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Get Smart !! Reduce Energy Use, Get Capital Project $$$

Get Smart !! Reduce Energy Use, Get Capital Project $$$. Boone Birdsell ESC Private Co-Chair. New Mexico Energy Services Coalition. Reference: Chapter 6, Article 23 of the New Mexico Statutes Public Facility Energy Efficiency and Water Conservation Act Amended July 1, 2009 .

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Get Smart !! Reduce Energy Use, Get Capital Project $$$

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  1. Get Smart !! Reduce Energy Use, Get Capital Project $$$

  2. Boone Birdsell ESC Private Co-Chair

  3. New Mexico Energy Services Coalition

  4. Reference: Chapter 6, Article 23 of the New Mexico Statutes Public Facility Energy Efficiency and Water Conservation Act Amended July 1, 2009

  5. Performance Contracting Performance Contracting is aProcurement Tool that enables you to use Future Cost Avoidance to Pay for the up front costs of Energy Efficiency Measures thru a “Guaranteed” savings program. Before PC After PC

  6. Performance Contracting Business as usual • Inefficient Building Issues • Lighting • Water • HVAC • Aging Equipment • Emergency funding needed for repairs & Deferred Maintenance. • Spare parts expensive BeforePC • Budget Funds reducing • Costs going up • Maintenance cost increasing • Spare parts cost increasing • Energy cost going up.

  7. Performance Contracting • Replace the old Equipment • Put Cost Avoidance in place • Building Automation • High efficiency HVAC • High efficiency Lighting • Increase building envelope efficiencies. • Water conservation • Renewable Energies • Reduce Maintenance • Increase Comfort levels Carve out a “Cost Avoidance” piece of the pie. After PC

  8. Performance Contracting Solutions 1. Provide a “Self-Funded” solution for an Energy and operational savings Project. • The “Cost Avoidance “ dollars will actually “PAY” for the Project. OR • 2. Provides additional funding to “Leverage” the energy project. • The “Cost Avoidance” dollars, “Leveraging ” the budget dollars present to increase the Project Scope. • The Scope can be increased on the project with the additional “Cost Avoidance” dollars. Both Options provide a Guaranteed Solution.

  9. Who Provides Performance Contracting? • ESCO- Energy Services Company • An ESCO is a commercial business that provides and arranges financing for a broad range of comprehensive energy and operational savings solutions, including energy audits, design, and implementation, training, commissioning, measurement and verification.

  10. Example Actual Project: Self-Funded Project w/ Positive Cash flow • Project “Cost Avoidance” (12 year term) • 12 year Total Cost $7,611,026 • 12 year Total Savings $8,011,190 • Positive $400,164 Actual Cash Flow over life of the project

  11. Performance Contract Guarantee * Guaranteed work to be done. No Change Orders • Definitive Scope of Work • Definitive Cost Avoidance • Definitive Term * Guaranteed Cost Avoidance and Open Book Pricing * Guaranteed payback time period

  12. Performance Contract History in NM. House Bill 603July 2009 PC Legislation Sep 2011 PC Path Set for NM 1993 2004 2012 2011 2009 Developing Pilot Programs PC Enabling Legislation Passed in NM. PC Projects Completed Thru 2004

  13. Performance Contracting Paths For New Mexico 2012 Oversight and guidance is provided byTheNew Mexico Energy Minerals and Natural Resources Dept. (EMNRD) Finance The Project Verify the savings Selection of ESCO Implement ECM’s Audit the Facility EMNRD Contact : Michael McDiarmid (505) 476-3319 michael.mcdiarmid@state.nm.us EMNRD Contact : Brian Johnson (505) 476-3313 brian.k.johnson@state.nm.us

  14. Step 1-Selection of ESCO Overview Agency contacts EMNRD Agency gathers data on the facilities to Support RFP Process Enter Data in Energy Star Portfolio Manager to reference in the RFP Building Sq. Footage Building Age And History Issue RFP for Investment Grade Audit & Project Proposal to ESCO’s Building Utilities Data for 12 months Building Issues Asbestos, Etc.. Provide Walk thru and opportunity for questions for the ESCO’s Building Address Or Location EMNRD Approves ESCO Agency Awards Contract Agency Selects ESCO Agency Selects short List of ESCO’s for final Interviews

  15. Step 1-Selection of ESCO EMNRD Agency The start pointis for the Agency to contact EMNRD An “Agency” is a School, Higher Ed, Municipality, County or State agency. NM Energy Minerals and Natural Resources Department. (EMNRD)

  16. Step 1-Selection of ESCO RFP EMNRD Agency • EMNRD is available to assist the agency with developing a Request for Proposal (RFP) to ESCO’s thru a bidding process. • EMNRD has sample RFP documents to use. • The Agency will need to compile the following info for the RFP Document: • Building age and history with environmental issues (Asbestos, etc.) • Square footage of each building on the RFP. • At least 12 months of utility data for each building. • Building name, locations and addresses.

