Performance Contracting for Educational & General Purpose Facilities


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Ohio energy services company, Brewer-Garrett, shares a presentation on energy savings performance contracting. Powerpoint by Kelly Tisdale of The Brewer Garrett Company.

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Performance Contracting for Educational & General Purpose Facilities

  1. 1. Redevelopment of E & G Facilities: Public-Private Partnerships Performance Contracting July 12, 2011 Kelly Tisdale, CEM, LEED AP
  2. 2. Agenda• Energy Environment• Institutional Energy Challenges• ORC 3345.61-3345.66 (HB7)• Performance Contracting Benefits• Performance Contract Structure• Performance Guarantee• Performance Contracting Process• Value Proposition
  3. 3. Energy Environment• Water – Local rates escalating at 7-9 % annually• Natural Gas – Deregulated utility – Volatile pricing based on global economic forces• Electricity – Deregulation in Ohio – Minimum price increases of 2-5 % annually
  4. 4. Institutional Energy Challenges• Issues: – Reliability – Conservation – Sustainability – Achievement of HB 251 Targets• Solution: – Energy Conservation and Management Programs Utilizing Performance Contracting
  5. 5. Performance Based Contracting ORC 3345.61-66 (HB 7)• State of Ohio enacts legislation in 1993-1994• ORC 3345.61-66 (HB7) defines: – Energy conservation measures (ECMs) – Avoided capital costs, water conservation measures (WCMs) and operating cost savings – RFP issuance process to use performance based contracting – Exemption from competitive bidding requirements (ORC 153) – Energy Services Company (ESCO) selection methodology – Payback period of 15 years for ECMs/WCMs – Financing options
  6. 6. What is Energy Savings Performance Contracting?• Uses energy savings to provide the funding stream for up-front facility infrastructure and capital improvement projects• Utilizes design/build approach vs. spec/bid approach• Finances up front project construction through a third party; paid for from the savings stream• Allows for comprehensive/co-authored scope• Guarantees results
  7. 7. Performance Contracting Benefits• Reduces energy and maintenance costs• Improves comfort and environment• Improves client satisfaction• Creates opportunity to address deferred maintenance without capital expenditure• Reduces energy consumption• Reduces greenhouse gases• Improves sustainability• Creates opportunity to incorporate sustainable, GREEN design practices and technology• Creates competitive advantage for enrollment/donor strategies
  8. 8. Contract Structure – Key Elements• Engineering/design/construction/commissioning• Energy performance guarantee• Service and audit• Financing
  9. 9. How does Guarantee Work?• No risk to the institution – Bond construction/energy savings – Contractually defined turnkey program for a fixed price in a specified time period with guaranteed results• Guaranteed results – Savings guaranteed for the contract term – If savings not achieved, institution reimbursed 100 % of the savings variance – Excess savings retained by the institution
  10. 10. Accountability Reduces Institutional Risk • Allows design/build approach with single contracting entity • Promotes market-based engineering and innovation • Bonds design/construction/installation/energy savings • Eliminates cost overruns/change orders • Delivers turnkey result in defined schedule • Meets/exceeds provisions of: – HB 251 – ASHRAE 90.1-2004; 62.1-2004; 55-2004 – Illuminated Engineering Society Standards & Practices (IESNA) – Labs 21 – International Monitoring and Verification Protocol (IMVP)
  11. 11. Performance Contracting Process Steps • Develop RFP (State of Ohio Attorney General Templates) • Advertise and solicit proposals • Evaluate proposals • Select ESCO • Finalize detailed engineering solutions • Finalize contracts (State of Ohio Attorney General Templates) • Obtain financing and finalize financing documents • Close/fund transaction • Install project in construction period • Commence contract performance periods • Provide ongoing audit/reporting/savings reconciliations • Provide ongoing service (optional)
  12. 12. Value Proposition: Performance Contracting• Satisfies HB 251 20% energy consumption/greenhouse gas reduction• Provides menu of ECMs to achieve the highest ROI possible• Enables co-authored project scope that meets institutional priorities• Guarantees cost and savings• Captures market opportunity for low-interest financing• Reduces utility, operating and maintenance costs• Addresses deferred maintenance• Engages staff/students in technical/behavioral training• Ensures long-term contract performance that is monitored/verified• Promotes institutional outreach and engagement in “green” initiatives• Enhances institution’s commitment to sustainability/environmental stewardship
  13. 13. Leadership in Ohio Higher Education ProjectsKSU Residence Services No. of Project Project Project Client Phases ECMs Savings Cost Sq. Ft. ($Millions) ($Millions) (Millions) 3 277 37 27 2.9 2 110 73 51 3.1 5 115 57 29 2.6 CSU Campus Totals 10 502 167 107 8.6Tri-C Campus KSU Stark Campus KSU Satellite Campuses
  14. 14. Redevelopment of E & G Facilities: Public-Private Partnerships Performance Contracting July 12, 2011 Kelly Tisdale, CEM, LEED AP