Western Governors Association

1

• Western Governors Association
• Energy Efficient Buildings
• Denver, CO
• July 18, 2007
• Roger Flud, MBA, CEM, CDSM, CLEP
• TAC Energy Solutions

2
Todays Subjects1. TAC Energy
Solutions Schneider capabilities How TAC
fits2. Economic Impact of Performance
Contracting3. Knowing Where the Risk
Lies
Presentation Overview
3
Building EfficiencyFrom Top to Bottom
4
Since 1980 electric consumption has increased
45. If nothing is done to slow this trend,
consumption could grow by 57 in the next 25
years.Green is the new Red, White and Blue and
is the most patriotic thing a person can
do.New York Tribune columnistTom Friedman
(2006)
ConservationMore Important Than Ever
5
Economic Impact of Performance Contracting

• Job Creation
• Overall benefits of energy-efficiency measures
  completed to date exceeds 1 Trillion
• Producing 200k of electricity
• Has a nominal to no impact on employment at the
  power companys electrical plant
• Saving 200k of electricity through a Performance
  contract
• Creates funding for a 2 million project
• 4 man years of electrical work
• 3 man years of air conditioning work
• 1.5 man years of engineering work
• .75 man years of project management
• Plus the manufacturing jobs for the material

6
Economic Impact of Performance Contracting

• Reallocation of existing funds
• Distinguish between
• savings due to reduction in service
• savings due to enhance technology
• We need to get away from the view that more
  energy means better service
• By using Performance Contacting to install new
  technology, other budgets will be available for
  other deferred maintenance/building needs
• Interest rates are lower than construction cost
  increases

7
Why Performance Contracting?

• Maintenance money getting tighter
• Improvements paid for from savings
• Improvements financed through a third-party
• Savings guaranteed by ESCO

8
Why Performance Contracting?

• Utility rate increases
• Maintenance money getting tighter
• Aging buildings and systems
• Low interest rates

9
Advantages of Performance Contracting

• Better to identify facilities needs
• Your staff does not have to deal with
• as many companies
• Expertise in analysis, design, contracting,
• project management

10
Performance Contracting
So Why Doesnt Everyone Do This?
11
Risk andRisk Management

• Cost Savings Development
• An educated consumer is the best customer
• Agree early on project intent
• Measurement Verification Procedures
• Some savings are budget reductions Some arent
• Third party reviews are available
• Contracts
• Be clear on Standards of Service and Comfort
• Knowledge and understanding is critical

12
Risk andRisk Management

• Financial Projections
• Involve the budgeting people early
• Know where the repayment funds are coming from
• Guarantees
• What are the clients responsibilities
• What are the
• Statutory Requirements / Solicitation Procedures
• Dont reinvent the wheel, talk to others who
  have been there before

13
Acknowledgements
Information provided here is courtesy of the
book Saving Energy Growing Jobs By David B.
Goldstein