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UESC Case Studies – PG&E

Project Financing UESC Basics

Chris GillisPacific Gas & Electric Company

August 12, 2015

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Opening Thoughts – UESC Solution

•One-stop-shop for audit, design, build, and financing energy conservation measures

•Government signs a single contract under the GSA Basic Ordering Agreement with PG&E

•PG&E subcontracts a qualified energy services company

•PG&E manages all phases of the project

• We identify and implement energy efficiency, water, renewable and capital improvement opportunities for customers.

• Typical projects have multiple measures for $5-20 million with paybacks from 5-15 yrs.

Measure and Verify Savings

Design and Implementation

Source Financing

Investment Grade Audit

Preliminary No-Cost

Audit

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Opening Thoughts – UESC Solution

•Utility Focus on Relationships – • Utilities value/focus - on the long term relationship providing

service to the Facility, maintaining/building high levels of customer satisfaction, improving the sustainability of the Facility, and not on maximizing individual project profit margins.

• Efficiency/Sustainability Focus – Focus of scope development is on energy efficiency equipment, control/management of energy, sustainable solutions, DSM programs, smart grids, and renewable energy products, not on brick and mortar construction.

• Integration of projects - into existing and future utility programs – Utilities understand better than other engineering or consulting firms how a facility’s potential energy efficiency, renewable energy, and energy security projects fit within the utility’s system, rate structure, and incentive programs.

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UESC Services

• Range of Services – Some services we offer:• Audits (high level to investment grade)Energy Consulting Services• Detailed Design (all disciplines)• Project Management & Site Supervision• Training (including O&M training)• Commissioning of Systems & Equipment• Retro commissioning/Re-commissioning• Financing – extremely competitive interest rates due to financial

strength of Utility• Construction services

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PG&E UESC - Overview

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PG&E UESC – Overview cont’d

-A Task Order is issued to PG&E to procure financing for

the project and implement the Energy Conservation Measures

identified in the IGA.-All measures are

commissioned, O&M manuals are provided, and training is

completed once all of the measures are installed.

-Performance Assurance is included in the scope to

ensure that equipment is operated as designed to

maximize savings.-Communication and

Government input is also key during this step to ensure

project is completed accurately and on time.

Implementation/Construction

-A Task Order is issued to PG&E for an IGA to be

completed which further identifies the project scope

using the Preliminary Assessment information.-The list of measures can

expand and contract during this process.

-Financing is discussed and determined during this stage

for the potential project.-Communication is key with

Government during this time to review progress and

receive input/feedback on proposed project.

Investment Grade Audit (IGA)

-No cost, initial step for PG&E to compete and

select the Subcontractor to perform the project.

-The result of the PA is to identify the cost of an IGA

as well as the proposed cost and savings for a UESC

project.-Requires a one day site

visit for PG&E Subs to walk the facilities and collect

information.

Preliminary Assessment (PA)

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PG&E – Case Study Projects

Dept. of Veteran AffairsVarious cities in CA

Project Scope: 5 hospitals, over 2,000,000 sqft.

Cost: $9.9 million

Dates: 2011–2014

MeasuresLighting, boilers, HVAC, EMCS and water conservation

Annual SavingsElectric: 6 million kWhGas: 355 thousand thermsWater: 16 million galEnergy Costs: $1 million

NASA Ames Research Center, Moffett Field, CA

Project Scope: 128 buildings, 2,600,000 sqft.

Cost: $23 million

Dates: 2010–2014

Measures Lighting, boilers, chillers, steam heat, EMCS and water conservation

Annual SavingsElectric: 9 million kWhGas: 1.3 million thermsWater: 15.7 million galEnergy Costs: $2 million

Internal Revenue Service (IRS), Fresno, CA

Project Scope: 5 buildings, 561,800 sqft.

