Energy Savings Performance

Contracting (ESPC)
What is an ESCO?
 Energy Services Company (ESCO)
 Some similarities to a Design/Build firm
 Turnkey service for energy efficiency
projects
 Expertise in energy engineering
 Commissions project work
 Measures and Verifies Energy Savings
ESCO Benefits
Collaboration between Owner, DES, and ESCO
Ability to fast-track
Owner involved with contractor selection
Owner involved with equipment selection
One responsible entity (ESCO)

GUARANTEED:
Maximum project cost
Energy savings
Equipment/System performance
 What is DES’s Role

1986 RCW 39.35 Prequalified Project Contractual Financial

Legislative Providers Oversight Framework & Transparency
Authority to GA Coordination
(Now DES)
Qualifying Projects

Energy and/or Water conservation projects

such as:

• Building lighting • Energy management

• Street lighting control systems
• HVAC modifications • Building and grounds
• Steam & condensate water conservation
• Boiler & chiller systems
Financing

Current
Operational Savings Savings

Costs Annual Debt

Service
New
Operational
Costs

Utility & Utility & Utility &

Maintenance Maintenance Maintenance
Costs Costs Costs

Before During After

Financing Options

 Energy Service Company (ESCO) Financing

 State Financing
 State Treasurer’s LOCAL Program
 3 - 5% interest rate
 10, 12 or 15 year loan

 Private Financing
 Agency intra-budget financing
 Department of Enterprise Services Experience
Energy conservation in public facilities since 1986
Over 500 projects totaling $300 million
Over $100 million in energy cost saved
$30 million in utility rebates brought to the projects

Clients include state agencies, colleges and universities, cities and towns,
counties, school districts, port districts, libraries, hospitals, health districts:

Highline College King County City of Olympia

Customers: Olympic College Tumwater School District Port of Bellingham
Yakima School District Department of Corrections …and dozens more
Valley Medical Center University of Washington
City of Tukwila Veterans Administration
 Sequence of an ESCO Project

Project initiated by Design &

Preliminary
Interagency
Agreement Audit Construction

#1 #3 #5

#2 #4 #6

ESCO Investment Measurement

Selection Grade Audit &
Verification
1. Interagency Agreement
 DES initiates an Interagency Agreement (IAA) between
the State and the client agency
 DES management fee schedule is included in the IAA
 The Client signs and DES executes the IAA
2. ESCO Selection
 DES pre-qualifies Energy Service Companies (ESCOs)
biannually and creates a registry through an RFQ
 The client reviews qualifications and chooses the
ESCO that is right for them
 ESCO Interviews are optional
3. Preliminary Audit
 Walkthrough to identify facilities and systems to
study
 Client establishes cost-effectiveness criteria
 ESCO conducts a preliminary audit
 Client and DES review the list of energy conservation
measures proposed
 The client decides whether to proceed with an
investment grade audit
4. Investment Grade Audit
 Up to this point, there is no obligation to pay for
ESCO services
 If you proceed with construction, the cost of the
investment grade audit is included in the
guaranteed project cost
 If you do not proceed with construction of energy
saving measures which meet your payback criteria,
you are billed for the audit
 If no measures are found that meet payback
criteria, there is no cost for the audit
4. Investment Grade Audit (continued)
 ESCO and DES sign investment grade audit
agreement, Client signs funding authorization
 ESCO develops investment grade audit with cost
and savings guarantee
 Client may list favorable subs and equipment
 Client and DES review and comment on draft audit
 ESCO incorporates comments, presents audit
results, and submits an energy services proposal
(ESP)
 The ESP includes all project costs
5. Design and Construction
 Client and DES review energy services proposal
 ESCO and DES sign construction contract
 Client signs funding authorization
 DES issues notice to proceed
 Client and DES review design documents
 Bid documents prepared by ESCO
 Sub-contractors and equipment selected
 DES manages ESCO project construction
 DES and Client verify ESCO’s costs and savings
6. Measurement and Verification
 First year measurement and verification (M&V) is
part of every project
 M&V is covered under a separate agreement,
authorized by the client
 2 – 3 years of M&V are recommended for systems
which require frequent adjustments, such as
controls systems
 If using loan to fund Energy project may want to
extend M&V
Highline College
 Performing Site survey for crane
pick
o What's coming out of that
vault?
o Uh oh….
 Central Heating Plant
 Direct Buried Piping - VE
 Engage DES approval for
Engineering investigation
 Develop cost analysis for repair
options
 Expedited Contracting, Tight
construction window
 What was presented:
Options Studied:
Cured-In-Place Pipe Lining
(Trenchless)
Open Cut Excavation and Pipeline
Replacement
•Direct Boring (Trenchless)
•Satellite Boiler
•Temporary Boilers (If piping failed
prior to a permanent fix)
Each Option Included:
•Overview of the option
•Advantages
•Disadvantages
•Impact of students and staff
•Timeframe for completion
•ROM Total Project Cost
 Construction B29
B4

