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    1. 1. Greater Murray Area Health Service Stephen Butt Manager, Asset Management Greater Murray Area Health Service, NSW Energy Performance Contracting in WA NSW Case Studies AEPCA Seminar – Perth, WA October 2003
    2. 2. Presentation Introduction GMAHS – Asset Management Support Unit <ul><li>Brief overview of Greater Murray Area Health Service </li></ul><ul><li>Quantify our energy consumption and costs </li></ul><ul><li>Background to GMAHS energy initiatives and why </li></ul><ul><li>Overview of EPC initiatives at WWBH/ABH & GBH </li></ul><ul><li>Discuss some of the items that require consideration, risk investigation and what we have learnt </li></ul><ul><li>Summary and close </li></ul><ul><li>Questions </li></ul>
    3. 3. Greater Murray Area Health Service GMAHS – Asset Management Support Unit
    4. 4. Greater Murray Area Health Service GMAHS – Asset Management Support Unit <ul><li>serves 260,000 people </li></ul><ul><li>approx. 3000 FTE </li></ul><ul><li>$300 m operating Budget </li></ul><ul><li>29 Hospitals </li></ul><ul><li>40 Community Health Buildings </li></ul>
    5. 5. GMAHS Energy Consumption and Costs GMAHS – Asset Management Support Unit <ul><li>Approximately 160 physically metered sites </li></ul><ul><li>Total consumption of 184,037 Gj (01/02) </li></ul><ul><li>Total Cost of $2.914 m for 01/02 </li></ul><ul><li>Major costs associated with hospitals </li></ul><ul><li>3 Base hospitals consume significant portion of energy (60/40) </li></ul>
    6. 6. GMAHS Energy Initiatives and WHY ? GMAHS – Asset Management Support Unit <ul><li>Initiatives </li></ul><ul><li>EPC’s at WWBH & ABH in place for 2 years </li></ul><ul><li>Current EPC at GBH nearing completion </li></ul><ul><li>Energy Manager </li></ul><ul><li>Small site GEEIP opportunities </li></ul><ul><li>Every project (big or small) has an energy review </li></ul><ul><li>Create a culture of treating every maintenance / building action as an energy opportunity </li></ul>
    7. 7. GMAHS Energy Initiatives and WHY ? GMAHS – Asset Management Support Unit <ul><li>Why </li></ul><ul><li>GEMP </li></ul><ul><li>Ailing and failing plant </li></ul><ul><li>Funding opportunities </li></ul><ul><li>Professional responsibilities </li></ul><ul><li>It makes financial sense </li></ul><ul><li>Don’t loose the opportunity </li></ul>
    8. 8. HOW MUCH DO WE NEED TO SAVE TO MEET OUR TARGETS GMAHS – Asset Management Support Unit
    9. 9. GMAHS & GEMP GMAHS – Asset Management Support Unit
    10. 10. Case Study 1 – Facility Overviews GMAHS – Asset Management Support Unit <ul><li>Wagga Wagga Base Hospital </li></ul><ul><li>Large regional referral base hospital (250 beds) </li></ul><ul><li>Mixture of building stock </li></ul><ul><li>Floor area of 24,000 m2 </li></ul><ul><li>Annual Energy spend of $475,000 </li></ul><ul><li>Mixture of old and new, efficient and inefficient energy plant </li></ul><ul><li>Mixture of regional & hospital services </li></ul>
    11. 11. Case Study 1 – Facility Overviews GMAHS – Asset Management Support Unit <ul><li>Albury Base Hospital </li></ul><ul><li>Large regional base hospital (150 beds) </li></ul><ul><li>Relative new building stock (1994) but D&C Construction </li></ul><ul><li>Floor area of 18,000 m2 </li></ul><ul><li>Annual Energy spend of $440,000 </li></ul><ul><li>BMS throughout </li></ul><ul><li>Typically the same energy saving issues as at WWBH </li></ul>
