Welcome to today’s Ask the Expert Session

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• Welcome to todays Ask the Expert Session
• for state and local grantees on
• Energy Savings Performance Contracting (ESPC)
• Some tips before we get started
• Session will be recorded
• All attendee phone lines are muted
• Please submit your questions via the Questions
  window
• As many questions as possible will be answered
  during the session
• Presentation slides along with the summary of ALL
  questions and answers will be sent to attendees a
  few days after the training

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DOE Technical Assistance Program

• Ask the Experts About Energy Savings Performance
  Contracting
• Date March 24, 2011

• ARRA EECBG Recipient
• Webinar Series

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What is TAP?
DOEs Technical Assistance Program (TAP) supports
the Energy Efficiency and Conservation Block
Grant Program (EECBG) and the State Energy
Program (SEP) by providing state, local, and
tribal officials the tools and resources needed
to implement successful and sustainable clean
energy programs.

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How Can TAP Help You?

• Topics include
• Energy efficiency and renewable energy
  technologies
• Program design and implementation
• Financing
• Performance contracting
• State and local capacity building

• TAP offers
• One-on-one assistance
• Extensive online library, including
• Webinars
• Events Calendar
• TAP Blog
• Best practices and project resources
• Facilitation of peer exchange

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The TAP Blog
Access the TAP Blog!http//www.eereblogs.energy.g
ov/tap/

• Provides a platform for state, local, and tribal
  government officials and DOEs network of
  technical and programmatic experts to connect and
  share best practices on a variety of topics.

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Accessing TAP Resources
We encourage you to
1) Explore our online resources via the Solution
Center
2) Submit a request via the Technical Assistance
Center

• 3) Ask questions via our call center at
  1-877-337-3827 or email us at http//www1.eere.ene
  rgy.gov/wip/solutioncenter/default.html

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Ask the Experts About Energy Savings Performance
Contracting

• Todays Experts
• Karl Berntson, Doug Dahle, David McGeown, Linda
  Smith

• ARRA EECBG Recipient
• Webinar Series

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ESPC Principles

• Long Term Partnerships (10-15 years)
• Persistent Performance is Success Factor
• Customer Champions Commitment
• Reallocating Excess Energy Expense into
  Infrastructure
• No Capital Cost Contractor Revenues from
  Savings
• Determine Energy and Savings
• Risks Responsibility Key focus for both
  parties
• Measurement Verification Verify Savings

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Todays Experts

• Karl Berntson
• SRA International
• Doug Dahle
• National Renewable Energy Laboratory
• David McGeown
• SRA International
• Linda Smith
• 9Kft Strategies in Energy

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Polling Question
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ESCO Selection
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ESCO Selection What defines an ESCO?

• A qualified ESCO puts many different pieces
• together in a turnkey approach
• Identify and evaluate project opportunities
• Design, install, commission and manage projects
• Help arrange for financing
• Measure and verify savings
• Train staff, provide ongoing maintenance
  services, and more.
• And, guarantee the savings will cover all
  project costs

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ESCO Selection How do I find an ESCO?

• Key ESCO organizations
• National Association of Energy Service Companies
  (NAESCO)
• www.naesco.org
• Energy Services Coalition (ESC)
• www.energyservicescoalition.org
• State energy office or state administrative
  agency that oversees state buildings may have
  a prequalified ESCO list

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ESCO Selection How do I select an ESCO?

• ESCO Selection Process
• Provide background information on your facilities
  
• Solicit proposals through a formal competitive
  process
• Set-up an evaluation team
• Review proposals and select the top proposers
• Interview the top proposers
• Select the finalist

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ESCO Selection Is this ESCO a good fit?

• Ensure firm qualifies as an ESCO
• Scope of Services (guarantee, auditing, MV,
  financing assistance, project management,
  construction/installation, commissioning)
• Scope of Measures (HVAC, lighting, renewables,
  water efficiency, plant upgrades specialty
  systems that relate to your facility
• Project History
• Quantity, scope and scale of ESPC projects (with
  guaranteed savings)
• Relevant projects in your market sector, your
  locale, and similar in scale
• Technical Approach
• Review a sample audit
• Expertise/experience in similar building types
  and with measures you anticipate.
• Management Approach
• Organizational structure
• Local staffing and support vs non-local
• Resumes and roles of staff to be assigned
• Subcontractors vs in-house staff
• Scheduling plans

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ESCO Selection How do I evaluate ESCO costs?

• Compare apples to apples
• Audit cost
• Request markups on each element
• Request other fees and how/when fee is to be
  applied
• Ensure commitment to open book pricing
  throughout the process

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ESCO Selection How can I select an ESCO to get
the best value?