  17. Step 1-Selection of ESCO RFP EMNRD Agency ESCO Companies • The Agency will Request Bid responses from ESCO’s for the RFP. • The Agency will provide a Pre Bid Walk thru for the ESCO’s to walk the site(s) and ask questions.

  18. Step 1-Selection of ESCO EMNRD Agency Selected ESCO • The Agency Selects the ESCO through Agency procurement • EMNRD Certifies the ESCO. • The ESCO is a Qualified Provider for this project only. • The Contract is awarded to the ESCO only After EMNRD Approval.

  19. Step 2-Audit the Facility Overview ESCO Provides the IGA with Project Proposal. NOTE: Agency must have funding for IGA Costs EMNRD Reviews and certifies the completed IGA and Project Proposal from the ESCO. EMNRD will provide a Model IGA Contract to Agency Upon Approval From EMNRD the Project Proposal then moves to the Agency for approvals. Financing by ESCO provided thru a competitive process Process for Municipalities Counties, High Ed and State Process for Schools Utility Cost savings must meet or exceed cost of the project Path A Path B

  20. Step 2-Audit the Facility EMNRD Agency IGA ESCO • EMNRD will Provide a Sample Investment Grade Audit (IGA) Document for the Agency to submit to the ESCO. • The Agency must have funding for the IGA cost in the event that they decide not to move forward with the project. (DON’T WORRY!) • The ESCO will provide the Audit per the IGA Document. • The ESCO will Identify & list ECMs (Energy Conservation Measures) • EMNRD will oversee the competitive financing process for the Final Proposal that will be turned in with the IGA.

  21. Step 2-Audit the Facility ESCO EMNRD IGA • The ESCO Completes the Investment Grade Audit which includes: • A “shovel ready” Project Proposal • Financing • Guaranteed terms • Guaranteed Scope • The EMNRD Reviews and approves the proposal Agency

  22. Step 2-Audit the Facility • The Path after EMNRD Approval. • Determined by Agency EMNRD Agency Path A Path B City, County, State, Municipalities &High Ed. Schools • EMNRD will Provide a Sample Investment Grade Audit (IGA) Document

  23. Step 3- Finance the Project Path A – Approvals for Schools Superintendent and School Board gives approvals The Annual Performance Contract amount will be removed from the School’s SEG (School Equalization Guarantee) Account and placed into a “Public School Utility Conservation Fund” to fund the Performance Contract with. Once this Special Fund has been set up and funded, the Implementation can begin in the succeeding fiscal year. PED compiles a list of school districts’ proposed projects, including information on annual payments and guaranteed savings. Next, PED notifies the Legislative Finance Committee of the proposed projects, during budget hearings preceding the regular legislative session. School District budgets for the succeeding fiscal year are approved during the regular legislative session

  24. Step 3- Finance the Project Path B- Approvals for Municipalities , Counties and State Agencies & Higher Ed. Once the Governing Council or Commission has approved the contract a Special Fund is set up for the sole purpose of paying the Performance Contract Costs. Once this Special Fund has been set up and funded, Implementation can begin. The Contract is presented for approvals of the Governing Council, Commission or agency head. Special Fund Appropriated from Operating Budget to Pay for the Performance Contract.

  25. Step 4- Implement the Project The Project with All Energy Conservation Measures (ECMs) is ready to start Implementation The ESCO is responsible for Managing the Project. Providing Training, Ensuring the Design and development of the project The Performance Period for the Contracts begins at customer approval and sign off of project completion. The Project does not have change orders unless there are changes that the customer requires.

  26. Step 5- Verify the savings The Project must have a Measurement and Verification (M&V) program to track and verify the savings of the performance Guarantee. The ESCO can also be responsible for O&M if required for the project.

  27. For Information on Performance Contracting, Go to: HTTP://www.CleanEnergyNM.org Select Link: Clean Energy Performance Financing

  28. Energy Performance Contracting FAQ Q: How Long can you finance an EPC Project? A: Up to 25 years, depending on the equipment Life expectancy. Q: What types of Projects qualify for an EPC Project? A: Almost all retrofits projects that save energy. See (6-23-2 Item B of the Statutes) Q: Who provides Financing for an EPC Project? A: The ESCO provides the financing as part of the EPC Project.

