Forum on Energy Savings with Senator Al Franken


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More than 100 Minnesota local government officials and business leaders gathered recently at the University of Minnesota St. Paul Campus--along with more than 50 on a live webinar--to talk about retrofitting buildings. The event was officially called the _Forum on Energy Savings: Retrofitting Programs for Minnesota Cities, Counties, and Businesses.

According to Senator Al Franken, who convened the event, renovating buildings to make them more energy-efficient--called retrofitting--saves money, improves real-estate values, strengthens our infrastructure--and could be the next big thing for Minnesota's economy. Energy-efficient retrofits will also create badly-needed jobs in both the construction and manufacturing industries.

Senator Al Franken joined with a number of Minnesota partners to hold this forum, including the Clean Energy Resource Teams, University of Minnesota's Institute on the Environment, MN Chapter of the Energy Services Coalition, Minnesota Pollution Control Agency, Urban Land Institute, Minnesota Waste Wise, and the Minnesota Department of Commerce. Deputy Secretary Daniel B. Poneman with the U.S. Department of Energy was a guest speaker.

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Forum on Energy Savings with Senator Al Franken

  1. 1. Hosted by the Initiative for Renewable Energy and the Environment 27 January 2012 • University of Minnesota, Twin Cities
  2. 2. Dick Hemmingsen, Managing Director,Innitiative for Renewable Energy & the EnvironmentMayor Chris ColemanSt. Paul, MinnesotaCommissioner Paul Aasen,Minnesota Pollution Control AgencyU.S. Senator Al Franken
  3. 3. Bill Heaney, MN Energy Jobs Association Jay Behnken, TraneMadonna Rykken, Honeywell Building SolutionsCommissioner Rhonda Sivarajah, Anoka County Andrew Dykstra, Anoka County
  4. 4. Retrofitting of Public Buildings
  5. 5. Agenda■ Overview of Performance Contracting (PC)■ Why use Performance Contracting . . . The Benefits■ Some Myths…Busted■ Case Study – Anoka County■ Questions (if time permits)
  6. 6. Existing MN Legislation■ Procurement method for state, municipal and k-12■ Payback requirements varies by sector■ Provides funding for capital projects■ Savings offset project costs■ No new taxes■ No upfront money required■ Performance and savings are guaranteed■ Improves operating efficiency/ Enhances working environment■ Flexible and unique for each customer
  7. 7. Benefits of PCTraditional Bid / Spec Performance-BasedLow bid awarded based on specifications Awarded based on performance & lifecycle costsProject costs funded by capital budget Payments for projects are offset by guaranteed savings freeing up capital for other needsPiecemeal approach based on available Comprehensive approachdollarsUp-front fee for evaluation/studies No up-front fee requiredPerformance & savings are not guaranteed Long-term performance & savings are guaranteedMultiple contracts with multiple vendors One contract, single-point accountabilityContractors have no accountability to Performance-based contractor is tied tolifecycle costs guaranteeing savings over term of contractOwner assumes risk Performance contractor takes risk
  8. 8. How it Works Performance Contracting is a way to fund improvements with no additional cost to taxpayers. Excess Savings Savings Savings Fund Existing Improvements facility, energy, operations & Existing $ Existing maintenance facility, facility, costs energy, energy, operations & operations & maintenance maintenance costs costs Before During After
  9. 9. The Myths■ Loss of project control■ Unsure of guaranteed savings measurement process■ Project costs more through performance contracting■ I don’t have a choice of the product manufacturer■ We have our own skilled personnel■ Only applies to greater Minnesota areas
  10. 10. Potential Opportunities Lighting Water Waste Water Street Lighting Parking Meters Landfill Sites HVAC Ice Arenas Swimming Pools Plumbing Building Fixtures Envelope Issues . . . & more
  11. 11. City of RochesterChallenges Solutions■ Aging facilities & infrastructure  Lighting, Temperature Controls, Water Upgrades■ Limited capital  Building Envelope issues■ Increasing energy & operational costs  Traffic Signal Upgrades  Steam Trap RepairProject Details  Boiler Replacements $5.6M  Building Automation Systems 12 Year Agreement  Ice Arena Dehumidification, energy recovery & ceilings Utility Savings:$502K/year  Variable speed drives, high efficiency motors & pumps Operational Savings:$102K/year  Fire alarm & security upgrades Rebates - $300K •Results ■ Addressed long overdue capital improvements ■ Improved reliability of mechanical systems ■ Improved comfort, efficiency and taxpayer image ■ Environmental benefits – reduced GHG emissions