Installation

Discovery DES on Board NTP for IGA Report Delivered NTP for Construction Completed

9/16/17 9/17/17 10/18/17 11/18/17 11/19/17 1/05/18

Attractive ESCO Projects

1. Projects with significant Energy/Utility

Savings
 Interior and exterior Lighting (LED)
 HVAC projects – chillers, boilers, pumps, AHUs,
distribution systems, commissioning
 Water conversation projects
 Building Envelope Upgrades
Attractive ESCO Projects

2.Projects with some energy savings and

significant project complexities
• Projects that require scheduling work around client requirements
on critical deadlines
• Projects with numerous unknowns like retro commissioning
projects or major HVAC renovations
• Projects that need contractor flexibility

• Projects that need guaranteed cost & energy savings to apply

for grants
Low Bid Vs ESCO Process

 ESCO Process – Design and Construction are by the same

Company.

 ESCO Process – Project’s cost and energy savings are

guaranteed and construction invoicing is “open book”.

 ESCO Process – You select ESCO from our prequalified

list. The ESCO process is your choice. The DES energy
program and ESCO have a lot of incentive to ensure
successful projects.
Washington Colleges
 Seattle Central College
o Eight ESCO projects – continuous from 2008 to current
o Has used three ESCOs
o Started with Commerce grant
 Highline College
o Six ESCO projects – continuous from 2011 to current
o Has used one ESCO
o Started with Commerce grant
 Edmonds College
o Nine ESCO projects – from 2000 to current
o Has used three ESCOs
o Received two Commerce grants
DES Commissioning Program

 Existing Building Commissioning

o Energy Hogs
o Control/Comfort Issues
o Buildings that have not been Commissioned for over 10
Years
 Prequalified On-Call Commissioning Firms
 Sequence similar to ESCO projects
 Commissioning firms are not allowed to do construction
activities (agreement – not a construction contract)
DES RCM Program

 New Program – will start accepting clients/marketing

early 2019
 Program is intended to provide our clients a pathway to
reduce utility costs/carbon emissions and sustain those
improvements
 Program will be flexible in scope and cost. We will
tailor to meet your specific needs. Could be whole
campus, specific building(s) and/or specific systems
 Program will partner with the WSU Energy Office to
provide training and energy efficiency information.
 Goal is to train your staff
ELCCAs

 Strive for “Net Zero Ready”

o Building Orientation (Future Solar PV)
o Building Exterior (Insulation/Windows)
o Roof/Conduits/Electrical system designed for future Solar
PV

 Pay close attention to Mechanical system

o New Washington State Energy Code limits choices
o If recommended Mechanical system is new to you and your
staff, ask questions and request examples.
Thank You

Joe Sullivan
DES Energy Program
360-407-9377
Joe.Sullivan@des.wa.gov