Energy Performance Contracting

Energy Performance Contracting December 2017

Outlines Section One: Jonson Controls as an Energy Service Company (ESCO) Reasons behind investment in Energy Efficiency Section Two: Funding Options of Energy Efficiency Projects Energy Efficiency Performance Contracting Measurement and Verification Section Three: Case Studies

Johnson Controls Building Efficiency BE develops & deploys technology enabled building efficiency solutions Credentials $23 billion revenue in 2016 Outcomes More than 1 million customers operating on every continent 130 thousand people with over one thousand LEED professionals and 5000 energy experts More than 100 thousand Metasys building automation systems deployed worldwide 130 years of Innovation and more than 30 years in software development 16 million metric tons of carbon dioxide reduction since 2000; equivalent of more than 3 million acres of pine forest Portfolio of more than 2 thousand high-performance heating, cooling & controls products and services 500+ renewable energy projects solar, wind, geothermal 1.5 billion square feet of real estate managed across more than 29 thousand sites Microsoft Managed Global ISV and 2011 Partner of the Year Finalist; strategic alliances with IBM and Cisco More than $5 billion in energy solutions guarantees

Building efficiency addresses a broad range of business needs Achieving better productivity, efficiency and sustainability Building Efficiency Stakeholders Building Efficiency Outcomes The Problem Statement CxO / Owner Facility Manager Productivity Employees moving to LEED certified buildings were found to work an additional 39 hours annually, due to reduced stress and fewer allergic reactions. Michigan State (2009) Building efficiency is complicated. Different systems. Different networks. Different operators. IT Professional Architect / Contractor Efficiency Benefits for High Performance Buildings Operating costs reduced by 9% Building value increased by 7.5% Occupancy rates increased by 4.1% McGraw Hill (2010), CoStar Group (2008), US Green Building Council (2011) 64 percent of respondents reported cost of smart building technology is the number 1 hurdle to investment* Sustainability Officer Occupant Sustainability Evolution of ASHRAE standard 90.1 has been instrumental in achieving 30% in energy savings since baseline year 1990. Pacific Northwest National Lab (2010) 44 percent of respondents reported information and skillset gaps limit their capacity to investment* *IDC Smart Building Global Market Forecast 2010-2015 (2011)

2017 Energy Efficiency Indicator survey Interest and investment in energy efficiency continues to increase globally More than 1,500 facility and management executives indicates that 70% of organizations are paying more attention to energy efficiency than a year ago. What is driving investments in energy efficiency? What are the most effective policies driving investments in energy improvement? 52% Government policy continues to be important driver for investment. cent of organizations. 83% Identified building performance benchmarking and certification. 81% Identified government leadership in leasing, building design and retrofits Building Systems Integration Energy Security & Resiliency Improvement Measures

2017 Energy Efficiency Indicator survey Interest and investment in energy efficiency continues to increase globally More than 1,500 facility and management executives indicates that 70% of organizations are paying more attention to energy efficiency than a year ago. What is driving investments in energy efficiency? What are the most effective policies driving investments in energy improvement? Building Systems Integration Energy Security & Resiliency Improvement Measures 46% Invested in building systems integration last year. 80% Plan to integrate their building systems in the future. The top four building systems that have already been integrated with other building systems: 1. Energy management 43% 2. Lighting 43% 3. Security 40% 4. Life safety 38%

2017 Energy Efficiency Indicator survey Interest and investment in energy efficiency continues to increase globally More than 1,500 facility and management executives indicates that 70% of organizations are paying more attention to energy efficiency than a year ago. What is driving investments in energy efficiency? What are the most effective policies driving investments in energy improvement? Building Systems Integration 71% Maintaining critical operations during severe weather events or extended power outages is very or extremely important when considering future infrastructure investments. 54% Planning to achieve near zero, net zero or energy positive status for at least one building within the next 10 years. 52% Very or extremely likely to have one or more facilities able to operate off the grid in the next 10 years. Energy Security & Resiliency Improvement Measures

2017 Energy Efficiency Indicator survey Interest and investment in energy efficiency continues to increase globally More than 1,500 facility and management executives indicates that 70% of organizations are paying more attention to energy efficiency than a year ago. What is driving investments in energy efficiency? What are the most effective policies driving investments in energy improvement? Building Systems Integration 75% Investments in heating, ventilation and air conditioning (HVAC) equipment was the most popular improvement made last year by respondents. 57% Planning to invest in onsite renewable energy in the coming year like roof top PV. 48% Planning to invest in electric storage in the coming year. Energy Security & Resiliency Improvement Measures

Finance of Energy Efficiency Projects Three basic ways to finance a utility project Equity Borrow Lease Very simple mechanism. Usually, the most LCC effective. The owner assumes all the risk. Many resource options. Owner assumes all risk after covering the lender risk with high interest rates. Rental is tax deductible. Will not own the assets at the end of term.

