The Pot of Gold

1
The Pot of Gold

• Western Governors Association
• Energy Efficient Buildings
• Denver, CO
• July 18, 2007

2
Overview

• What is NAESCO?
• What is Performance Contracting?
• Why Do Performance Contracting?
• Sample Projects
• Calculating the Cost of Delay

3
What is NAESCO?

• National trade organization
• About 85 companies and agencies
• ESCOs, financiers, contractors, suppliers
• Members deliver 4 billion of projects/year
• All US utility EE programs combined
• Rigorous accreditation process
• http//www.naesco.org/accreditation/companies.aspx
  

4
What is Performance Contracting?

• Turnkey service
• Similar to Design/Build
• Full range of measures installed
• Guaranteed savings
• Sufficient to finance cost of improvements
• Substantial industry history

5
Turnkey Service

• Energy audit
• Design engineering
• Construction management
• Project financing
• Commissioning
• Operations Maintenance
• Savings Monitoring Verification

6
Full Range of Building Measures

• Lighting
• Heating, air conditioning and ventilation
• Controls
• Building envelope
• Cogeneration and CHP
• Demand Response
• Renewables and biomass
• Water and sewer
• Sustainable materials and operations

7
Guaranteed Savings

• ESCO provides guarantee that savings will meet or
  exceed a specific amount
• Guarantees meet federal and state standards,
  according to the jurisdiction

8
ESCO Industry History
9
Why Do Performance Contracting?

• Seems difficult and complex
• Takes a lot of time
• What are the rewards for taking a risk?

10
PC The Pot of Gold

• Use performance contracting to
• Solve building problems
• IAQ and productivity improvements
• Pay for greening a building
• Meet energy and CO2 reduction mandates
• Enhance the local economy

11
Solve Building Problems

• Improve facility energy and water efficiency
• Use third party financing
• Decrease maintenance costs
• Free-up budget dollars for primary activities
• Increase productivity
• Improved indoor air quality (IAQ)
• Building comfort conditions

12
Pay for Greening a Building

• Comprehensive project
• Efficiency first
• Optimize the whole building
• EE pays for green
• Short payback measures produce for longer
  payback measures
• Green retrofits plus operations

13
Meet Energy and CO2 Mandates

• Governor and/or legislature want reductions
• Facilities have limited budgets
• Third parties will finance improvements through
  performance contracts
• Billions of dollars pledged to the market
• Competitive rates and terms

14
Enhance the Local Economy
Results from WGA EE Task Force, 12/2005
15
Calculating the Cost of Delay
16
ENERGY STAR Cash Flow Opportunity Calculator

• Simple to Use
• Illustrates Cost of Delay
• Customer s Can Confirm Results Independently
• Answers
• How much equipment can be purchased from savings
• Whether it is better to wait and use future cash
• If money is being lost waiting for better
  interest rate

17
ENERGY STAR Cash Flow Opportunity Calculator
http//www.energystar.gov/ia/business/bus_financin
g_cfo_calculator.xls
18
CFOCA general approach
19
CFOCThe Value of Your Investment
20
CFOCThe Value of Your Investment
1,512,000
21
CFOCSimple Payback
22
CFOCNet Present Value
1,042,136
883,170
23
CFOCBreak-Even Point
24
CFOCOpportunity Cost
25
Conclusion

• PC can be a pot of gold
• Outstanding energy savings
• Solves building problems
• Pays for greening a building
• Helps meet energy and CO2 reduction mandates
• Enhances the local economy
• Use it!

26
Thank You