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The New Face of Energy Performance Contracting
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The New Face of Energy Performance Contracting

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The presentation examines the intricate balance associated with embedding energy efficiency performance contracting within a comprehensive, inclusive and unique sustainability process that leads …

The presentation examines the intricate balance associated with embedding energy efficiency performance contracting within a comprehensive, inclusive and unique sustainability process that leads ultimately to actionable outcomes and reduced costs.


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  • Energy performance contracting takes advantage of the fact that energy saving projects pay for themselves. Savings stack up over time and accumulate to the point that they can pay for the entire cost of the project (or at least make a substantial dent in the project cost).
  • It is financed through a lease-purchase agreement, where annual cost savings exceed annual payments. The financing term is typically 12 to 15 years, and can be as long as 25 years as long as the lifetime of the equipment exceeds the financing term. It’s not impacted by TABOR because of the lease-purchase approach. The lease-purchase is subject to non-appropriations and is annually renewable, taking it out of the realm of TABOR. Because it’s not impacted by TABOR, it does not impact the debt ceiling (exception with University of Colorado’s Treasury interpretation). This arrangement is approved by the Office of Attorney General and the Division of State Purchasing for use in state facilities. It’s approved by the State Legislature for both state and local governments. And, the Governor just issued an Executive Order for state agencies to use this approach. We’ve done the homework already, and we will help make the process as easy as possible.
  • Transcript

