noise reduction
• Better humidity control

66
District Cooling Configuration
67
Project Criteria

• Fewer customers is better!
• One system customer is optimum
• More customers served, more complex the sales
  effort becomes
• Administrative costs are higher with multiple
  customers

68
Project Criteria (continued)

• Load diversity enhances project economics
• Multi-building campuses with day and night
  operations (e.g., classroom, administration,
  dorms)
• Multi-use buildings (e.g., retail entertainment
  complexes, theaters, restaurants, bars)

69
New District CoolingConstruction

• Optimum chiller plant load is 2,000 tons
• Project economics are favorable for both customer
  and ESCO

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New District CoolingConstruction (continued)

• For plant loads less than 2,000 tons
• Will chiller plant load increase over time?
• Can ESCO acquire and upgrade the owners existing
  plant?
• Is the customer highly motivated to outsource?
  May agree to pay incrementally higher cost

71
Case Study Prototype School

• Prototype middle school
• For simplicity Only one piece of mechanical
  equipment was selected as candidate for energy
  upgrade
• Original plans chiller with minimum energy
  efficiency ratio of 0.72 kW/ton
• Upgraded to 0.612 kW/ton

72
Case Study Savings
73
Case Study Savings (continued)
74
Summary of Savings

• Cost of chiller upgrade 4,500/unit
• Based on two 260-ton centrifugal machines
• Annual savings between two chiller models
  4,585
• Cost to upgrade 2 years of electric utility cost
  savings (simple payback)

75
Case Study Ybor City District Cooling

• Project cost 4.2 million
• In operation since 1999
• Single story structure with historical
  architectural design
• Capacity 3,600 tons of peak cooling capacity

76
Ybor City District Cooling
77
Ybor City District Cooling

• Main customer Hillsborough Community College
  Ybor City Campus
• Uses chilled water to air condition three
  buildings on college campus
• Other customers served
• Hilton Garden Inn
• Centro Ybor retail / entertainment complex
• Ybor Square

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Ybor City District Cooling

• Circulating pumps installed
• 40 HP primary chilled water
• 100 HP secondary chilled water
• 125 HP condenser water
• ESCO offers in-house resources to operate and
  maintain all facets of end-user metering system,
  customer billing, payments, and accounting,
  customer service issue resolution, and reactive
  maintenance

79
Hillsborough Community College/Dale Mabry Campus

• Complete renovation of chilled water and heating
  generation
• New construction element Connect new
  classroom/lab addition to central plant
• ECMs
• Two 900-ton chillers
• Lighting retrofits
• Variable frequency drive retrofit
• Separate meter for tennis court complex

80
Hillsborough Community College/Dale Mabry Campus
81
Hillsborough Community College/Dale Mabry Campus

• Project Cost 3,719,277
• Savings

82
Summary Energy Performance Contracting for New
Construction

• Provide a funding source based on the incremental
  cost savings from upgrading the buildings
  systems
• Savings can be found in several types of systems
  that can reduce total building life cycle costs
• Several energy service companies offer this
  service

83
Summary District Cooling

• 2,000 ton minimum
• Aesthetics, noise reduction, humidity control,
  and less space requirements all have value a
  bonus on top of the energy efficiency comparison
• Several utilities and ESCOs offer district
  cooling in Florida

84
Closing Comments

• Keep operating costs in mind when value
  engineering
• If budget is tight, consider these options
• Understand your options and apply them in the
  early stages of project development

85
Closing Comments

• Ask for help if you have questions
• Florida Energy Services Coalition
• Florida Energy Office
• Independent consultants
• ESCOs and utilities