• Look to your ESCO to provide best value
• Capture the maximum level of savings
• A comprehensive approach
• No cherry picking of projects
• Ensure measured, sustained savings
• Rigorous measurement and verification process
  (with an up-front plan) to ensure ongoing savings
• Leverage funds capture utility incentives,
  grants, etc.
• Economy of scale address all buildings
• Disclose ALL cost elements up-front (markups,
  margins, fees up-front show how they will be
  applied and then negotiate)

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Investment Grade Audit
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Investment Grade Audit (IGA) Division of
Responsibilities

• Negotiate the terms of IGA and project
  development agreement (owner and ESCO)
• Provide utility bills (owner)
• Perform facility audit (ESCO)
• Review the audit results (owner and ESCO)
• Select final ECMs to implement (ESCO and owner)
• Develop implementation proposal (ESCO)

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Investment Grade Audit (IGA) Components

• Investment Grade Audit (IGA) components
• Baseline measurements
• IGA schedule
• IGA cost
• Overhead and Profit mark-ups for
• overall ESPC

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IGA Components contd

• Scope of work
• Baseline establishment
• Facility(s) walk-through
• Modeling
• Develop list of ECMs
• Provide audit report
• Develop ESPC proposal
• Prepare preliminary installation layouts
• Time of completion

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Polling Question
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ESPC Financing
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ESPC Financing
Reallocating Excess Energy Expense
into Infrastructure

• Pay a lower utility bill and energy system OM
  cost
• Dollar Savings Payments to ESCO Financier
• Achieve cost savings for the customer

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Where the Money Comes From and Where It Goes
Savings to Financier
Agency Energy and OM Bills
Savings for ESCO Services
Cost Savings
ESCO installs project (Financing Draws)
Improvements create energy and savings
Customer Funds for Energy and Related OM
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ESPC Financing Types

• State/Local Bonds
• Tax-exempt Bank Financing
• Master Lease for Financing (tax-exempt credit
  line)
• Bid Financier
• Block of Projected Financing
• Project Specific Interest Rate
• Lease/Purchase

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ESPC Financing

• ESCO Project Investment Thresholds
• Transaction Costs vs. Rate of Return
• Common target 1 M investment
• Economy of scale
• Consider
• Bundling energy efficiency renewable projects
• Public sector facilities attractive to ESCOs
• Low risk long term partner

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ECM Selection
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Energy Conservation Measures (ECMs) All
Technology Categories

• Boiler and chiller plants
• Energy management control systems
• Building envelope
• HVAC
• Chilled/hot water and steam distribution
• Lighting
• Electric motors and drives
• Refrigeration
• Distributed generation

• Renewable energy
• Energy/utility distribution
• Water and sewer
• Electrical peak shaving/load shifting
• Rate adjustments
• Energy-related process improvements
• Commissioning
• Advanced metering
• Appliance/plug load reductions

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Hospital Campus

• 4.5M ESPC project 8.4 year payback
• Replacing boilers with a steam production system,
  5 steam efficiency increase, no 24-hour staff
• Evaluating the energy management control system,
  upgrading controls, and installing a life safety
  supervision system
• Replacing 25-horsepower air compressors with
  40-horsepower rotary air compressors
• Replacing corroded cooling coils
• Replacing 25,000 lamps, ballasts, and fixtures
  with high-efficiency models and installing
  lighting controls
• Replacing electric motors..
• 8 buildings and 1 million square feet
• 1.8 million energy bill

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Hospital Campus
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Negotiating a Fair Price

• Look at the FEMP models
• http//apps1.eere.energy.gov/femp/training/course_
  detail_ondemand.cfm/CourseId42
• Use local contacting expertise
• Just like regular sticks and bricks
• Use you own government estimators
• ESCO cost plus models
• Verify how costs are determined
• Are costs burdened? If so how?
• Dont wait until a final proposal
• Work together as much as possible from project
  inception
• Understand financing costs

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ESPC Measurement Verification (MV)
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Risk and MV

• An ESCO guarantees performance it can control
  that rarely covers all risks in a project
• An effective MV plan shares risks between the
  owner and the ESCO
• Risk of operating a facility is usually borne by
  the owner
• Equipment performance is usually covered by the
  ESCO
• Maintenance to ensure savings may be taken on by
  ESCO and/or owner
• Market price for energy can rarely be
  underwritten by the ESCO

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• The MV Plan
• IF YOU DONT UNDERSTAND IT, DONT SIGN IT.

