Energy Saving Performance Contracting

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Smart Growth/Smart EnergyDecember 7, 2007

• Energy Saving Performance Contracting

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Introduction to session

• Promote and deliver cost-effective energy
  efficiency outcomes

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Introduction to session

• Eileen McHugh
• Division of Energy Resources
• eileen.mchugh_at_state.ma.us
• [phone]
• www.mass.gov/doer

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What is theEnergy Services Coalition?

• Goal is to Assist with Performance Contracting
• Cooperative Between Customers and Energy Services
  Companies (ESCos)
• Helpful Website with Tools to get you Started
• www.energyservicescoalition.org

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Information

• www.mass.gov/doer
• Energy Management Services

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Introduction to Speakers

• Jerry Drummond
• Kathy Stanley
• Steve Lisauskas

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Jerry Drummond
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What is Performance Contracting?

• Performance contracts install energy efficient
  facility improvements, with no up front cost,
  paid for out of guaranteed energy savings from
  your existing operating budget.

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Energy Services Company
ESCo
Develop
Maintain
Design
Finance
Construct
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Performance Contracting

• A way to finance and implement facility
  improvements and services
• Energy and operating savings sufficient to cover
  all project costs
• A bundled set of retrofit, service, OM, and
  Energy Management Services
• Performance-based Guarantee

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Performance ContractingCore Components

• Technical
• Financial
• Contractual

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Technical

• Lighting
• Lighting controls
• Motors replacement
• Energy management system installation and
  optimization
• Variable frequency drives

• Hot water reset
• Control valves for boilers
• Water conservation
• Plug load controls (including PCs)
• Boiler replacement
• Green/renewable technologies

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Financial

• Where does the money come from?
• Existing budget neutral
• Energy
• Maintenance
• Capital improvement
• Rebates and incentives
• Municipal Lease or Other

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The Savings Buckets
Maintenance
Technology
Technology Infrastructure Upgrades
Facilities Infrastructure Upgrades
Communications
Utility
Operational Budget
Capital Budget
Project Funding
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Operating Budget1m
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Operating Budget1m
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How is it paid for?
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Contractual

• How can you buy this?
• How do we measure success?
• Guarantees
• When do you start to pay?
• What happens if.?
• Hotter/Colder
• Energy prices change
• Add buildings
• Eliminate buildings
• Schedule changes

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Getting Started

• Organize a team
• Procurement
• Budget and finance
• Technical
• Legal

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Springfield Project

















Customer Name City of Springfield 36 Court
Street Springfield, MA 0113 Owners
Representative Patrick Sullivan Director of
Parks and Recreation Contact
Information [phone]












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Springfield Project

















Project Size 15,000,000 Municipal
Bond Guaranteed Savings 1,174,843
Annually Utility Rebate 600,000












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Springfield Project

















Scope of Work Boilers High Efficiency
Condensing Steam Lighting Retrofits
Controls Centralized Energy Management
System Cogeneration Pool Cover Air
Handler Replacement Repair Centralized
Computer Network Controller Heating System
Improvements Plug Load Controls












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Kathy Stanley
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Getting Started

• Self Assessment Critical Path
• Drives Site Selection
• Drives Technical Issues
• Drives Calculating Savings
• Prevents Cream Skimming

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Prepare An Energy Baseline

• Do this first
• Include all energy types
• Detail and summary by Btu
• Include Square Footage in Calcs
• Get your benchmarks
• Allocate Resources or Outsource for speed

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Use Your Baseline

• Identify Problem Areas
• Save Money Now!
• Clean up billing issues
• Clean up meter issues
• Fix no capital required problems
• Skim your own cream

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Avoid Bumps in the Road

• Before you start
• Internal agreement on financing strategy and
  financial parameters of the project
• Realistic expectations
• Involve a representative from all departments,
  i.e. purchasing, legal, facilities, accounting,
  finance
• Designate a project manager who is committed to
  seeing the project through

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Avoid Bumps in the Road

• Selecting a Partner (ESCO)
• Follow your procurement law and process
• Keep careful notes and document as much as
  possible
• Place a high priority on firms with a strong,
  successful team
• Check references diligently and document
• Ask questions several different ways, look for
  consistency
• Be sure you meet and interview the actual
  personnel working on your project

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Avoid Bumps in the Road

• Negotiating the contract
• Be clear about construction project structure,
  i.e. fixed price vs. cost plus
• Close the scope definition before beginning
  negotiations
• Be clear about savings sources
• Be specific about deadlines for deliverables and
  enforce them
• Check all measurement and verification specifics,
  check all engineering calculations for sound
  engineering practice

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Steve Lisauskas
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(No Transcript)
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What did we get?

• 60 Boilers
• Centralized Energy Management System
• Infrastructure Revitalization
• Improved Learning and Work Environment
• Strategic Energy Plan
• Long Term Partnership with Guaranteed Financial
  and Technical Accountability

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What Savings Are Expected

• Over 2,000,000 in Annual Energy Savings
• Hundreds of Thousands of Dollars in Maintenance
  and Other Operating Cost Reductions
• Preventive Maintenance vs. Repair Based
• 15,000,000 in Reduced Capital Spending
• All Annual Positive Cash Flow is Springfields to
  Keep

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Impacts for the Program Term

• Energy Saved
• 2,549,150 kWh of electricity
• (245,480) Therms of natural gas
• 624,680 Gallons of 2 oil

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Impacts for the Program Term

• Emission Reductions (Metric Tons)
• 137,748 of carbon dioxide
• 215 of sulfur dioxide
• 140 nitrogen oxide

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Equivalent Impact forProgram Term

• 29,762 Passenger Cars off road

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Equivalent Impact forProgram Term

• 41,413 planted acres of trees

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Questions