round-up the savings to pay for facilities improvements

Nevada Governor’s Office of Energy

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Round-Up the Savingsto Pay for

Facilities Improvements


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Public Facilities Retrofit ProgramGovernor’s Office of Energy

Sue StephensEnergy Program Manager


Public Facilities Retrofit Program

Grant from U.S. Department of EnergyTo increase energy efficiency through performance contracting

For state and local governments



For:• State agencies and state higher education institutions• Cities, counties, school districts, other government districtsEducation • Information

– Visit our website: www.energy.nv.gov– Sign-up for our upcoming newsletter

• Workshops – Las Vegas (February 6th)– Winnemucca (March 18th)– Reno (March or April – not yet scheduled)

Technical Assistance• Best practices• Model procurement and contracting documents• Guidance to develop a successful project

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http://www.energy.nv.gov/


Public-Private PartnershipMission: Increase awareness and use of performance contracting in Nevada.

Public Sector Participants• Nevada Governor’s Office of Energy• Project managers of successful projects• Others interested in the missionPrivate Sector Participants: • ESCOs• Vendors of energy efficient equipment• Performance contracting specialists/consultants• Utilities • Others


N

Nevada Chapter


Contact Us

We’re here to help you get started and see you

through

Don’t Delay! Contact us Today!

Sue StephensEnergy Program ManagerPublic Buildings Retrofit Program775-687-1850 Ext. [email protected] www.energy.nv.gov

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mailto:[email protected]



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Linda SmithProgram Consultant (9Kft Strategies in Energy)


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What is Performance Contracting?

…and, how does it work?


Competing needs for the budget Maintenance problems or

comfort complaints Limited expertise on

technologies Too many demands on

staff time to launch new projects

Yet…you want to replace equipment and modernize your facilities

What Problems Do You Face at Your Facility?

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An Innovative Solution

Performance Contracting

Energy SavingsPerformance Contracting

…a smart way to get better buildings

If you face these problems….you are

not alone

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Energy Savings Performance Contracting (ESPC)

Projects pay for themselves!

Savings stack up over time…

A way to upgrade your facilities without dipping into your capital budget…Using future cost savings to pay for projects

What is Energy Savings Performance Contracting?

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Each year money in your budget is freed-up to pay for equipment!

How It Works – Annually

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• Financed through lease-purchase agreement (municipal tax-exempt)

• Annual cost savings exceed annual payments

• Does not impact debt (common legal perspective)

• Financing term is up to 15 years (per legislation)

• Blend and leverage funds (savings plus utility rebates, grants, bonds, budgeted funds)

How It Works - Financing Multi-Year Lease-Purchase Agreement

Maintenance Costs

Utility Costs

ANNUAL BUDGET

SavingsPay for Improve-ments

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How It Works – Over the Years

The long-term view

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Contract with an Energy Service Company (ESCO)

The ESCO brings in a team of specialists

The ESCO Partner

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A qualified ESCO puts many different piecestogether in a turnkey approach:

Identify and evaluate project opportunities Help arrange for financing and other funding

sources Design, install, commission and manage projects Measure and verify savings Train staff, provide ongoing maintenance services And, guarantee that projected savings will

cover all costs

The ESCO Partner

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ESCO

Agency/Owner

How ESPC Works

Financier

ESCO guarantee: Savings => Payment

Performance Contract

Lease-Purchase Agreement or other funding arrangement

2 Contractual AgreementsSecured by the ESCO Guarantee

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Measures that save: • Energy• Water• Operational, utility, maintenance

costs• And beyond (waste handling and

other infrastructure improvements)

A Broad Range of Measures:

• Lighting equipment replacements• Building automation system

upgrades• HVAC system improvements• Boiler replacements• Plant improvements • Renewable energy systems• Landscape irrigation• Plumbing fixture replacements• Commissioning • Utility rate adjustments• LED traffic and street lighting systems