Energy Efficiency Performance Contracting Energy and operational savings is enough to pay back for financing Performance Contracting is a procurement tool that allows you to leverage your future guaranteed energy savings to pay for building improvements today with minimized risk.

Discussion to Identify Goals: energy efficiency, emissions reduction, operational savings, water savings, etc. Preliminary audit/site visit Partnership commitment Detailed audit Sophisticated analysis tools used to gather data and develop customized solution Energy Saving Contract with Savings Analysis Improvements such as: Lighting, water, HVAC, renewable energy, building Env upgrades, controls Lower Water Use 13 Lower Utility Use Reduce Waste Reduce Emissions Meet Customer Goals Reduce Ops Budget Reduce Maintenance

Energy Benchmarking An approach to identifying Energy Efficiency opportunities kw/yr/sqm 340 350 350 250 225 215 205 195 185 175 NEEDS IMPROVEMENT FAIR GOOD EXCELLENT Re-commissioning Retrofits Replacement Testing and Balancing (TAB) HVAC Enhancement Energy Efficient Retrofit is an improvement made to an Existing Facility which provides an Increase in the overall Energy Efficiency Lighting Improvement Controls Upgrading (Calibration) Insulation Improvement (Glazing) New Base Load (equest) Energy Conservation Measures - ECMs

Measurement & Verification Programmatic annual validation of savings Measuring and Verifying energy consumption, energy demand (if needed) and energy cost savings produced as a result of the implementation of an energy conservation measure to ensure projects are successfully managed. Following the IPMVP; the measuring options are: Option A = Retrofit Isolation-Key Parameter Measurement Option B = Retrofit Isolation-All Parameters Measurement Option C = Whole Facility Measurement Option D = Calibrated Simulation

Case Studies of Energy Performance Contracting

Case study Dubai World Trade Center The Brief Challenges Solutions Results Maintain iconic image Demonstrate transparent business case Create replicable model for deep retrofits Increase overall net leasable Value Energy savings through Optimize operations and retrofits Limited internal energy expertise No defined energy strategy First Performance Contract No local frame work available Energy efficiency audit program Dedicated energy professionals to drive program management First Performance Contract in the region : Guaranteed Energy Savings Phase 1: Customized CPO for 3 Plant Rooms with an ROI of 1.5 years Phase 2: Chiller Replacement for 2400 Tons with Cooling Tower Energy Savings of 1.3 Million kwh/annum with a pay back of 1.5 yrs Carbon foot print of Reduction of 1.1 Million Co2/Annum Innovative solution s: Customized CPO for 14 Chillers Solution-based project more profitable than project based on cost + margin. Set price based on savings VALUE.

Case study Doha City Center Facts Johnson Controls was selected for Facility Management & Operational Efficiency services Guaranteed 11% savings in efficient Operations Services Provided Energy: Life Cycle Analysis Energy data analytics, Energy Management System Management HVAC & Building Automation Security & Access, Fire & Life Safety System Integration Facilities: Building service and maintenance Grounds and security,cleaning, waste management Results Achieving more than 20% savings in utility per month. Carried out detailed space utility and energy survey to ensure accurate knowledge of space under management. Result: more transparency, greater level of detail and consistency Ensuring successful business operations 24/7 Facility retro-commissioning and optimization Every day the FM team manages more than 45,000 visitors. Better management of its energy expenditure

Case study Energy Retrofit Ritz Carlton- Bahrain PLANT EFFICIENCY AC 2.00 1.90 The Brief Chiller Retrofit Programs Existing YORK Chillers of installed capacity 2200 Tons has to be replaced Life Cycle Analysis of Existing Chillers Inefficient Operation 1.85 1.80 1.75 1.70 Challenges Cut throat Competition Equipment Matching the Load Profile rather than conventional Like to like replacement opportunity 1.65 Solutions Detailed Energy Audit measuring plant overall efficiencies 1.60 Efficient Replacement program 1.55 Dedicated energy professionals to drive program management 1.50 1.40 Quick savings from operational improvement program to improve efficiency Energy Efficient Operation 1.35 1.30 1.25 1.20 1.15 1.10 Results Value added engineering for better selection of equipment Avoided competition / No completion Better Customer relationship and Commitment More pull through Energy savings of 4 Million/Kwh/Annum with high efficient chillers

THANK YOU