Smart Growth/Smart Energy December 7, 2007 Energy Saving Performance Contracting

Introduction to session

Promote and deliver cost-effective energy efficiency outcomes

Introduction to session
Eileen McHugh Division of Energy Resources eileen.mchugh@state.ma.us (617) 727-4732 www.mass.gov/doer

What is the Energy 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

Information

www.mass.gov/doer
Energy Management Services

Introduction to Speakers

Jerry Drummond Kathy Stanley Steve Lisauskas

Jerry Drummond

What is Performance Contracting?

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

Energy Services Company

ESCo

Develop

Design

Finance

Construct

Maintain

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, O&M, and Energy Management Services Performance-based Guarantee

Performance Contracting Core Components

Technical Financial Contractual

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

Financial

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

The Savings Buckets

Maintenance Technology Facilities Infrastructure Upgrades Utility Communications

Technology Infrastructure Upgrades

Operational Budget

Capital Budget

Project Funding

Operating Budget=$1m

Operating Budget=$1m

How is it paid for?

$1,000,000 $900,000 $800,000 $700,000 $600,000 $500,000 $400,000 $300,000 $200,000 $100,000 $0 Current Situation Installation Period Program Years Post Program 1-10 Years 11+

Excess Savings Program Cost Utility Payment

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

Getting Started

Organize a team
Procurement Budget

and finance

Technical Legal

Springfield Project
Customer Name: City of Springfield 36 Court Street Springfield, MA 0113

Owners Representative: Patrick Sullivan Director of Parks and Recreation Contact Information: (413) 787-6444

Springfield Project
Project Size: $15,000,000 Municipal Bond

Guaranteed Savings: $1,174,843 Annually Utility Rebate: $600,000+

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

Kathy Stanley

Getting Started

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

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

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

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

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

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

Steve Lisauskas

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

Balliet Elementary School

Boland, Edward P Elementary School

Bridge Academy, Eastern Avenue Campus

Brookings Elementary School

Central High School

Chestnut School

Deberry Elementary School

Dryden Memorial Elementary School

Where We Started

Van Sickle Middle School Springfield High School

Current Cost
ELLS, Margaret Elementary School Gerena Community School Glickman Elementary School High School of Science and Technology Indian Orchard Elementary School

Proposed Cost

Kensington Elementary School

Liberty Elementary School

Mary Lynch Elementary School

Pottenger Elementary School

Rebecca Johnson Elementary School

Sumner Ave Elementary School

Washington Elementary School

Zanetti Elementary School

$0

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

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

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

Impacts for the Program Term Emission Reductions (Metric Tons) 137,748 of carbon dioxide 215 of sulfur dioxide 140 nitrogen oxide

Equivalent Impact for Program Term

29,762 Passenger Cars off road

Equivalent Impact for Program Term

41,413 planted acres of trees

Questions