Energy Conservation Measures Group ECM Solutions Your Energy

Energy Conservation Measures Group (ECM Solutions) Your Energy Consultants Non Government Commercial/ Institutional

THE TEAM COO, Founder: Robert Oakley Jr. Senior Inspector CEO, Founder: Simmon Wilcox MD. Business Development Sheena Radi Executive Assistant Bradley Henson Financial Advisor Heidi Gurney Technical Writer Josh Colbert Technical Writer Mike Hagarty CM Advisor Musheer Robinson ESCO Consultant Eugene Ji ESCO Consultant www. ecmsolutionsgroup. com

Government buildings Schools Program Focus Housing Developments Universities www. ecmsolutionsgroup. com

Referrals for qualified Energy Service Company (ESCO) A comprehensive inspection of your project, including energy efficiency improvements and services Allow your energy savings to pay for the work ECM will inform you of all resources available What do you get by contracting ECM as your Consultant? ECM Performance contracts can be used to leverage more comprehensive modernization projects Grant research and submittal to save you time www. ecmsolutionsgroup. com

Historical Performance of the ESCO Industry Commercial, Industrial, Residential & "other" Projects 26% K-12 Schools 27% Institutional Projects Federal Facilities 7% Universities/ Colleges 10% Health/Hosptial 14% State/Local Governments 16% www. ecmsolutionsgroup. com

Standard Services Offered by ECM Solutions ESCO § Investment grade energy audit § Grant application submittal § Comprehensive project design & engineering § Project performance guarantees for the duration of the contract § Sources of project financing § § Equipment acquisition Savings measurement and verification § Complete project installation and management § Ongoing equipment maintenance services § Extensive resident training program services www. ecmsolutionsgroup. com

Standard Services Offered by ECM ESCO (continued) § Rate negotiation § Project monitoring § Commissioning of new equipment § § Customer education on building load profile Extensive ongoing training for building operators and facility personnel § Access to available incentive programs www. ecmsolutionsgroup. com

Multifamily Market Opportunities Multifamily (5+ units): over 15 million households Private conventional rental: 10 Million Private assisted rental: 3 Million Federal public rental: 1. 3 Million City, state public rental: 2 Million www. ecmsolutionsgroup. com

Many tens of thousands of households Owned and managed by either housing authorities or nonprofits “Family” and “elderly” occupancy Public Housing & Non-Profit Housing Entities HUD & the States regulate performance contracting and other energy incentives PHAs & Non-Profit housing entities generally have little or no credit history or financing expertise Very low and low income www. ecmsolutionsgroup. com

HUD regulatory incentive in place since 1991 Many municipal housing authorities with $1 million utility bill or more RFP/RFQ procedures are in place PHAs & Not-for profits qualify for tax-exempt financing Public & Not-for. Profit Housing Performance Contract Opportunities Average investment: $2, 000 -$4, 000 per unit among experienced ESCOs www. ecmsolutionsgroup. com

Annual potential: $ hundreds of millions of dollars Energy Savings Potential for Not-for. Profits Less than dozen Deep South PHAs have done EPC projects Actual savings: small percentage of potential www. ecmsolutionsgroup. com

Residential Market Characteristics that Matter Ownership/market segmentation (single, multi, public, private, etc. ) Building construction, size, age, and condition Occupancy (family/elderly/ handicapped) Utility costs Metering configuration and applicable rate structures (master/individual/buildingbased) Climate, loads Presence of utility or HUD, housing agency subsidies Impacts of utility company deregulation www. ecmsolutionsgroup. com

Water efficiency measures are key leveraging elements Sensitivity to tenant concerns, behavior What is Different About Multi-family Performance Contracting? Both Public housing & Not-for–profit success requires housing background; rules are complicated Must sell management, tenants, HUD or Not-for profit owner www. ecmsolutionsgroup. com

Why Use ECM for your ESCO needs? § Expertise: • Survey, analysis, design, financing • Project management, installation, O&M, M&V • Energy procurement § Financing options in place § Minimal costs until energy savings accrue § Long-term partnerships § Reduced project risk § Utilities used to be the only game in town – now there’s the option of using G 2’s ESCO as a Third Party managing the energy risk until a point of self-management (all technology costs retired) § Synergistic teamwork/total solutions www. ecmsolutionsgroup. com

HUD allows retention of savings generated (up to 20 years) Advantages of ECM ESCO’s Performance Contracting Improves energy efficiency and occupant comfort levels Minimizes technical and financial risks www. ecmsolutionsgroup. com

Benefits of ESCO’s Performance Contracting Replace aging equipment with new equipment Access to ECM’s 3 rd party financing for needed capital energy improvements Improved facility energy efficiency and reduced energy costs Reliable and persistent long-term energy saving project performance Enhanced local economies through the G 2 ESCO’s use of local subcontractors Decreased equipment repairs and lower maintenance costs Optimized equipment performance through project commissioning Better overall management and control of facility www. ecmsolutionsgroup. com

Risk Reduction Benefits Contractually measurements savings reduces the risk of savings erosion over time Integrated project analysis, design, and construction reduces the risk of lost savings opportunities and schedule delays Utility savings and performance monitoring reduces the risk of under-funding key maintenance requirements Up-to-date training and knowledge for facility operating personnel reduces the risk of project non-performance Ability to select services and materials based upon quality and value, rather than on lowest first cost www. ecmsolutionsgroup. com