  12. 12. Anoka County – Government FacilitiesChallenges Solutions■ Aging facilities & infrastructure ■ Lighting and fixture upgrades ■ Occupancy sensors■ Budget shortfalls/limited capital ■ Exterior photocells■ Increasing energy & operational costs ■ Energy efficient motors and pumps w/ VFD’s■ Uncomfortable working environment ■ Water saving retrofits on fixtures ■ Energy management systemProject Details ■ Central heating & cooling plant upgrades■ $12.5M of facility upgrades ■ Mechanical system improvements■ Annual energy/operational savings of $873,000 ■ Temperature control system upgrades ■ On-site generator to manage peak demand■ 30+ buildings ■ Training of staff■ Over 1.4 million square feet ■ Measurement and verification■ 7 phases of work Results ■ Addressed long overdue capital improvements ■ Improved reliability of mechanical systems ■ Improved comfort, efficiency and taxpayer image ■ Environmental benefits
  13. 13. Questions Madonna Rykken | 612.865.1492 Business Development Manager Honeywell Building Solutions Jay Behnken | 651-468-2715 Comprehensive Solutions Manager Trane Minneapolis/St. Paul
  14. 14. Anoka County MEPC Meeting April 7, 2011 Andrew Dykstra Director of Facilities Management and Construction (763) 323-5385
  15. 15. Anoka County Facilities Total of 2,500,000 square feet of buildings. Anoka County Library Facilities Anoka County Parks and Recreation Facilities Anoka County Facilities
  16. 16. Why Anoka County Did a Project? Aging Infrastructure/Deferred Maintenance Increasing Energy and Operating Costs Occupancy Comfort Issues Lack of Funding $$$ Aging HVAC Obsolete Control Systems Degrading Building Envelope Increasing IAQ Inefficient Physical Asset Requirements Infrastructure Deterioration
  17. 17. Types of Projects Lighting Retrofit Energy Management System Upgrades Energy Efficient Motors/Variable Speed Drives Central Heating and Cooling Plant Replacements Dual Duct Ventilation System Conversion Back-up Generators Temperature Control System Repairs Water Conservation Insulation Replacement Power Factor Correction Miscellaneous Improvements
  18. 18. Financial Results $12.5 million in projects – 7 phases – Over 10 years Energy and Operational Cost Reduction Exceed $873,000 annually (for all 7 phases). Annual Energy & Operational Savings by Year
  19. 19. How the State’s Guaranteed Energy Savings Programand Public Building Enhanced Energy EfficiencyProgram Can Help. Janet Streff Manager, State Energy Office Minnesota Department of Commerce
  20. 20. Encouraging Energy Efficiency and PublicBuilding Retrofits in the State of Minnesota
  21. 21. • Minnesota Department of Commerce • Division of Energy Resources • State Energy Office • Providing energy information for over 35 years… • Energy conservation, efficiency, & renewables • Through technology, analysis, grants, programs, & public outreach • Data, reports, publications, presentations, website, call center, training, public events 21
  22. 22. • Getting Started – Tools • Access B3 Benchmarking Website• Building Construction Data – • Square footage, operational equipment, occupancy and usage• Energy Consumption Data – • Electrical and natural gas – kW, kWh, therms 22
  23. 23. • Benchmarking your buildings gives you the information you need to get started• MN has benchmarked 6,400 of its public buildings 23
  24. 24. Set Energy Code Target Range Dramatic difference in return on investment for retrofit $$ 50% Over Code 120 100Number of Buildings Best Candidate Buildings for Investing Energy Efficiency Dollars 80 60 40 20 0 10 40 70 100 130 160 190 220 250 280 Annual KBtu/sq. ft. 24
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  26. 26. 26
  27. 27. •Mechanical Systems •Heating Systems •Ventilation Systems •Air Conditioning •Electrical Systems •Energy Management Systems•Lighting Retrofits•Building Envelope•Water Conservation•Renewable Energies 27
  28. 28. • MN Public Sector Programs • Public Buildings Enhanced Energy Efficiency Program ( • Retrocommissioning through extended studies • Smaller capital projects • Guaranteed Energy Savings Program • Revamping state performance contracting program via Dayton’s Executive Order 11-12 • RFQ for energy service companies 1/30/12 28
  29. 29. • Legislative Background – State Energy Improvement Financing Program • Minn. Stat §16B.321 – 16B.322 enacted in 2008 to address two fundamental constraints to reducing energy consumption in state buildings: • Access to expert technical assessment to identify measures to reduce energy consumption • Access to financing to implement recommended measures • Economic feasibility is determined by ability to pay back financing out of savings realized by energy improvement project 29