    • 1. The New Face of Energy Performance ContractingChristopher Berry Kim Ketchem, CEM JohnComprehensive Solutions Comprehensive Solutions Canfield, CEM, CBEM, CLEPBusiness Development Manager Senior Account Executive WYECIP ConsultantTrane / Ingersoll Rand Trane / Ingersoll Rand Trident Energy Services720-505-0096 719-229-1735 303-247-0193Chris.berry@trane.com Kim.ketchem@trane.com jfcanfield@tridentenergy.com
    • 2. Agenda• Introductions• Definitions / Themes• What Does My Project Look Like?• Variations on a Theme – Case Studies • A County in Wyoming – Traditional / WYECIP • A School District – Grants / Rebates • Higher Ed • Sustainability• The Wyoming Business Council – WYECIP
    • 3. What is Energy Performance Contracting (EPC )?Energy Performance Contracting……Process through which energy efficiency and capital upgrade improvementsare funded (fully or partially) by the energy and maintenance cost savingsgenerated by the improvements themselves when the cost savings areformally “captured” and used to pay back the funding source.•A way to upgrade your facilities without dipping into your capital budget•Use future energy savings to pay for projects
    • 4. Energy Performance Contracting– Energy Savings Measures funded through guaranteed savings.– Reallocate money already being spent in utility budget to purchase efficiency and capital improvements
    • 5. Energy Performance Contracting Emergency/unplanned equipment replacement Do Nothing: No EPC Utility and O&M costs Improved: Post-EPC 2010 2015 2020 2025Rising utility rates drive increased energy costs overtime for both scenarios, but with a lower energy usein the post-EPC scenario, you save more each year.
    • 6. What is an Energy Service Company (ESCO )?An ESCO is a one-stop shop for:Energy opportunity identificationQuantificationFinancingImplementationStaff trainingA guarantee that the savings will cover the costs of theproject.
    • 7. But, Why?The most obvious advantages to EPC and working with an ESCO: The owner does not have to invest any upfront money The owner does not have to raise taxes The owner does not need to tie up staff resources managing: Contracts Contractors Vendors ESCOs provide turn-key services. The return on investment is guaranteed. It is a very secure investment, with limited liability and financial risk.
    • 8. Energy Performance ContractingAdditional funding sources can supplement energy and maintenance cost savings. • Utility Incentives • Grants • Capital Funds • Other?Typical Facility Energy Savings Opportunity: 15% to 30% (or more)
    • 9. Energy Performance ContractingPotential Energy Performance ContractExample :•$200,000 annual utility expense•20% annual savings = $40,000•12 year tax-exempt lease purchase • $40,000 X 12 years = $480,000*• Fund nearly $480k in improvements today andpay it back over 12 years with funds previouslybudgeted to your utility company.* These estimates do not incorporate interest payments but are offered for simplicity.
    • 10. What Does My Project Look Like?Ultimately YOU define What Works Best : Fit For Your Culture Comprehensive Inclusive Return
    • 11. Case Study: A County in Wyoming Theme: Traditional EPC with a Twist Challenge: Inefficient operations and energy use, system failures, increasing repair costs, aging equipment and infrastructure Solution: EPC guaranteed savings, updating aging infrastructure and address capital improvements. Results: Embrace WYECIP Wyoming Business Council; Pursue 0% interest Energy Loan Program
    • 12. Case Study: Larger School Districts Theme: Grants / Rebates; Multi Phase Challenge: Inefficient operations and energy use, system failures, increasing repair costs, reductions in state funding Solution: EPC guaranteed savings, updating aging mechanical systems in a multi-phase approach to improve the student learning environment. Results: Annual energy savings of $830,000 per year in energy costs including savings in operations and maintenance. $1.3 million in rebate checks. Reached goal of providing school buildings that are energy efficient, comfortable, and healthy spaces for learning.
    • 13. Case Study: Smaller School Districts Theme: Grants / Rebates Challenge: Inefficient operations and energy use, system failures, increasing repair costs, reductions in state funding Solution: EPC guaranteed savings, updating aging infrastructure to improve the student learning environment and help ensure continuous system performance. Results: Annual energy savings of $190,000 per year in energy costs including savings in operations and maintenance. $125,000 in utility rebates at startup.
    • 14. Case Study: Higher Education Theme: Renewable Energy Challenge: Inefficient operations and energy use, system failures, increasing repair costs, reductions in state funding, interest in renewable energy Solution: Investigate Geothermal / Solar additions to project; provide opportunity for curriculum development
    • 15. Creating the Vision of Sustainability Economic Reduced Costs No New Taxes Economic Development Sustainable developmentSocialImproved learning Environmental EquitableEnvironment social A viable natural environment environment
    • 16. Sustainability Process Benefits to Organization Leveraged Energy and Water Savings Energy Performance Contract Technical Sustainability Audit Preliminary Sustainability Assessment
    • 17. Wyoming Business Council State Energy Office
    • 18. Wyoming State Energy Office Mission“Support viable energy conservation effortsand energy resource development thatcontribute to Wyomings long-termeconomic sustainability and the nationsenergy independence."
    • 19. What is WYECIP? Wyoming Energy Conservation Improvement ProgramA state program, administered by the WyomingBusiness Council through its State Energy Officeto provide coordination, oversight, and support toagencies interested in Energy PerformanceContracting.http://www.wyomingbusiness.org/program/energy- performance-contracting-epc-/6308
    • 20. Who Can Participate?• State Agencies• Higher Education • Universities • Community Colleges• Counties• Municipalities • Cities • Towns• K-12 schools
    • 21. Benefits of WYECIP• WYECIP Pre-qualified ESCos • Simplifies the selection process • Ensures highest level of quality • Continuous and annual review and re-approval process• Standardized Process/Procedures• Standardized Contract Documents• Pre-qualified ESCos under contract with WBC WYECIP to use WBC WYECIP contracts and processes• On-going guidance/support from WBC WYECIP
    • 22. Key Elements• Support from WBC State Energy Office – Help agencies identify potential projects – Provide technical & contracting assistance – Assist with project development – Review audits, proposals, contracts & reports – Monitor implementation – Review M&V of savings
    • 23. Key Elements• Investment Grade Audit & Project Development Contract – Standard form for use by agencies – Between agency and selected ESCo – Sets expectations for ESCo & agency – Defines process to be followed & deliverables – Costs can’t exceed max in Master Agreement – Establishes basis for Energy Performance Contract to follow
    • 24. Key Elements• Energy Performance Contract – Standard form for use by agencies – Between agency and selected ESCo – Contains all aspects of project • Scope of work - measures to be implemented • Costs and savings • Responsibilities of ESCo & agency • Measurement & Verification Plan • Savings Guarantee • Project Financials
    • 25. When Will It Be Available?• Program effective July 1, 2011• Agencies may execute contract with the WBC and enjoy program benefits.
    • 26. How Can My Facility Participate?• Sign Agency-Wyoming Business Council Agreement – 1st step in process – Allows agency to participate with SEO/WYECIP – Commitment to adhere to guidelines
    • 27. Thank You!!!Website: www.wyomingbusiness.org Sherry.hughes@wyo.gov
    • 28. TRANE REPRESENTATIVES Christopher Berry Comprehensive Solutions Business Development Manager Trane / Ingersoll Rand 720-505-0096 Chris.berry@trane.com Kim Ketchem, CEM Comprehensive Solutions Senior Account Executive Trane / Ingersoll Rand 719-229-1735 Kim.ketchem@trane.com WYECIP REPRESENTATIVES Sherry Hughes Program Manager, Wyoming State Energy Office Sherry.hughes@wyo.gov John Canfield Trident Energy Services, Inc.Consultants to the Wyoming Business Council’s WYECIP Program jfcanfield@tridentenergy.com