    12. 12. EPC Process GMAHS – Asset Management Support Unit <ul><li>signed EPC in late 1999 after over 2 years of negotiations (at WWBH & ABH) </li></ul><ul><li>Investment approximately $0.8 m </li></ul><ul><li>IRR approximately 20 % </li></ul><ul><li>CO2 reductions of 5,820 tonnes (20 % of MJ target) </li></ul><ul><li>8 year agreement </li></ul><ul><li>total savings in excess of $200,000 per annum </li></ul><ul><li>currently reviewing performance of all ECM’s </li></ul>
    13. 13. WW & AB Hospitals Project Cost Summary GMAHS – Asset Management Support Unit Project Summary $15,100 Water savings 16,258 KL Water Savings $81,000 EPC Management costs $90,669 Electrical savings -5,820 tonnes (20 % of our target) CO2 GHG emission $55,000 Gas Savings $35,950 Maint. & Deferred Capital Savings $124,000 per annum Net Savings 9,897 GJ Gas Savings 924,212 kWh Elect Savings $800,000 Cost
    14. 14. Energy Conservation Measures – Case Study 1 GMAHS – Asset Management Support Unit <ul><li>Lighting (both sites) - (50 % 0f electricity savings) </li></ul><ul><li>BMS Upgrades </li></ul><ul><li>Plant re-commission and balancing (50 % of gas savings) </li></ul><ul><li>De-super heaters on chillers </li></ul><ul><li>Space Heating control </li></ul><ul><li>Water Management (flow restrictors etc) </li></ul><ul><li>Power factor correction </li></ul><ul><li>currently reviewing performance of all ECM’s </li></ul>
    15. 15. Case Study 2 - Griffith Base Hospital Overview GMAHS – Asset Management Support Unit <ul><li>Small regional base hospital (100 beds) </li></ul><ul><li>Mixture of building stock </li></ul><ul><li>Floor area of 16,000 m2 </li></ul><ul><li>Annual Energy spend of $280,000 </li></ul><ul><li>Scaled down service after centralisation of support services </li></ul><ul><li>Significantly inefficient energy plant </li></ul><ul><li>No major energy improvements made for 20 years </li></ul>
    16. 16. Griffith Base Hospital Overview GMAHS – Asset Management Support Unit Specific Current Energy profile 292 25,424 Totals 180 7,195 Electricity 112 18,229 Gas $ (000) Gj
    17. 17. Griffith Base Hospital Cogeneration system GMAHS – Asset Management Support Unit <ul><li>To be delivered as part of a site EPC </li></ul><ul><li>Small system (211 kVa) to provide base load </li></ul><ul><li>Total project spend $940k </li></ul><ul><li>IRR 12 % </li></ul><ul><li>Funded from NSW Treasury loan </li></ul><ul><li>EPC contract period is 7 years </li></ul><ul><li>Provided best GHG reduction option (1,081 tonnes) </li></ul>
    18. 18. Griffith Base Hospital Cogeneration system GMAHS – Asset Management Support Unit <ul><li>To provide 100 % of domestic hot water load </li></ul><ul><li>To provide significant % of heating load </li></ul><ul><li>We required 100 % back up of heating services </li></ul><ul><li>Have alternative diesel fired gen. set for whole site as emergency back up (and maintenance outages) </li></ul>
    19. 19. Items for consideration GMAHS – Asset Management Support Unit <ul><li>Do nothing </li></ul><ul><li>Capital investment requirements </li></ul><ul><li>Weekend support and resource issues </li></ul><ul><li>Increasing maintenance costs </li></ul><ul><li>Miss matched plant </li></ul>
    20. 20. Items for consideration GMAHS – Asset Management Support Unit <ul><li>Cogeneration </li></ul><ul><li>Energy prices (sensitivity analysis) </li></ul><ul><li>Gas contracts (competition) </li></ul><ul><li>Engine maintenance (how much and who) </li></ul><ul><li>Alternative supply during maintenance and failure </li></ul><ul><li>Other ECM’s and their effect on your load </li></ul><ul><li>Protection issues, authority approval </li></ul><ul><li>Know your alternative heat sources </li></ul>