Savings Erosion Over Time is Typical of Conventional Energy Projects 100 90 80 Percent of 70 60 Predicted Savings 50 Achieved 40 30 20 10 0 Year 1 Year 2 Year 3 Year 4 Year 5 www. ecmsolutionsgroup. com

Stable Savings Guaranteed Over Time is ECM ESCO’s Value Proposition Percent of Predicted Savings Achieved 120 Guaranteed Savings % Predicted Savings Achieved 100 80 60 40 20 0 Year 1 Year 2 Year 3 Year 4 Year 5 www. ecmsolutionsgroup. com

Example of ESCO’s Performance Contracts May Deliver Double the Value of Conventional Contracts Cumulative Savings Spec & Bid Procurement (Minimize First Cost) G 2 Performance Procurement (Maximize Net Benefit) Cumulative Project Costs Cumulative Net Benefits Benefit/Cost Ratio $3. 2 Mil $2. 9 Mil $ 0. 3 Mil $ 1. 1 $1. 9 Mil $6. 0 Mil $3. 1 Mil $ 2. 9 www. ecmsolutionsgroup. com

Comparison of Cumulative Long-Term Energy Savings Achieved Over Ten Years Through ESCO’s PC 100 Percent of Predicted Savings Achieved 80 60 40 20 0 Performance Contract Conventional Contract www. ecmsolutionsgroup. com

Conventional Bid and ESCO Negotiated Procurement Conventional ECM Performance Contracts § § All funds needed for a comprehensive energy project are readily available § § § May take several years to secure sufficient funds to implement comprehensive energy projects High staff costs due to a piecemeal approach to bidding and managing each separate project Multiple contracts with multiple vendors can result in conflicting project requirements § Lower staff cost and quicker completion of a comprehensive project § One contract with single point accountability for project performance § Long-term energy savings are guaranteed by the G 2 ESCO Energy savings are not guaranteed www. ecmsolutionsgroup. com

Conventional Bid and ESCO Negotiated Procurement (continued) Conventional ECM Performance Contracts § Guarantees of comfort and operating standards are not usually offered by equipment vendors § G 2 Performance contracts would typically contain explicit comfort and operating standards § Incremental project implementation misses savings design opportunities § G 2’s Comprehensive project implementation methodology maximizes savings design opportunities § Energy projects must compete for limited budget resources with other improvement projects § G 2 Energy projects are funded with utility bill savings § No direct incentive for building staff to reduce energy costs § G 2’s ESCO compensation is tied to providing energy savings over the term of the contract www. ecmsolutionsgroup. com

Conventional Bid and ESCO Negotiated Procurement (continued) Conventional ECM Performance Contracts § Limited staff or lack of expertise may put project performance at risk § G 2’s ESCO provides ongoing technical expertise to insure project performance § Operations and maintenance budgets are usually under-funded, resulting in wasted energy § Utility bill savings finance operations and maintenance are provided by the G 2 ESCO to maintain project performance www. ecmsolutionsgroup. com

Cash Flows from Conservation Projects Using Standard PFS Funding

Implementing Regulations: Revised March 29, 2001 – Federal Register If a PHA takes specific actions to reduce the utility rates it pays, the PHA may share in the savings on a 50/50 matching basis Incentive 1 Sharing of Energy Rate Reductions 990. 110(c)(1)(i) 50% of the decrease may be kept by the PHA (no time limitation); 50% must be returned as part of each PHA’s post-year utility settlement Savings must be monitored and must be documented by the PHA These actions must be specific to the PHA and must represent greater action than general participation in a rate-setting proceeding www. ecmsolutionsgroup. com

Implementing Regulations: Revised as a result of Rulemaking on March 29, 2001 – Federal Register (continued) Incentive 2 – Non -HUD Financing of Energy Conservation Measures Payments Dependent on Energy Consumption Savings Realized 990. 110(c)(2)(ii) If a PHA undertakes energy conservation measures with non-HUD financing, which are approved by HUD, the PHA may retain up to 100% of the savings from the decreased energy consumption, once payment to the energy conservation contractor or ESCO is completed and the terms of that financing agreement are satisfied www. ecmsolutionsgroup. com

Implementing Regulations: Revised March 29, 2001 – Federal Register A contract is agreed to between the PHA and the ESCO that the energy or water efficiency improvements will perform as projected and the monetary savings will accrue (thus, “energy performance contracting”) The 3 -year rolling base of utility consumption is frozen at the level existing prior to installation of the energy conservation measures (continued) PHA is responsible for debt amortization if the projected savings do not materialize ESCOs must provide sufficient guarantees of savings such that a shortfall in the savings will not cause the PHA to default on the debt if the projected savings are not realized. www. ecmsolutionsgroup. com

The Frozen Base Incentive HUD will freeze threeyear rolling base at the current consumption level As consumption goes down, the authority keeps 100% of the cost difference www. ecmsolutionsgroup. com

Cash Flows from Conservation Projects Using the Frozen Base Incentive

Implementing Regulations: Revised as a result of Rulemaking on March 29, 2001 – Federal Register (continued) Debt Payment Not Directly Dependent on Energy Savings 990. 110(e) Where the contract does not allow the PHA’s payment to be dependent on the cost savings it realizes, then the PHA is eligible for an additional operating subsidy each year of the contract to amortize the cost of the energy efficiency measures, subject to a maximum annual limit equal to the annual debt service for that year www. ecmsolutionsgroup. com

Cash Flows from Conservation Projects Using Add-On Subsidy Incentive