  30. 30. Through People and OrganizationsProgram:  Center for Energy and Program Administrator Environment (CEE)Provider:  PBEEEP Qualified Contractor(s) Complete projectsState  Department of Commerce, Div of Energy ResourcesLocal Government:  City, County, School District Project Building Owner 30
  31. 31. Enhances public building energy efficiency through retro- CX and retrofits • Reduces energy use • Reduces operating costs • Reduces greenhouse gas emissions • Creates/retains jobs • Promotes renewable, alternative energy sources 31
  32. 32. • Guaranteed energy savings program reinvigorated through Executive Order 11-12• DER staff provide technical, financial and contractual assistance to local units of government seeking building retrofit programmatic support.• DER is part of the Energy Service Coalition – MN Chapter 32
  33. 33. • National, nonprofit, organization of public & private sector members, working in partnership with the U.S. Department of Energy• Working together at state & local level to increase energy efficiency and renew building infrastructure through the use of Energy Savings Performance Contracts MN Dept. of Commerce Energy Service Companies MNSCU Product Manufacturers Local Unions Utility Companies Renewable Energy Cos Installing Contractors 33
  34. 34. Savings Significantly reduce energy use Comfort Productivity Improve facilities’ environment Reduce deferred maintenance Avoid expenditure of capital Reduce operations and maintenance Improve productivity Energy Reduce waste Fund projects through energy Liability Repairs savings 34
  35. 35. • SEE Action Network • State and local effort facilitated by the federal government that helps states, utilities, and other local stakeholders take energy efficiency to scale and achieve all cost- effective energy efficiency by 2020. • Existing Commercial Buildings WG goals include enlisting 10 state and 30 local governments to adopt one or more solutions (benchmarking, green leasing, RCx) • 35
  36. 36. • Launched by President in December 2011• Partners commit to an energy savings pledge, a showcase building, and to share their progress• MN participants include State of MN, Best Buy, 3M, Cummins – and more?• 1.6 Billion sq. ft. committed, $2B financing through allies• 300+ manufacturing facilities 36
  37. 37. • GreenStep Cities – 30+ MN cities signed up for voluntary challenge, assistance program • Building efficiency one of 28 best practices • City policies/programs useful to other cities • 37
  38. 38. State programs and GreenStep Buildings & Lighting Best Practices Actions: 1. B3 Benchmarking 2. GESP 3. PBEEEP
  39. 39. Division of Energy Resources ContactsPBEEEP: Abby Finis Peter Berger Eric Rehm
  40. 40. Please use roving microphones for questions and comments For those joining us online, please submit questions via chat
  41. 41. Deputy Secretary,U.S. Department of Energy
  42. 42. Retrofitting Private Buildings Mayor Jim Hovland of Edina Former State Senator John DollKate Worley, Co-Executive Director, Minnesota Waste Wise
  43. 43. EDINA EMERALD ENERGY PROGRAM (PACE) Mayor Jim Hovland City of Edina January 27, 2012
  44. 44. EDINA PACE PROGRAM DOCUMENTS•Program Report and Administrative Guidelines•Application and Petition for Special Assessment•Bond Purchase Agreement•Bond Resolution•List of Eligible Improvements•Summary of Financing Process•Flow Chart of Financing Process
  45. 45. Property Assessed Clean Energy Financing Senator Franken - GreenStep Cities Event January 27, 2011 John Doll Former State Senator, District 40
  46. 46. nearly 35% of U.S. energy useand carbon emissions come from our buildings
  47. 47. Benefits of Deep Energy Retrofits in Commercial Buildings• Significant Energy Consumption Savings•Net Increase in Cash Flow•Healthier Environments for Tenants and Employees•Improved Productivity Levels•Higher Occupancy Rates/Higher Rents•Improved Marketability of the Property•Increased Property Values• Energy Efficiency Credits
  48. 48. Why PACE?PACE provides a pathway to overcome inherentbarriers to investing into critical deep energy retrofits inthe private sector: short term investment horizons, split incentives, capital competition, high upfront costs, tight credit or low levels of liquidity.It provides a perpetual funding mechanism for EE and RE projectsthat can overcome the above concerns. And because energy savingsmake the projects cash-flow positive, and because total asset value isincreased, companies improve their financial position without havingto tie up any of their equity or debt capacity.
  49. 49. What is PACE?Property Assessed Clean Energy financing is alocal government program that uses a 100+year old provision of the property tax code tocreate a land secured financing district thatallows property owners to pay forimprovements that are in the public interest.In this case, improving building energyefficiency and installing renewable energyupgrades.
