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The Energy Efficiency Opportunity

The Energy Efficiency Opportunity. Conservation IS… “More Important Than Ever”.

duncan-donovan
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The Energy Efficiency Opportunity

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  1. The Energy Efficiency Opportunity

  2. Conservation IS…“More Important Than Ever” • Since 1980 electric consumption has increased 45%. If nothing is done to slow this trend, consumption could grow by 57% in the next 25 years.“Green is the new “Red-White & Blue” and is the most patriotic thing a person can do”.New York Tribune columnistTom Friedman (2006)

  3. Common problems for public facilities… • Limited budgets • 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, modernize your facilities and meet SUSTAINABILITY GOALS….

  4. An Innovative Solution: Energy Performance Contracting …a smart way to get better buildings

  5. Here’s How It Works...… Money otherwise owed to the gas, electric or water utility pays for equipment!

  6. How is the project funded? Annual Budget AFTER Improvements • Financed through a tax exempt lease purchase financing • Annual cost savings exceed annual payments • 10-30 year financing terms (per legislation) • Does not impact debt ceiling • Endorsed by most state legislatures & Governors • Results guaranteed by the ESCO The money saved from the operating budget is used to make the payments!

  7. Performance Contracting projects are significantly lower risk than traditional construction/retrofit projects • Design build process gives agency control of outcome • Single point of responsibility eliminates finger pointing • Guaranteed Results • The equipment will perform as intended • The project will perform financially as intended • The ESCO is obligated contractually by a performance guarantee

  8. Measurement and Verification of Project Performance • Established Protocols for Measurement and Verification (M&V) • IPMVP - International Protocol for Measurement and Verification Procedures • M&V Plan may be reviewed by third party engineer • It is possible to measure actual performance !

  9. Risk and Risk Management • Cost Savings Development • An educated consumer is the best customer • Agree early on project intent • Measurement & Verification Procedures • Some savings are budget reductions – Some aren’t • Third party reviews are available • Contracts • Be clear on Standards of Service and Comfort • Knowledge and understanding is critical

  10. Risk and Risk Management • Financial Projections • Involve your budgeting people early • Know where the repayment funds are coming from • Guarantees • What are the client’s responsibilities • What are the ESCOs responsibilities • Statutory Requirements / Solicitation Procedures • Don’t reinvent the wheel, talk to others who have been there before

  11. Guaranteed Savings • ESCO provides guarantee that savings will meet or exceed a specific amount • Guarantees meet federal and state standards, according to the jurisdiction • If you don’t realize the guaranteed savings the ESCO must pay you the difference • Motivates BEST life-cycle cost rather than lowest cost bid

  12. The “ESCO” is fully accountable for project performance, costs and savings!

  13. ESCO Responsibilities • Identify and evaluate opportunities (energy audit) • Design systems (engineering), specify & purchase • Manage construction • Arrange for financing • Provide long-term energy management services • Guarantee performance!

  14. The Kansas Facility Conservation Improvement Program (FCIP) • The FCIP is a program which enables public agencies easy access to a method of construction known as energy savings performance contracting • KSA 75-37,125 Authorizes the FCIP to provide support and resources • Essentially the FCIP streamlines the process of developing a partnership between a public agency and an Energy Service Company (ESCO)

  15. Steps To Success • Preliminary Audit • Investment Grade Audit • Energy Performance Contract

  16. Facilities Conservation Improvement Program Russ Rudy Buildings Team Manager Kansas Energy Office 785-271-3241 - office 785-207-5145 - cell r.rudy@kcc.ks.gov

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