EPC Scope

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chalpin

ESPC


5 Steps to Success and Program Services

Decide if performance contracting is right for you (Assess your needs & potential benefits) Services: FREE engineering study, Board presentation, meetingsSelect an Energy Service Company, ESCO (Develop an RFP)

Services: FREE RFP development, advisor ESCO identifies energy-saving opportunities (Develop an investment grade audit contract)

Services: Audit contract development, negotiating tips, engineering review of audit

ESCO implements projects (Negotiate an Energy Performance Contract)

Services: Contract development, negotiating tips, engineering & process advisor

Verify savings and enjoy the benefits (Monitor long-term performance)

Services: Engineering review of results and basic follow-up monitoring


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City of Henderson – Facilities ManagementEd McGuireKathy Ogle

Nevada Success Story in Performance Contracting

CITY OF HENDERSON, NVCity Wide Performance Energy Project

BACKGROUND – The City of HendersonOne of America’s Premier Cities•275,000 residents•105 square miles, 817 miles of streets•Over 2 Million square feet of City Buildings under roof•60 miles of trails, most have lights•11 pools•7 Recreation Centers•52 parks- 1200 plus acres •Still adding amenities•Population rising, use of facilities rising•BUDGETS FALLING

BACKGROUND: Continued•City owned Water and Wastewater plants•BUDGETS FALLING •Operational Costs are Rising•All the NON-Glamorous Stuff is wearing out•Out of date technology•BUDGETS FALLING •Annual Electricity- $10.3 Million•Annual Natural Gas- $542K•Annual Water- $2.3 M (includes sewer charges)•Utilities are $3.3 Million a year for Facilities

BACKGROUND: Continued

•BUDGETS FALLING •Las Vegas Valley Economy Sucks•Residents staying home, staycationing at Rec. Centers•Clients expecting more, willing to pay less•Clients NEED affordable, durable, cost effective and reliable “stuff”•City needs to replace or refresh the big ticket, utility consuming stuff•What do we do? DO MORE WITH LESS?•Can you do everything with nothing?

NRS CHAPTER 332 - PURCHASING: LOCAL GOVERNMENTS to the rescue!

The section applies to: Every political subdivision or other entity which has the right to levy or receive money from ad valorem taxes or other taxes or from any mandatory assessments, including counties, cities, towns, school districts and LVVWD

See Subsection NRS 332.300 PERFORMANCE CONTRACTS FOR OPERATING COST-SAVINGS MEASURES!

Performance Contracting Process• RFP and ESCO Selection by owner• Kickoff meeting with scope discussion• Develop Financial Grade Audit with multiple

workshops to determine final scope• Energy Services Agreement signed• Final Design completed• Construction• Measurement and Verification of savings• Ongoing O&M

The City has past experience with PERFORMANCE CONTRACTS FOR OPERATING COST-SAVING MEASURES

In 2006 and 2007 The City of Henderson entered into an energy performance contract with an ESCOto upgrade and retrofit a variety of items.

The first Energy Savings Performance Contract (ESPC) completed by the City was a $2.8M energy savings project for the Justice Facility. Completed in 2007, the project is saving over $250,000 per year. Funding was a combination of 1/3 Capital Funds and 2/3 medium term bond (10 years).

The second project cost $20M and is saving about $2M a year!

The second project was financed with a 15 year loan. The City put out a Request For Proposals for bank loans and received several inquires, with Bank of America delivering the best terms.

Both projects have GUARANTEED savings, if the savings goal is not achieved either the ESCO installs further upgrades to increase savings or pays down the cost of the energy saving measure until the cost benefit is positive. Your ESCO is your business partner, select them carefully!