    21. 21. Items for consideration GMAHS – Asset Management Support Unit <ul><li>Demand charge risk for short off line experiences </li></ul><ul><li>Electricity contract flexibility </li></ul><ul><li>Our Particular installation </li></ul><ul><li>Noise </li></ul><ul><li>Fire Rating of installation </li></ul><ul><li>Rural location and associated project management </li></ul><ul><li>Engine maintenance </li></ul>
    22. 22. Reduce your risk GMAHS – Asset Management Support Unit <ul><li>Through modelling worst case scenarios </li></ul><ul><li>Catastrophic engine failure </li></ul><ul><li>Energy price shifts </li></ul><ul><li>Site characteristics changes </li></ul><ul><li>Contract issues – dependent on delivery method </li></ul>
    23. 23. Griffith Base Hospital Project Cost Summary GMAHS – Asset Management Support Unit Project Summary ($30,000) Cogen maintenance and EPC Management costs $126,720 Electrical savings - 1,081 tonnes (18% of our target) CO2 GHG emission ($21,334) Gas Savings $34,000 Maintenance Savings $110,000 per annum Total Net Savings -7,459,597 MJ Gas Savings 1,604,174 kWh Elect Savings $938 k Cost
    24. 24. GMAHS – Asset Management Support Unit <ul><li>Operating in a Rural / Regional environment </li></ul><ul><li>“ you’re in the country now” </li></ul><ul><li>increased travel costs / time </li></ul><ul><li>resource issues </li></ul><ul><li>supervision and timetables </li></ul><ul><li>difficulties in integrating into, and understand the sites </li></ul>Engineering in the Greater Murray 2003 2000 2001 2002 ………… ...…. ………… ...…. ………… ...…. ………… ...…. Specific EPC Considerations
    25. 25. GMAHS – Asset Management Support Unit <ul><li>Maintenance Savings </li></ul><ul><li>great in theory !! </li></ul><ul><li>however text book maintenance just doesn’t happen in hospitals </li></ul><ul><li>be careful maintenance savings aren’t used to boost the IRR </li></ul><ul><li>ensure maintenance savings are fully explained </li></ul><ul><li>in future provide the information and protocol for life cycle costing analysis that is realistic. </li></ul>Engineering in the Greater Murray 2003 2000 2001 2002 ………… ...…. ………… ...…. ………… ...…. ………… ...…. Specific EPC Considerations
    26. 26. GMAHS – Asset Management Support Unit <ul><li>Deferred Capital Investment </li></ul><ul><li>great in theory !! </li></ul><ul><li>do we all have TAM fully implemented ?? </li></ul><ul><li>Do we value our assets in a financial context, similar to private industry ?? </li></ul><ul><li>Specify how you want these issues handles. In some cases they are better excluded </li></ul><ul><li>be mindful of the tender analysis process that is still to come </li></ul>Engineering in the Greater Murray 2003 2000 2001 2002 ………… ...…. ………… ...…. ………… ...…. ………… ...…. Specific EPC Considerations
    27. 27. GMAHS – Asset Management Support Unit <ul><li>Maintenance Procedures </li></ul><ul><li>keep your options open </li></ul><ul><li>be clear on what you want to achieve </li></ul><ul><li>remember the long term nature of these contracts </li></ul><ul><li>search for further benefits such as contract consolidation, coverage of extra equipment, training opportunities for staff, total business approach </li></ul><ul><li>beware of hidden costs and agendas </li></ul>Engineering in the Greater Murray 2003 2000 2001 2002 ………… ...…. ………… ...…. ………… ...…. ………… ...…. Specific EPC Considerations