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The MV Plan

• In accordance with IPMVP 2010, the MV plan
  should cover 13 specific topics
• ECM Intent
• Selected IPMVP Option and Measurement
  Boundary
• Baseline Period, Energy and Conditions
• Reporting Period
• Basis for Adjustment
• Analysis Procedure
• Energy Prices

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MV Plan (contd.)

• Meter Specifications
• Monitoring Responsibilities
• Expected Accuracy
• Budget
• Report Format
• Quality Assurance

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The MV Reconciliation Report

• The MV Reconciliation Report should include
• Energy data for the reporting period
• Values of independent variables weather,
  occupancy and variables that affect
  energy usage
• Justification for corrections made to any data
• Handling of bad or missing data
• Agreed estimated values for Option A
• Energy rates used
• Details on non-routine adjustments
• Computed savings in both energy units and dollars
• Emissions reduction

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Cost Elements of ESPCs
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Cost Elements of ESPC

• Project Development
• Surveys, audits, proposal
• Conservation Measures
• Direct costs for design and implementation
• ESCO overhead and profit
• Financing
• Interest
• Procurement
• Performance Period Services

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Contract Administration
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ESPC Contract Administration

• Contract Administration Activity after Award
• Insurance and bonds before design
• Review of Design and Installation Plans
• Accept Design Installation Notice to Proceed
• Coordinate access to facilities and lay down
  area
• Witness Commissioning tests MV measurements
• Accept Installation Proceed with Performance
• Review Annual MV Reports Invoices (Annual)
• Contract Modifications as needed
• Close out Contract

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Successful Contract Administration

• OPEN COMMUNICATION with ESCO partner
• Key Customer Personnel/Roles
• Contracting Officer (CO) Administration Official
• Primary POC for ESCO Contract meetings/issues
• Contracting Officers Technical Representative
• Primary POC for project review of ESCO work
  deliverables
• General
• Document any and all agreements
• File all project documents for future reference
• Count on turnover of project personnel
• Access to past project documentation critical

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Parking Lot McGeown
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FDA Campus Cogen

• 71M savings performance contract for power from
  a combined heat and power plant Central Utility
  Plant
• Saves 5.8 M energy and 6.5 M in OM
• Almost 20 MW of cogeneration
• 5.6 MW dual fuel engine
• 3 x 4.5 MW natural gas combustion turbines
• 2 x 1130-ton absorption chillers
• 2 x1130-ton
• 3 x1980-ton electric chillers
• 3 x10 MMBtu/hr hot water boilers
• Integrated plant controls, building automation
  systems,
• 1,800 sf fixed solar array and a 300 sf
  single-axis tracking solar array.

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Bureau of Land Management

• 3.6M for small BLM facilities in Colorado,
  Idaho, Montana, Nevada, Oregon, and Wyoming
• Lighting and associated controls
• HVAC controls
• Digital HVAC control upgrades
• New boilers
• Ground source heat pumps
• Advanced meter installations

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Air Force Water

• Energy savings performance contract
• Savings 300,000 a year
• Reduces annual potable water consumption by 160
  million gallons (2 percent of Citys water
  supply)
• Two 11-million-gallon holding reservoirs
• Two pump stations
• 3 miles of distribution pping

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Navy Renewable Energy

• 12M wind turbine Guantanamo Bay
• Four wind turbines will generate 3,800kW
• 25 peak power for base operations
• 1.2M/yr energy savings, 650,000 gallons diesel

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The FEMP Online Oracle

• Federal on-line ESPC training
• http//apps1.eere.energy.gov/femp/training/course_
  detail_ondemand.cfm/CourseId43
• FEMP first Thursday seminars
• http//apps1.eere.energy.gov/femp/training/first_t
  hursday_seminars.cfm

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More Questions?

• DOE Team Lead
• Chani Vines chani.vines_at_ee.doe.gov
• ICF Team Contract Leads
• Deborah Miller, demiller_at_icfi.com
• Brian Zaleski, bzaleski_at_icfi.com
• ICF ESPC Technical Assistance Team Contacts
• Karl Berntson Karl_Berntson_at_sra.com
• Dale Hahs dhahs_at_energyservicescoalition.org
• Irina Bulkley-Hopkins Irina_Bulkley-Hopkins_at_sra.c
  om
• Doug Dahle douglas.dahle_at_nrel.gov
• David McGeown David_McGeown_at_sra.com
• Linda Smith Linda.Smith_at_9Kft.com

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Upcoming Webinars

• Please join us again for additional webinars
• For the most up-to-date information and
  registration links, please visit the Solution
  Center webcasts page at www.wip.energy.gov/solutio
  ncenter/webcasts