Cost: $9 million

Dates: 2010–2013

Measures Lighting, central plant upgrade, CAV to VAV, open protocol EMCS

Annual SavingsElectric: 7 million kWhGas: 50 thousand thermsEnergy Costs: $1 million

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PG&E Case Study Projects – cont’d

Coast GuardTraining CenterPetaluma, CA

Project Scope: 574,000 square feet of mission buildings and family housing

Cost: $4.2 million

Timeframe: 2014-2015

Measures:

Lighting, boilers, HVAC, CO2 ventilation control, kitchen hood ventilation, solar thermal hot water, and EMCS

Annual Savings:

Electric: 1.8 million kWhGas: 10,357 thermsEnergy Costs: $382,684Payback: 11 years

Federal Aviation AuthorityOakland Air Route Traffic Control CenterFremont, CA

Project Scope: Fremont (3 permanent buildings and 5 portable buildings, 130,000 square feet) and other locations

Cost: $5.3 million

Timeframe: 2014

Measures:Lighting, chillers, boilers, HVAC and EMCS

Estimated Annual Savings:Electric: 1.9 million kWhGas: 25,000 thermsEnergy Costs: $420,000Payback: 12 years

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UESC – Case Study Facts

• Be prepared for the following - • A business development cycle of 6 to 12 months

• Total project timeline w/o development 18 to 24 months

• All UESC’s started out as a simple energy project…expand the conversation

• “Buy-in” via Facility, Energy and Contracting are critical

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UESC Solution – Best Practices I

• For each of the projects - • Scoping Audit - based on energy & water efficiency

improvements (no-cost to Federal Agency)• establish an initial baseline• 50% =/- energy savings vs. implementation costs

• The most strategic approach is “bundled” or Integrated• Include = EE, DR, Small Renewable and Water solutions• Identify via Title 24 what incentives and rebates apply• Discuss the Performance Assurance Plan (IGA Phase)

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UESC Solution – Best Practices II

• For each of the projects - • Most contracting personnel not familiar with UESC’s• UESC FEMP Training is imperative…and excellent• Include Contracting from the very beginning • Address preferred contracting solution • Areawide Agreement & BOA• Model Agreement

• Review Utility competitive procurement process• General Contractor & Sub-contractors

• Identify if O&M cost savings is applicable

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Questions / Answers

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Christopher GillisPacific Gas & Electric Co.Federal Government Segment Office: 415-973-3770Cell: 925-457-3333Email: CXGL@pge.com

Contact Information

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Appendix – Contracting Overview

• A UESC Task Order is placed under the GSA Areawide Contract (Utility terms via the Basic Ordering Agreement)

Utility GSA

Areawide Contract

Agency Utility

Task Order

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Appendix – Market Drivers

• EO 13693: Planning for Federal Sustainability in the Next Decade – March 2015

• Reduce building energy intensity by 2.5% annually• Improve Data Center efficiency• Increases Federal Government commitment to

performance based contracting• $4 Billion by December 2016• President’s Performance Contracting Challenge

• EO 13514, EISA 2007, EO 13423, EPACT 2005

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Appendix – Utility Incentives

• Incentives Found in UESC Contracts

• Initial / Preliminary Feasibility Audit (PFA) typically costs $25k to $150k as an incentive to the Government, requiring significant analysis including renewable and other extremely long payback items that would not normally be evaluated. This level of effort is not available to other Utility customer groups.

• Integrated Utility project design and implementation, which results in:• More energy saved per project than implementing one ECM/MILCON project one at a time. • “Cradle to grave” services for complete project responsibility, leaves no room for Mis-communication between project

handoffs - audit to design, design to construction, interaction between multiple subs, including engineers, manufacturers and contractors

• Reduction of overall development & engineering fees. • Faster realization of savings due to reduced implementation time frame (time = money).

• No Contractor Initiated Change Orders – Change Orders are typically zero dollar change orders to clean/true up scope items; other Government initiated change orders only for scope/building additions to the project.

• “Wrap around warranty” – Utility is responsible for ensuring the project performs as promised, regardless of why the performance is not up to standards or which subcontractor may be at fault.

• Extended Warranties – Utilities regularly “fix” projects after the contracted one year UESC warranties expire at no additional cost to the Navy.

• Reduced Government Risk and Cost – Utility is responsible for competitive procurement of all contractors, dramatically reducing the Government project management responsibilities, avoids delays/costs due to bid/award protests and results in savings from avoided scope disputes, law suits, etc.

• Value Engineering Eliminated – UESC projects are not susceptible to the impact of normal Navy project budget limits ensuring that the highest energy efficient equipment remains in project scopes.