PROJECT DESCRIPTION:The selected citywide measures include:•Retrofitting or replacing over 4,000 building lighting fixtures•Replaces 23,000 4’ T-12 lamps with T-8 28 watt high output lamps•Installing over 1,500 new lighting occupancy sensors •Installing/upgrading energy management system in 15 facilities •Replacing 17 boilers in nine facilities•Replacing 2 chillers in 2 facilities •Retrofitting over 310 plumbing fixtures•Installation of ultraviolet water treatment on indoor swimming pools (improves indoor air quality and decreases chemical usage)

UV Water treatment 200 Ton Magnetic bearing, Frictionless McQuay Chiller ready for install

Examples of sexy projects

Old boiler after a “hard light” New high efficiency, low emission boiler

Gibson Road lighting

Honeywell 3000

PROJECT DESCRIPTION cont.•Installed two 30-kilowatt photovoltaic arrays•Replaced rooftop HVAC units at multiple locations•Retrofit or replaced nearly 28,000 HPS street lights with induction lighting technology

•Replaced 12 large exhaust fans at the Jail•Repaired or replaced appurtenant maintenance items that don’t meet the energy saving test but are critical and failing like valves, controllers etc., paid for with energy savings.

HPS Inductive

All old lamps, ballasts, fixtures and thermostats were recycled, all new equipment is low emission, high efficiency. Two R-22 refrigerant equipped chillers were upgraded with new R-134a compatible chillers (non ozone depleting refrigerant)

•Coordination with 1900 full time employees•Convince the Public Works, Finance, Utilities and Building Department heads the project will work and pay for itself•Coordinate 15 contractors working in 36 locations plus all 817 miles of public streets•Built-in conflicts with all the old valves, switches and connections. Every shutdown was an adventure!•All the buildings were open for business and remained so for the term of the contract•No major shutdowns, no closures

The City had the dream team for this project:

The City selected the most qualified Energy Service Company (ESCO), they function like a Prime Contractor in a design/build. The ESCO selects “subs”, designers, engineers, suppliers and installers to complete the project.

The City hired a third party energy consultant to provide project oversight. This is required by NRS 332.360, the third party must possess an AEE “Certified Energy Manager” certification.

City staff managed the day to day work and helped coordinate with the occupants of all the locations, processed all payments, reviewed certified payroll and attended bi-weekly coordination/project meetings.

Original Contract Amount : $17,506,991.00Change orders owner added 13%: $2,589,678.00Contract Price after This Change $20,096,669.00

Added to the Base Contract via change orders, all owner requested changes or additional work funded by others

NV Energy Rebates total approximately $845,000American Recovery Act Funds $1,043,000City Capital Funds $700,000

No time growth

Sample power bill, Residential Streetlights

Sample power bill, Arterial Streetlights

Sample power consumption, 3 Buildings

Convention Center, Black Mountain Rec. Center and Emergency Services Facility. Power consumption 2008 to 2011 for June, July and August. Summer Months show 35% decrease at each location!

Continued Savings

• The project reduced the City’s carbon footprint, greenhouse gas emissions and remove 240 milligrams of mercury.

• The project appreciably reduced maintenance cost and effort • The project has resulted in a Cultural Change at the City of Henderson• All rebates were spent on additional related energy saving work.• The project had a $20 million dollar impact with $700,000 direct cost • All equipment was high efficiency, low emissions and low or mercury free• Most street lamps were retrofit, those that could not were replaced and recycled• All 28,000 street lamp ballasts were recycled• The project has reduced utility spending by $2.4 Million dollars a year!• Using EPA Energy Star benchmarking software, City Hall improved over 20 points

(20%).• Savings has exceeded the contract based on 17% guaranteed savings

Summary


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Chris Halpin, PE, CEM, CMVP, LEED APProgram Consultant – Technical Assistance

(Celtic Energy)


• Determine if Performance Contracting is right for you– Assessment of facility opportunities through performance

contracting– On-site meetings and facility walk-throughs– Benchmarking energy use and costs– Support for your decision-making team to get the “go” decision

• Competitively select an ESCO– Apply a standardized process– Help prepare the RFP– Serve as a neutral advisor

FREE Technical Assistance to Get Started

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• Your project’s savings will pay for continued technical assistance (as referenced in statute)

• Investment Grade Audit– Provide a 3rd party review of the savings projections and

recommended measures• Performance Contract (implementation contract)

– Educate and advise during contract negotiations– Ensure thorough documentation– Ensure reasonable project costs, markups, etc.– Ensure sound measurement and verification

approaches

Continued Technical Assistance

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FREE Technical Assistance

• Conduct a training seminar for Agency personnel to ensure understanding of ESPC scope, financing, M&V, etc.

