Energy Performance Contracting...No need to pass a levy Savings are guaranteed Useful life of...
Transcript of Energy Performance Contracting...No need to pass a levy Savings are guaranteed Useful life of...
October 10, 2017
Energy Performance Contracting
Why is Energy Efficiency a Focus?
CHALLENGES OBJECTIVES
� Increasing utility and
maintenance costs
� Aging infrastructure and
Maintenance Intensive
� Tax Payers Expect to do
More with Less
� Save Money, Reduce Energy,
Operational, Maintenance Costs
� Improve schools without capital
funds
� Replace Old Equipment &
Increase Reliability and
Efficiency
� Operating budget is
lowered which pays
debt service for
improvements
� No need to pass a levy
� Savings are
guaranteed
� Useful life of
equipment is longer
than term of debt
service
How Does an ESPC Work?
The Energy Performance Contracting process mirrors and streamlines a traditional project delivery method, while meeting all public procurement requirements.
A common EPC includes:
� Comprehensive energy study
� Design of selected improvements
� Competitive subcontract pricing
� Financing assistance
� Construction
� Commissioning & Training
� Measurement & Verification (M&V)
Services are “Bundled” under an EPC
Benefits of a Stepped Approach
Comprehensive Energy Audit (CEA)• ECM Cost/Benefit realistically presented
• ECMs selected for design phase
Design Phase• ECMs designed
• ECM Cost/Benefit updated and reviewed
Execute Performance
Contract Documents
Finance Closing• BANS, Bonds, Municipal Lease
Construction• Install ECMs
Competitive Bidding• Contractors and venders compete based on design docs
• ECM Cost/Benefit finalized
Owner makes
2nd go/no go
decision
Owner makes 1st go/no go decision
Owner makes final go/no go
decision
EPC RFP• Qualification based
• Fully disclosed ESCO Fees and Mark ups
• Open book requirement
Benefits of an Energy Performance Contract
� “Repurpose” money that is already in operating (utility costs)
budgets into needed capital improvements
� Accelerated/Simplified project implementation (WV Code 18,5, 9A)
� A single point of contact/responsibility
� Do not public bid material & labor (no low bidder)
� Financing and grant assistance
� A positive cash flow makes projects “self funding”
� Energy savings are guaranteed
EPC Model vs. Traditional DBB
Traditional Design-Bid-Build Energy Performance Contract
Project funding required in budget Utilizes operational budget savings to
“self-fund” project
Design is a focus: life cycle cost is not Both design and life cycle cost are focus
Familiar delivery model Design-Build delivery model
Multiple points of contact Single point of contact
Design firm and construction company
in adversarial roles
Design firm and construction company act
as one team
No performance/savings guarantee Performance/savings guaranteed
Low bid could mean poorly qualified
contractor
Avoids low bid, low qualified contractor
headache
Transparent “open book” cost Transparent “open book” cost
Prevailing wage Prevailing wage
EPC Implementation Strategies
Combine longer payback upgrades with proven shorter payback energy conservation improvements to financially accomplish project goals. For example:
� Short Payback Items (i.e. LED Lighting)
� Short Payback Items (i.e. VFDs)
� Short Payback Items (i.e. RetroCx)
� Medium Payback Items (i.e. Equipment Controls)
� Long Payback Items (i.e. New Boiler)________________________________________________________________________________________________________________________
RESULT = Project that pays for itself (neutral cash flow)
EPC Pitfalls
� Guaranteed savings didn’t materialize
� Lack of transparency in procurement of labor and materials
� Hidden fees and mark-ups discovered after implementation
� Owner did not have control of the project
EPC Pitfalls and how to avoid them
� Public bidding laws
� Upfront disclosure of fees and mark-ups
� Define what unburdened construction costs are
� Transparent review of pricing from contractors
� Disclosure of escalation rates:
� Energy costs
� O&M Costs
� Measurement and verification
� Service/Maintenance agreements
� Transparent project contingency
Unburdened Construction Cost (1)
Less than
$1,000,000
$1,000,000
to $3,000,000
Greater than
3,000,000
Construction Mark-up (2)
(as a % of total unburdened construction cost) ____________ % ____________ % ____________ %
Program Management and Planning ____________ % ____________ % ____________ %
Design and Specifications (Engineer of Record) ____________ % ____________ % ____________ %
Administration ____________ % ____________ % ____________ %
Cost of Risk ____________ % ____________ % ____________ %
Construction Management and ESCO General Conditions ___________ % ____________ % ____________ %
Hazardous Waste Abatement ____________ % ____________ % ____________ %
Commissioning ____________ % ____________ % ____________ %
Training ____________ % ____________ % ____________ %
Profit ____________ % ____________ % ____________ %
Corporate Overhead ____________ % ____________ % ____________ %
Other: ____________ % ____________ % ____________ %
Total: ____________ % ____________ % ____________ %
ESCO Fee PricingProject Fee Sample
Competitive Subcontractor PricingBenefit of Competitive Construction Pricing
Total Savings Over Bidder B: $725,666
Pricing of ESCO Subcontractors
Construction
Cost(competitive pricing)
ESCO Cost of
Risk(Contingency kept by ESCO)
Construction
Cost
Transparent
Contingency(Goes back to Customer)
Fin
al C
ost
$
Open Book,
Fully Transparent ESCO
Closed Book ESCO
Establishing Contract ValueBottom Up Approach…More Project. Less Cost.