    28. 28. GMAHS – Asset Management Support Unit <ul><li>Design standards and plant redundancy </li></ul><ul><li>EPC’s don’t follow typical building / plant procurement processes </li></ul><ul><li>ensure your requirements are clear and fully explained </li></ul><ul><li>beware of proprietary systems and inter company relationships </li></ul><ul><li>ensure you have a fall back position (i.e. redundancy) </li></ul>Engineering in the Greater Murray 2003 2000 2001 2002 ………… ...…. ………… ...…. ………… ...…. ………… ...…. Specific EPC Considerations
    29. 29. GMAHS – Asset Management Support Unit <ul><li>Data, data, data ………. ! </li></ul><ul><li>Don’t ever think you have enough data already to run an EPC </li></ul><ul><li>you need to understand every single function of your sites energy use and its possible influences </li></ul><ul><li>ensure consistency of message and documentation </li></ul><ul><li>get it correct the first time otherwise you may pay in the long run </li></ul>Engineering in the Greater Murray 2003 2000 2001 2002 ………… ...…. ………… ...…. ………… ...…. ………… ...…. Specific EPC Considerations
    30. 30. GMAHS – Asset Management Support Unit <ul><li>Baselines </li></ul><ul><li>keep them simple </li></ul><ul><li>some variables will be out of your engineering control </li></ul><ul><li>engage the facility executive staff, and hope they understand </li></ul><ul><li>think energy impact in all your decisions </li></ul>Engineering in the Greater Murray 2003 2000 2001 2002 ………… ...…. ………… ...…. ………… ...…. ………… ...…. Specific EPC Considerations
    31. 31. GMAHS – Asset Management Support Unit <ul><li>Internal Rate of Return (IRR) </li></ul><ul><li>beware of the bottom line </li></ul><ul><li>don’t miss out on the potential for maximising capital investment </li></ul><ul><li>contractors need to be briefed correctly </li></ul><ul><li>weight your evaluation criteria carefully </li></ul>Engineering in the Greater Murray 2003 2000 2001 2002 ………… ...…. ………… ...…. ………… ...…. ………… ...…. Specific EPC Considerations
    32. 32. GMAHS – Asset Management Support Unit <ul><li>Implementation timetables </li></ul><ul><li>Year 0 issues </li></ul><ul><li>building industry programming/ performance relevance </li></ul><ul><li>slow implementation means lost opportunities which should be compensated </li></ul><ul><li>the client is the one who has most to lose !! </li></ul>Engineering in the Greater Murray 2003 2000 2001 2002 ………… ...…. ………… ...…. ………… ...…. ………… ...…. Specific EPC Considerations
    33. 33. GMAHS – Asset Management Support Unit Engineering in the Greater Murray 2003 2000 2001 2002 ………… ...…. ………… ...…. ………… ...…. ………… ...…. Further Benefits <ul><li>sharing the benefits to other sites </li></ul><ul><li>standardisation </li></ul><ul><li>become your own energy performance contractor at sites that warrant them </li></ul><ul><li>use the EPC process and outcomes as a catalyst for change, particularly for Engineering staff. </li></ul>
    34. 34. Summary GMAHS – Asset Management Support Unit <ul><li>We have lived through the development of EPC’s and survived, and are soon to prosper. </li></ul><ul><li>It’s horses for courses and choose your projects and funding models wisely. </li></ul><ul><li>Don’t expect that the EPC Company will come in and do it all for you, be prepared for a lot of work and get your data organised which will help with returns. </li></ul><ul><li>These are long term undertakings and be prepared to wait </li></ul><ul><li>Good understanding of your site, its loads and consumptions will ensure business confidence in your choice. </li></ul>
    35. 35. Questions ? Stephen Butt Manager, Asset Management Greater Murray Area Health Service, NSW NSW Case Studies AEPCA Seminar October 2003

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