Using ESPC to Maximize Energy Saving Goals Prepared

Using ESPC to Maximize Energy Saving Goals Prepared for Environmental Business Council Paul Popinchalk, PE Celtic Energy

11/28/2020 Environmental Scan • Economic Downturn creating Economic • • distress, staff & budget reductions Energy Costs variable, global upward pressure Environmental concerns increasing need to reduce energy use US Energy use creating concerns with security & reliability PA 11 -80 promotes ESPC as mechanism for efficiency & renewable energy use Environmental Business Council 2

11/28/2020 What is ESPC? • Energy Savings Performance Contracting (ESPC) is an “innovative” method to purchase energy efficiency, water, and O&M improvements in buildings • A “single” procurement is used to purchase a complete package of services from an “Energy Services Company” (ESCO) on an open book basis (Design/Build done right) Self-Financing of the entire project so there are no up front costs. Use Tax Exempt Municipal Lease, not ESCO $ ESPC can help improve indoor air quality and work/learning environments, while reducing energy costs • • Environmental Business Council 3

Potential Components of ESPC Project 11/28/2020 ESPC Capital Funds Leverage precious Capital $ by up to 10 to 1 CCEF CEEF DPUC/ISO CREBS QZABS Environmental Business Council 4

11/28/2020 ESPCs re-allocate current spending NOT ADDED DEBT!!! Reduce spending on: – Wasted energy – Maintenance of old, inefficient equipment And reallocate the same spending to: – New energy-using infrastructure – Project financing costs (mostly interest) Will not degrade credit rating No need to ask taxpayers for new $ Environmental Business Council 5

11/28/2020 Owner Share $ Utility Bill Energy Cost Contractor Saving Payment s Utility Bill Before ESPC Contract Owner Share During ESPC Contract After ESPC Contract How Does It Work? • Pay a lower utility bill • Pay the contractor • Achieve cost savings for the Owner Environmental Business Council 6

11/28/2020 The Basic Cash Flow Savings Net Positive Cash Flow $ [Debt Service, M&V, and O&M Costs] T (Time) 15 Environmental Business Council 7

11/28/2020 What makes ESPC Attractive? • Guarantees for Performance, Savings, Costs, and O&M • Multiple Financing Options – Treat Projects as Investments • Comprehensive Energy Engineering • Everything is Negotiable – Custom Fit for each Owner’s Needs • Open Book Pricing • Cost of Construction Returned to Owner through Conservation Savings • Proven, Successful Practice since 1970 s Environmental Business Council 8

11/28/2020 Who are the Players? Energy Service Company (ESCo): – Identify and evaluate energy savings opportunities – Develop engineering design & specifications – Manage project from design to installation – Can arrange for financing – Train Owner’s staff on O&M – Guarantee project cost, performance & savings – Provides long term O&M if desired by Owner – Helpful Link: www. naesco. org Environmental Business Council 9

11/28/2020 Who are the Players? 3 rd Party Consultant – Assist in development of RFP – Evaluate ESCOs’ Proposals assist in selection – Facilitate accurate, comprehensive Detailed Audit by ESCO – Validate ESCO’s M&V, CX, O&M Plans – Verify ESCO’s M&V, CX activities – Review engineering design and specifications – Help Owner with contract negotiations – Review Annual M&V reports for term Environmental Business Council 10

ESPC Benefits 11/28/2020 Environmental Business Council 11

11/28/2020 Windham Public Schools Willimantic, CT • Cash strapped district with 9 older facilities. • Major infrastructure upgrades; boilers, windows, etc. • Solved chronic comfort and maintenance problems (No need for parkas in class anymore!) • Many standard measures, lighting, sensors, EMS • Small Cogeneration at two schools allowed for emergency shelter status • CEI managing Performance Contract, $5. 5 million at all schools, 13 year term Environmental Business Council 12

Who’s Doing ESPC? 11/28/2020 USDOE - Transformational Energy Action Management (TEAM) Initiative at dozens of its own facilities across the country featuring ESPC as the main vehicle of achieving savings (CEI is managing projects at HQ and Brookhaven Labs) City of Stamford implementing a $6. 1 million energy performance contract in more than 20 schools (third party financing to pay to improve energy efficiency and repaid with utility energy savings) City of New Haven – – $6. 1 million of leased improvements. $250, 000 in utility rebates to offset capital cost. $8. 64 million in energy, maintenance, parts and labor cost saved to date. $8. 8 million savings guaranteed over the nine-year program. Town of East Hartford – several million $ in ESPC, and QECBS Town of Farmington just selected AMERESCO Town of Cheshire developing ESCO RFP with CEI Town of Colchester – just selected Honeywell with CEI Town of Newtown – just selected CEI as Third Party Consultants Environmental Business Council 13

Thank you for your time. . . QUESTIONS? Paul Popinchalk, PE LEED Accredited Professional Certified Monitoring & Verification Professional Director of Engineering Celtic Energy, Inc. (860) 882 -1515 paul@celticenergy. com www. celticenergy. com 14

Federal Research Center – White Oak 11/28/2020 • Celtic hired to do Quality Control over ESPC with over $290 M in assets • 60 MW gas fired turbines • 20, 000 tons of HE chillers • Solar power array • ECMs in buildings • CEI pushed New Phase 3 to be: • Smart. Grid/PJM compliant • Robust M&V and CX plans Energy Savings Performance Contracting 15

11/28/2020 State of Rhode Island Energy Office • State Administration Complex: – Cannon Building – Powers Building – Chapin Laboratory Building • Projects Include: – – Replace old HVAC, chillers, boilers Add campus wide HVAC controls Lighting retrofits and controls VFDs and premium efficiency motors • Economics: – – Project Cost: Annual Savings: Utility Rebate: Contract Term: $5. 6 M $534, 000 $234, 000 13 years Energy Savings Performance Contracting 16

11/28/2020 Isn’t Design/Bid/Build Cheaper? • Yes, sometimes D/B/B is cheaper based on First Costs! – Get what you pay for. – Seldom are DBB designs optimized for efficiency, rarely capture expected savings. AE firms are not trained for these designs. – V. E. V. = Value Engineering Victim (Typical of D/B/B, not ESPC) – CATNAP = Cheapest Available Technology Necessary to Avoid Prosecution (Typical of D/B/B, not ESPC) – ESPC allows you to select ECMs based on value and life cycle, and not low bid! – No guarantees beyond one year warranty period in DBB – Rarely are systems commissioned 17

11/28/2020 US Department of Energy - HQ • CEI Quality Assurance on ESPC Project at DOE Headquarters Washington, DC • Over $26 M of infrastructure projects • Over $1. 5 M million in annual energy/O&M savings • ECMs include: – – – High performance lighting Steam trap replacement/O&M VAV system conversion New HE central chiller plant Water conservation • Annual Emissions Reductions (kg/yr): – 3, 600, 000 CO 2, 1, 500 Nox, 115 kg SOx Energy Savings Performance Contracting 18

11/28/2020 UNC Wilmington • • • Hired Celtic Energy in January 2008 Annual utilities cost $5 M+, and growing New chilled water plant is under loaded Connected satellite cooling/heating plants Daylight harvesting/skylights Integrated multiple buildings into one webenabled, open protocol front end Replaced boilers, AHUs, chillers, windows CEI worked with Energy Office and UNCW to modify and improve RFP Currently in construction $5 M project, 20 year term Energy Savings Performance Contracting 19