  29. Thank You!

  30. Renewable Energy for Schools Michael Cecchini Director of Business Development

  31. Benefits of Renewable Energy for Schools • Energy Cost Savings – Operating Budget • Reduced Peak Demand Charges • Clean Energy • Curriculum Opportunity

  32. Ways for Schools to Implement a Solar Project • CES Procurement • Design/Build/Own – GO Bond Funding • Power Purchase Agreement – Third Party Funded & Owned • Performance Contract – Incorporate Solar in with other Energy Conservation Measures (ECM’s) with a Guaranteed Savings Agreement which will self fund the project.

  33. Installation Options for Schools

  34. Installation Options for Schools Parking Lot Shade Structures

  35. Thank You!

  36. Using New Mexico’s Energy Performance Contracting Law Brian Johnson ESC Public Co-Chair Facility Managers Training Workshop October 31, 2012 New Mexico Energy, Minerals and Natural Resources Department

  37. Basic Features of the Law • schools, state agencies, municipalities, universities • energy savings are guaranteed • up to 25-year term allowed • all types of efficiency & renewable measures • EMNRD oversight: • “Qualified Provider” certification • Energy savings are accurate and reasonable New Mexico Energy, Minerals and Natural Resources Department

  38. New Mexico’s Energy Performance Contracting Law • Where can I get help? The Public-Private Partnership • How do I get started? ESCO Selection • Your Future: Projecting Utility Costs vs. Financing Costs • The Guarantee: How Schools are Protected New Mexico Energy, Minerals and Natural Resources Department

  39. Where can I get help? The Public-Private Partnership • EMNRD – www.CleanEnergyNM.org • Energy Services Coalition – www.EnergyServicesCoalition.org • Schools: PED, PSFA New Mexico Energy, Minerals and Natural Resources Department

  40. www.CleanEnergyNM.org Clean Energy Performance Financing • Model documents: • Request for Proposals (RFP) • Energy Audit Contract • Guaranteed Utility Savings Contract New Mexico Energy, Minerals and Natural Resources Department

  41. School Capital Project Resources Public School Facilities Authority • Bob Gorrell, Director • rgorrell@nmpsfa.org • 505-988-5989 Public Education Department • Antonio Ortiz, Director, Capital Outlay Bureau • antonio.ortiz1@state.nm.us • 505-827-6613 New Mexico Energy, Minerals and Natural Resources Department

  42. Energy Services Coalition Brian Johnson, Public Sector Co-Chair • brian.k.johnson@state.nm.us • 505-476-3313 Boone Birdsell, Private Sector Co-Chair • boone@yearoutenergy.com • 505-270-1831 New Mexico Energy, Minerals and Natural Resources Department

  43. How do I get started? Contacted by an ESCO or heard from EMNRD about Energy Performance Contracting? • Contact EMNRD • OK for ESCO to offer school unsolicited proposal, but… • Want ESCO hired competitively • Deemed “Qualified Provider” by EMNRD New Mexico Energy, Minerals and Natural Resources Department

  44. Competitive Selection • Stand-alone RFP • Federal GSA (www.gsaelibrary.gsa.gov; Schedule 03FAC; Category 871 202) • Statewide Price Agreement (2013) New Mexico Energy, Minerals and Natural Resources Department

  45. New Mexico Energy, Minerals and Natural Resources Department

  46. New Mexico Energy, Minerals and Natural Resources Department

  47. Your Future Utility Costs vs. Financing Costs • Electricity prices are trending up • Natural gas is trending down…future volatility? • Propane is expensive New Mexico Energy, Minerals and Natural Resources Department

  48. New Mexico Energy, Minerals and Natural Resources Department

  49. The Guarantee How Schools are Protected • We want energy $$$ savings • Guarantee is for energy BTU savings • Baseline-to-current-year energy comparison • Baseline adjustments needed • Utility bill accounting vs. avoided energy costs • Model documents • strong language for savings calculations and measurement & verification plan • Need to enforce New Mexico Energy, Minerals and Natural Resources Department

  50. Sample Contract Language Proposed Energy and Water Savings Calculations and Methodology • Provide detail description of analysis methodology used. Describe any data manipulation or analysis that was conducted prior to applying savings calculations. • Detail all assumptions and sources of data, including all stipulated values used in calculations. • Include equations and technical details of all calculations made. (Use appendix and electronic format as necessary.) Include description of data format (headings, units, etc.). • Details of any savings or baseline adjustments that may be required. • Detail energy and water rates used to calculate cost savings. Provide post-acceptance performance period energy and water rate adjustment factors. New Mexico Energy, Minerals and Natural Resources Department

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