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Energy Saving

Performance

Contracting

Smart Growth/Smart EnergySmart Growth/Smart Energy

December 7, 2007December 7, 2007



Introduction to session

Promote and deliver

cost-effective energy

efficiency outcomes



What is the Energy Services Coalition?

• Goal is to Assist with Performance

Contracting

• Cooperative Between Customers andEnergy Services Companies (ESCo’s)

• Helpful Website with Tools to get youStarted

–

www.energyservicescoalition.org

http://www.energyservicescoalition.org/

http://www.energyservicescoalition.org/



Information

www.mass.gov/doer

“Energy Management Services”

http://www.mass.gov/doer

http://www.mass.gov/doer



Introduction to Speakers

• Jerry Drummond

• Kathy Stanley• Steve Lisauskas



Jerry Drummond



What is Performance Contracting?

Performance contracts install energy

efficient facility improvements, with no up front cost, paid for out of

guaranteed energy savings from yourexisting operating budget.

Performance contracts install energy

efficient facility improvements, with

no up front cost, paid for out of

guaranteed energy savings from yourexisting operating budget.



Energy Services Company

Develop Design Finance Construct Maintain

ESCo



Performance Contracting Core Components

• Technical

• Financial

• Contractual



Technical

• Lighting

• Lighting controls

• Motors replacement• Energy management

system installation and

optimization• Variable frequency

drives

• Hot water reset

• Control valves for boilers

• Water conservation• Plug load controls

(including PCs)

• Boiler replacement

• Green/renewabletechnologies



Financial

• Where does the money come from?

• Existing budget neutral

• Energy

• Maintenance

• Capital improvement

• Rebates and incentives

• Municipal Lease or Other



Project Funding

Operational Budget

Utility

Maintenance Technology

Communications

Capital Budget

Technology

Infrastructure

Upgrades

Facilities

Infrastructure

Upgrades

The Savings Buckets…



Operating Budget=$1m



How is it paid for?

$0

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

$700,000

$800,000

$900,000

$1,000,000

CurrentSituation

InstallationPeriod

Program Years1-10

Post ProgramYears 11+

Excess Savings

Program Cost

Utility Payment



Contractual• How can you buy this?

• How do we measure success?

• Guarantees• When do you start to pay?

• What happens if….?

Hotter/Colder Energy prices change

Add buildings

Eliminate buildings

Schedule changes



Getting Started

• Organize a team

ProcurementBudget and finance

Technical

Legal



Springfield Project

Customer Name: City of Springfield 36 Court StreetSpringfield, MA 0113

Owner’s Representative: Patrick SullivanDirector of Parks andRecreation

Contact Information: (413) 787-6444



Springfield Project

Project Size: $15,000,000Municipal Bond

Guaranteed Savings: $1,174,843 Annually

Utility Rebate: $600,000+



Springfield Project

Scope of Work: Boilers – High EfficiencyCondensing Steam

Lighting Retrofits & ControlsCentralized Energy Management SystemCogenerationPool Cover

Air Handler Replacement & Repair Centralized Computer Network Controller Heating System ImprovementsPlug Load Controls



Kathy Stanley



Getting Started

• Self Assessment – Critical Path

Drives Site Selection

Drives Technical Issues

Drives Calculating SavingsPrevents “Cream Skimming”



Prepare An Energy Baseline

• Do this first

Include all energy types

Detail and summary by Btu

Include Square Footage in Calcs

Get your benchmarks

• Allocate Resources or Outsource for

speed



Use Your Baseline

• Identify Problem Areas

• Save Money Now!

Clean up billing issues

Clean up meter issues

Fix “no capital required” problems

Skim your own cream



Avoid Bumps in the Road

• Before you start:

Internal agreement on financing strategy and financial

parameters of the project Realistic expectations

Involve a representative from all departments, i.e.

purchasing, legal, facilities, accounting, finance

Designate a project manager who is committed to seeing the

project through




• Selecting a Partner (ESCO)

Follow your procurement law and process

Keep careful notes and document as much as possible Place a high priority on firms with a strong, successful

team

Check references diligently and document Ask questions several different ways, look for

consistency

Be sure you meet and interview the actual personnelworking on your project




• Negotiating the contract

Be clear about construction project structure, i.e. fixed

price vs. cost plus Close the scope definition before beginning negotiations

Be clear about savings sources

Be specific about deadlines for deliverables and enforce

them

Check all measurement and verification specifics, check

all engineering calculations for sound engineering practice



Steve Lisauskas



Where We Started

$0

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

B a l l i e t E l e m e n t a r y

S c h o o l

B o

l a n d ,

E d w a r d P E l e m e n t a r y

S c h o o l

B r i d g e A

c a d e m y ,

E a s t e r n A v e n u e C

a m p u s

B r o o k i n g s E l e m e n t a r y

S c h o o l

C e n t r a l H i g h

S c h o o l

C h e s t n u t

S c h o o l

D e b e r r y E l e m e n t a r y

S c h o o l

D

r y d e n M e m o r i a l E l e m e n t a r y

S c h o o l

E L L S ,

M a r g a r e t E l e m e n t a r y

S c h o o l

G e r e n a C o m m u n i t y

S c h o o l

G l i c k m a n E l e m e n t a r y

S c h o o l

H i g h

S c h o o l o f S c i e n c e a n d T e c h

n o l o g y

I n d i a n O r c h a r d E l e m e n t a r y

S c h o o l

K e n s i n g t o n E l e m e n t a r y

S c h o o l

L i b e r t y E l e m e n t a r y

S c h o o l

M a r y L y n c h E l e m e n t a r y

S c h o o l

P o t t e n g e r E l e m e n t a r y

S c h o o l

R e

b e c c a J o h n s o n E l e m e n t a r y

S c h o o l

S u m n e r A v e E l e m e n t a r y

S c h o o l

V a n S i c k l e M i d d l e S c h o o l S p r i n g f i e l d H i g h

S c h o o l

W a s h i n g t o n E l e m e n t a r y

S c h o o l

Z a n e t t i E l e m e n t a r y

S c h o o l

Current Cost Proposed Cost



What did we get?• 60+ Boilers

• Centralized Energy Management System

• Infrastructure Revitalization

• Improved Learning and Work Environment

• Strategic Energy Plan

• Long Term Partnership with Guaranteed

Financial and Technical Accountability



What Savings Are Expected

• Over $ 2,000,000 in Annual Energy Savings

• Hundreds of Thousands of Dollars in

Maintenance and Other Operating CostReductions

• Preventive Maintenance vs. Repair Based • $15,000,000+ in Reduced Capital Spending

• All Annual Positive Cash Flow is Springfield’sto Keep



• Emission Reductions (Metric Tons)

137,748 of carbon dioxide 215 of sulfur dioxide

140 nitrogen oxide

Impacts for the Program Term



Equivalent Impact for Program Term

29,762 Passenger Cars off road



Equivalent Impact for Program Term

41,413 planted acres of trees



Questions

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