This Is Not Your Father's ESPC

Transcription

1 This Is Not Your Father's ESPC Monday, June 9, :15 pm 2:30 pm, Hidalgo Presented by: Hope Davis, Director, Massachusetts Division of Capital Asset Management & Maintenance Russ Katherman, Engineering Manager, Montana Architecture & Engineering Division Dick Mink, Director, Kentucky Division of Facility Efficiency Steve Truebner, Business Development Manager, McKinstry Energy performance contracting is not what it used to be ten years ago, five years ago, or even one year ago! The process has become more transparent, more flexible and truly empowers customers with an impressive level of control to execute exactly what they want and need for their facilities. ABOUT THE SPEAKERS HOPE DAVIS is the Director of the Energy program at DCAMM where she has worked on operational efficiency projects and programs for nearly 30 years. Her experience includes managing energy performance contracting projects for state buildings, incorporating sustainable design techniques and technologies into new construction/ major renovation projects, and designing programs to improve the maintenance of state facilities. She is directing, in collaboration with the Department of Energy Resources, the Patrick Administration s Accelerated Energy Program, which will improve the energy efficiency of 700 state facilities, save over $40 million and create an estimated 4,000 jobs. Hope has served on the board of directors of the Boston Area Sustainable Energy Association, and she is a past president of NASFA. For nearly 18 years, RUSS KATHERMAN has served as the Engineering Manager, Contracting and Administrative Officer for the State of Montana s Architecture & Engineering Division. His responsibilities involve supervision of the construction project managers, all contracting functions for the state s vertical construction efforts, and oversight and resolution of claims and disputes. Another key area of responsibility is testifying before the state legislature on matters affecting construction of vertical public works infrastructure. Prior to coming to the State, Russ worked for the U.S. Army s Corps of Engineers in Kansas City as the Engineering Technical Project Manager for hydroelectric facilities new construction and equipment renovation projects, plus design and design review of many projects for the District's military installations. He also spent several years working in the private sector designing mechanical and electrical systems on a wide variety of building types. He is a licensed mechanical engineer and recently served as the President for the National Association of State Facilities Administrators. DICK MINK has 20 years of experience in the utility industry and 13 years in facilities management. He currently serves the Commonwealth of Kentucky in the Division of Facility Efficiency as the Director. As the CEMCS project manager Dick had an extraordinary team and a unique point of view on the invention of many one of a kind processes, and integrations that are the CEMCS. Dick will lead the state wide implementation going forward. STEVE TRUEBNER is a Business Development Manager with McKinstry, a design-build and energy management firm based in Seattle. From the branch office in Overland Park, Kansas, Steve is focused on energy and facility improvement projects with public entities. Many of these projects involve using energy savings to offset the cost of the improvements, in a budget neutral approach. Prior to joining his current company, he spent five years with Johnson Controls in Colorado concentrating on state government energy solutions in the western U.S. During that time, Steve s work included projects with Departments of Corrections, Transportation and National Guard. Steve started his career in the Colorado Office of Energy Management in Since then, he has worked in 24 states, and actively participated in multiple energy, facility and public policy associations. He currently serves on the Board of Directors for the National Energy Services Coalition.

2 This is not your Father s (or Mother s!) ESPC Steve Truebner, McKinstry Russ Katherman, Montana Dick Mink, Kentucky Hope Davis, Massachusetts

3 ESPC: Then and Now

4 ESPC: Then and Now

5 ESPC: Than and Now

6 ESPC: Then and Now? Technology continues to change and improve; so why not Energy Services Performance Contracting too?

7 ESPC 101 A self-funded facility improvement project uses guaranteed energy and operational savings to generate the up-front capital for the project, typically financed over years.

8 ESPC: Then and Now Then: Now: Single, large projects Typically financed ESCO controlled equipment and contractors, as long as project met performance requirements Pricing typically in lump sum format ESCOs were often equipment manufacturers Contracts written by ESCOs Single project procurement Multiple, phased projects Funded through cash, and connected to Energy master plan Customer control over equipment and contractors Open-Book Pricing Vendor Neutral Template contracts through Energy Services Coalition or DOE State managed programs with prequalified ESCOs

9 Project Examples Washington State University City of Boulder, CO

10 ESPC in Kentucky State Government ESPC Process Determine if your facilities is a good candidate for ESPC, if YES then Develop a Request for Proposal (RFP) Select an ESCO ESCO will perform an Energy Audit ESCO and Using Agency will develop a ESPC Project Enter into a contract with the ESCO Execute Financing for the Project Implementation, including Functional Testing and Commissioning Document Savings through a Measurement and Verification Plan

11 ESPC in State Government Benchmarks for determining if your building/campus is a candidate for ESPC Buildings that have annual utility costs that exceed $1.20/sq.ft. (using a blended rate o $08) are likely to have opportunities for energy and operational savings. Buildings or Campuses that still have T12 lighting, pneumatic controls, heating and cooling equipment older than 15 years, water closets and urinals that still utilize large GPM flow, are good candidates for energy and operational savings. Buildings that large annual maintenance costs to maintain existing equipment are good candidates for ESPC. Areas where utility rate structures have implemented large demand charges or rates have recently risen. Older buildings facing EPA compliance for air quality standards.