Contract
Cost
Difference
Energy Conservation Measures
� Lighting & Lighting Controls
� Energy Management and Control Systems
� HVAC Equipment Upgrades/Replacements
� Motors & Variable Speed Drives
� Computer Power Management System
� Demand Controlled Ventilation
� Heat Pumps
� Water Conservation
� Building Envelope
Energy Conservation Measures
� Photovoltaic
� Wind Turbines
� Solar Thermal
� Geothermal
� Hydro Turbine
� Fuel Cell
Case Study
Implemented improvements included:
� Lighting & Lighting Controls Upgrades
� HVAC Controls
� HVAC and DHW Equipment Replacements
� Dishwasher Booster Heater
� Computer Power Management Software
Doddridge County Schools- Energy Performance Contract • Project Cost: $1,737,201
Total Annual Savings: $68,043 • School Building Authority Funds $768,950
Case Study
Guaranteed Annual Energy Savings
1,115,590 kWh
2,592 kW
494 mmBtu
$122,272
Annual Equivalent Savings for Comparison
Cars Removed from Road 148
Barrels of Oil Saved 1,766
Homes Energy Use 66
Implemented improvements included:
� Indoor Lighting
� Gymnasium Lighting
� Variable Frequency Drives
� Energy Management System Upgrades
� HVAC Replacements
� Air Conditioner Replacements
� Water Conservation
� Computer Power Management
Roane County Schools- Energy Performance Contract
Project Cost: $1,563,035 • Guaranteed Annual Savings: $122,272
Mason County Schools- Energy Performance Contract
Estimated Capital Cost: $5,200,000 • SBA Funding: $614,880
K-12 Case Study
Annual Energy Use and Costs Prior
to Implementation
3,110 kW
9,000,000 kWh
15,000 mmbtu
$1,100,000
Estimated Annual Energy Savings
76,000 kWh
450 mmbtu
$250,000
Implemented improvements included:
� Lighting and Occupancy Sensor Upgrades
� Boiler Burner Replacement
� Boiler Plant Replacements
� Steam Trap Upgrades and Replacements
� Thermostatic Radiator Controls
� Window AC Control Optimization
� Digital Air Handler Controls Upgrade
� High Efficiency DHW Replacement
� Premium Efficient Motor Replacement
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K-12 Case Study
Architectural &
Engineering Services
Est. 1940
Construction
Est. 1983
Energy Services
Since 1992
EPC
Success
WendelWendel’s Fully Integrated Professional Services
Reinforcing Cycle
� Implemented over $200 Million in ESPCs & Implementation
� $55 Million in the K-12 market
� $135 Million currently in development
� $28 Million in the K-12 market
� Professional Credentials
� Licensed Engineers
� Registered Architects
� Certified Energy Managers
� Certified Energy Auditors
� Certified Commissioning Professionals
QualificationsCredentials
� Renewable Energy Professionals
� LEED Accredited Professionals
� Certified Measurement &
Verification Professionals
Thank you.
Wendel Energy Services, LLCAndy Cocina
(304) 266-1534