• Discuss “Lessons Learned” from previous ESPCs

• Secure commitment of all stakeholders to ESPC

• Liaison with NV Energy Office

Building the Project Team

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• Meet with facility management staff, discuss O&M, ECM opportunities– What projects have been completed?– Are there critical infrastructure needs?– Planned projects short of funding?

• Review and benchmark existing utility data. Compare facilities to peers using BTU/SF, $/SF– Create utility baseline– Helps prioritize targets


Determine if Performance Contracting is right for youAssessment of facility opportunities

through performance contractingOn-site meetings and facility walk-

throughsBenchmarking energy use and costsSupport for your decision-making

team to get the “go” decision

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• Follow standardized RFQ/RFP process established by the energy office through this DOE grant

• Help prepare the RFP– Use the energy office template, modify

as needed– Assist with Technical Facility Profile

• Building descriptions, utility data, plans

• Serve as a neutral advisor– Discuss assembly of selection

committee– Brief committee on RFP issuance,

proposal review and scoring criteria, ESCO selection process,etc.

– Assist with “Board” presentations


Competitively select an ESCOApply a standardized

processHelp prepare the RFPServe as a neutral

advisor

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Sue StephensEnergy Program Manager


WHY should I consider doing a performance contracting project?

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Meet Climate Change & Energy Saving Goals • Reduce energy use, long-termModernize infrastructure• Better buildings nowGood Environmental Stewardship• Energy & water savings• Pollution prevention• Renewable energy opportunities• Reduce our dependence on fossil fuels Wise use of government dollars• Reduce the taxpayer burden• Divert wasted energy dollars to pay for infrastructureEconomic development• Create Jobs – real jobs now! (ESCO staff, Subcontractors to ESCOs,

Equipment suppliers , engineers, installers, on-site energy managers, service providers and more)

• Pump money into your local economy

Benefits for all levels of government

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Benefits for the facility manager

Solution to Limited Budgets• Capital improvement without spending capital dollars • Avoid the cost of delay – it costs money to wait!• Leverage other funds

(utility incentives, grants, bonds, in-house funds)• Stabilize budgets – less risk from future energy rate increases• A sustainable approach, post-ARRA

Better Buildings!• Comprehensive, whole-building approach for better systems and deep savings• Improve work/study environment - indoor air quality, comfort and lighting quality• Modern systems

Sustained Energy Savings• Ongoing project monitoring to verify savings• The ESCO takes on the risk of performance

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Benefits for the facility manager (more)

Maintenance Problems Solved!• Handle deferred maintenance (finally!)• Manageable systems• Trained staff

A Good Process• Time-effective, cost-effective approach for completing facilities energy upgrades• Guarantee of energy savings offloads financial and performance risk• One stop shop = single point of accountability (ESCO)• ESCO selected for best value, not lowest bid • Owner participates in final equipment and subcontractor selection• Low-interest financing options available• Annual savings verification done per International Performance Measurement & Verification Protocol (IPMVP)

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Contact Us

We’re here to help you get started and see you

through

Don’t Delay! Contact us Today!

Sue StephensEnergy Program ManagerPublic Buildings Retrofit Program775-687-1850 Ext. [email protected] www.energy.nv.gov

54

mailto:[email protected]


round-up the savings to pay for facilities improvements

Documents

nevada legislation

contracting documentsguidance

energy efficiency

nevada revised statutes

program grant

state agencies

budget maintenance problems

staff time