  50. 50. PACE BasicsProvides capital Contractor paidto fund energy for retrofit retrofit Pays special Energy savings assessment on pay for capital property tax bill improvements
  51. 51. PACE Basics Owner –arranged PACE financing model Property Owner Apply for and Guaranteed Energy receive approval Saving for Special Performance Assessment ContractLocal ESCOGovernment Arrange Pay Special Financing Assessment Through Property TaxPay collected ConstructionAssessment to lender Payments Commercial
  52. 52. Key Provisions of MN PACE• MN Statute 216C.436 authorizes local governments to issue and sell revenue bondsunder the program through special assessment on property tax.•Allows multi-jurisdictional PACE programs through an authorized implementing entity.• Senior Lien Status (Tax Lien) of Financing not to exceed 10% of assessed value• Transferability of lien – Financing is land/property secured. A change in ownership ofthe property does not accelerate or otherwise alter the original payment period.• “Opt-in” program - All properties within energy financing district are eligible and, ifowners qualify under established underwriting rules and guidelines, may participate inPACE program.•Best Practices and strong underwriting guidelines significantly reduce the risk ofdefault.• Requires an energy audit or renewable energy system feasibility study• Program sustainability ensured through quality assurance and controls•Bonds issued under this subdivision are not a debt or obligation of the issuer or anylocal government that issued them, nor is the payment of the bonds enforceable out of
  53. 53. Benefits of PACETo Property Owners To Lenders • Very Low Default Rates• No upfront cash needed • Better Loan-to-Value Ratio• Improved Cash Flow • Improved property value• Less investment risk •Off-balance sheet financing •Improved marketability of asset • Savings to Investment Ratio > 1 • Guaranteed revenue stream -• Improved property Positive cash flow improvesvalues/marketability property owner’s financial position, thus their ability to repay the•Minimizes the split incentive barrier financing •Property tax liens can pass through to tenants •ESCO participation provides additional layer of performance• Removes Holding Period Bias security •Special assessments can transfer
  54. 54. Commercial PACEPACE Financing for Commercial Buildingsto Reach $2.5 Billion Annually by 2015 – Pike Research, June 2010According to a new report from Pike Research, PACE programs will continue to proliferatein the United States, and by 2015 investment in PACE financing for commercial buildingswill total $2.5 billion annually, under a baseline forecast scenario. This level of investmentwould result in the creation of 50,000 new jobs, and would mitigate almost 8 million metrictons of carbon dioxide (CO2) emissions, equivalent to taking 1.7 million cars off the roadfor a year.“PACE programs are gaining momentum around the country, and they represent a verypromising mechanism for overcoming many of the barriers to energy efficiency retrofits forcommercial buildings,” says Pike Research managing director Clint Wheelock. “Themajority of buildings would benefit from energy retrofits, with neutral to positive cash flow inaddition to the other environmental and social benefits.”
  55. 55. For more information -Contact: John Doll at 612.366.6822 Building a sustainable future based on clean energy
  56. 56. Getting Started
  57. 57. Know Utility RebatesProgram RebateLighting Efficiency Rebates for installing efficient lighting in existing and new buildings.Heating and Cooling Efficiency Energy efficient boilers & burners, furnaces, steam traps, chillers, economizers, PTAC’s. Prescriptive & custom.Motor Efficiency Prescriptive and custom rebates for motors and VFD’s that meet or exceed NEMA premium efficiency standards.Efficiency Controls Automated building systems controls for lighting, HVAC and others.Custom Efficiency Projects that involve energy savings but are not included in other programs.Recommissioning Building system tune-up—improve efficiency of existing operating systems and controls.Refrigeration Recommissioning Commercial refrigeration system tune-up—improve efficiency of existing refrigeration systems.
  58. 58. Xcel Energy T12 Bonus Rebate 50% Bonus Rebate for T12 Lighting through March 31, 2012If you still have T12 lights, now is the time to act. Financial incentives are their highest. Pick up a lighting rebate form today
  59. 59. The Private Sector ContinuumCatalog private commercial buildings How many, how big, who owns, etc.Identify private sector targets Prioritize (value, sq. ft., business type, etc.)Develop outreach plan Who makes contact, when, how, etc.Conduct energy audits Identify mid-cost vs. ESCO projectsIdentify upgrade options & take to City Hall
  60. 60. Where to Turn for Help
  61. 61. Useful Resources in Minnesota Green Step Cities Energy Smart Your energy utility Minnesota Division of Energy Resources Center for Energy and the Environment (CEE) Minnesota Technical Assistance Program (MnTAP) or Retired Engineers Technical Assistance Program (RETAP) Clean Energy Resource Teams (CERTs) Your city economic development department Your county or regional economic development programs
  62. 62. Contact Info Kate Worley (651) 292-4662
  63. 63. Please use roving microphones for questions and comments For those joining us online, please submit questions via chat
  64. 64. Thank You for Joining Us!Hosted by the Initiative for Renewable Energy and the Environment 27 January 2012 • University of Minnesota, Twin Cities