12 ESPC in State Government Who has successfully completed ESPC projects for the Commonwealth? Energy System Group Ameresco Johnson Controls Earthwell Energy Management Noresco Siemens Chevron Texaco Honeywell Building Solutions Trane

13 ESPC in State Government To date the Commonwealth has contracted for ESPC projects totaling over $200 million. $62 million in the last two years The average term for payback is 12.5 yrs.

14 ESPC in State Government Who has financed ESPC projects for the Commonwealth? GE Capital Citi Capital Chase JP Morgan Chase Bank of America PNC Sun Trust KY Green Bank ( $14M ARRA Revolving Loan Fund)

15 ESPC in State Government Payback for ESPC Projects can be impacted by the following: Utility Rates/Rate Structure Operations Financing Interest Rate O&M Savings Term used to for Payback (yrs.) Availability of Rebates, Incentives, Grants

16 ESPC in State Government Improvements are entirely funded by the energy and operational savings generated by the services or equipment This program is tied to the Finance and Administration Cabinet s Strategic Plan goals of reducing utility costs and improving efficiency The program is environmentally and fiscally responsible Emerging Technology, good fit for PC Lessons Learned, DO M&V, Commission the Work, Bundle, Define and agree to standards of comfort and put them in the contract, Do involve budget staff in project development, Understand Construction Period Savings, Understand O&M Savings, Sustainable Savings, Commission the Work, Know your end users ability to operate. Additional savings beyond the guarantee. Double edge?

17 Massachusetts State Facilities Energy Program Hope Davis, Director Office of Facilities Management and Maintenance

18 Div. of Capital Asset Mgmt. and Maintenance Scope of DCAMM Services Planning Design Construction ($400 million/year) Capital Repairs and Improvements Leasing Acquisition and Disposition Facilities Maintenance

19 Massachusetts State Building Statistics 80 million square feet active buildings 695,000 acres 474 leases, 6.8 million sf Higher Education Human Services Courthouses Public Safety Office Buildings Recreational Facilities

20 EPC in Massachusetts Projects underway for nearly 30 years. Authorized under separate law, Ch. 25A, 11c. Evaluation is best value. Prevailing wage. Advertising requirements. Balance between savings and capital improvement objectives.

21 Program Evolution Water conservation On-site resident engineers Limited stipulated savings Sustainable design/renewable considerations Equipment-only (fast-track energy equipment replacements) Shovel-ready/Phased approach (ARRA-influenced)

22 Program Evolution (continued) Outreach to trades/meps/gcs/d-b firms 30 percent design Third-party commissioning Accelerated Energy Program focus on smaller sites Coordination with operations/ maintenance/training Communication with facilities staff

23 Project Financing Clean Energy Investment Bonds G.O. bonds Debt Service is paid by energy savings Requires 10% coverage Client agency commitment to repay loan Pro-formas at each project phase Reliance on International M and V protocols Revolving loan financing Deferred Maintenance funds Utility incentives and Grid programs

24 Challenges Small number of competing firms Flexibility to utilize various funding sources (e.g. CREBS). Including less-than-optimal sites Long-term commitment Getting beyond convention Towards ZNE

25 Summary Performance contracting continues to be an important component of state capital improvement program. Continual self-assessment - periodic meetings with ESCOs/contractors. Investigation of approaches in other states and jurisdictions.

26 EPC in Montana State Government EPC Process Req d Statutory Changes Became possible for state agency use in 2009 Selection Process (2 ways) Develop a Request for Proposal (RFP) for each project DEQ maintains a listing of qualified providers (10 currently pre-qualified) Select an ESCO; must provide licensed engineer ESCO will perform an Energy Audit ESCO and Using Agency will develop an EPC Project Enter into a contract with the ESCO Term: >3 years; <21 years Guarantee, Monitor, and Annual Report Execute Financing for the Project (probably the biggest issue)

27 EPC in Montana State Government ARRA as ESPC in MT (Innovation Award!!) Who has successfully completed ESPC projects for the State? McKinstry To date, MT has contracted only 4 EPC (~ 25 K-12) projects totaling $16.9M Annual savings is $667,000 Typical/simple payback is 20.7 yrs

28 Contacts Steve Truebner Russ Katherman Dick Mink Hope Davis , ext