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Energy Performance Financing

Energy Performance Financing. Pittsburgh Energy Conference Duquesne University . August 9, 2005. Overview. Financial Needs . Financial Incentives For Energy . Success Stories . Options for Contracting. How HUD Can Help. The HUD Review Process. Building Condition Assessments.

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Energy Performance Financing

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  1. Energy Performance Financing Pittsburgh Energy Conference Duquesne University August 9, 2005

  2. Overview Financial Needs Financial Incentives For Energy Success Stories Options for Contracting How HUD Can Help The HUD Review Process

  3. Building Condition Assessments ELECTRICAL Power & Distribution Interior Lighting Exterior Lighting Emergency Power Fire Alarm System Comm / IT systems Security Systems Clock Systems MECHANICAL Heating Systems Ventilation Systems Air Conditioning Plumbing/Drainage Building Controls Fire Prevention ARCHITECTURAL/ STRUCTURAL Roofing, Windows, Ext. Doors Foundation & Exterior Walls Flooring & Ceilings Interior Walls/Doors/Millwork Painting & Window Coverings Accessories & Equipment PROPERTY / SITE Roadways / Driveways Paving & Walkways Retaining Walls Landscaping Fencing Underground utilities Courtesy – Ameresco Inc.

  4. Age Profile Area Constructed (square feet) Courtesy – Ameresco Inc. Construction Year

  5. Unfunded Liability Cumulative Cost vs. Funding Courtesy – Ameresco Inc.

  6. Courtesy – Ameresco Inc.

  7. Courtesy – Ameresco Inc.

  8. Courtesy – Ameresco Inc.

  9. Courtesy – Ameresco Inc.

  10. Overview Financial Needs Financial Incentives For Energy Success Stories Options for Contracting How HUD Can Help The HUD Review Process

  11. 24 CFR 85.36 – Procurement Requirements 24 CFR 990 – Annual Contributions for Operating Subsidy: 24 CFR 990.107(f) – Incentives for energy conservation improvements 24 CFR 990.110 – Adjustments 24 CFR 965.308 – Energy Performance Contracts 24 CFR 943 – Consortiums / Collaborations. Regulations

  12. HUD Operating Funding System CFR 990.107(f) imposes two requirements for funding energy conservation improvements. 1. Energy conservation measures MUST be financed by an entity other than the Secretary. [ Private Loan] • Energy cost savings MUST be sufficient to pay the loan within 12 years.

  13. + 2. 1. Freezing the Rolling Base Add-on Subsidy HUD Performance Funding System Federal Regulations 24 CFR 990.107(f) provide two options for funding energy conservation improvements.

  14. HUD Performance Funding System Option 1: Freeze the Rolling Base Incentive Cost Benefit To PHA Frozen Base Line PHA Energy Usage Before Improvements Per Year HUD Energy Payment Energy Savings Yearly Energy Usage After Improvements Minimum of 51% (75%) of the savings MUST be used to for loan repayment

  15. Frozen Baseline - Energy Consumption Before Improvements + Current Utility Rate Cost Savings Energy Consumption After Improvements HUD Performance Funding System Option 1: Freeze the Rolling Base Incentive Energy Savings

  16. Add On Subsidy HUD Performance Funding System Option 2: Add-On Subsidy Incentive Energy Cost Savings- PFS Base Line – NOT Frozen PHA Energy Usage Before Improvements Per Year Yearly Energy Usage After Improvements HUD Energy Payment

  17. HUD Performance Funding System Option 2: Add-On Subsidy Incentive

  18. Option 2: Add-On Subsidy Incentive

  19. HUD Performance Funding System Options Available Energy Service Company (ESCO) Developed PHA Developed PHA functions as their own ESCO

  20. New Requirements HUD Field Office Review Procedure By Statute, the housing authority is required to have a qualified third party to assist in its energy finance program. The authority is required to use a licensed engineer familiar with performance contracting, financing, commissioning, and measurement and verification. Procurement will follow 24 CFR 85.36 PHA Developed PHA functions as their own ESCO

  21. HUD Performance Funding System Options Available ESCO Developed Add-On Subsidy ESCO Developed Freezing The Rolling Base PHA Developed Add-On Subsidy PHA Developed Freezing The Rolling Base

  22. HUD Performance Funding System PHA Cost Risk Both incentives, freezing the rolling base and the add-on subsidy incentive, are effected by yearly Congressional budget cuts.

  23. Overview Financial Needs Financial Incentives For Energy Success Stories Options for Contracting How HUD Can Help The HUD Review Process

  24. Rochester Housing Authority Ithaca Housing Authority Chattanooga Housing Authority Binghamton Housing Authority Batavia Housing Authority {in process} Lackawanna Housing Authority {in process} Buffalo Housing Authority – Phase New Britain Housing Authority Success Stories

  25. Batavia Housing Authority Pending approval PHA Size: 198 dwelling units. EPC Approach: PHA Developed – NYSERDA AMP Program Contract Cost: $868,063 { estimate} Energy Savings: $77,979 / year; $1935,748 over 12 years. PHA Cost Benefit: Energy: $175,452 (PFS cost benefit) Cost Avoidance: $352,694 (Window Replacement) PHA Infrastructure Cost Contribution: {currentlyunknown} HUD Incentive: Add-On Subsidy Metering / Verification Method: Type C (Actual) Other Grants: NYSERDA : $ 98,511

  26. Binghamton Housing Authority PHA Size: 641 dwelling units. EPC Approach: PHA Developed – NYSERDA AMP Program Contract Cost: $2,034,170 Energy Savings: $112,024 / year; $1,344,408 over 12 years. HUD Incentive: Add-On Subsidy PHA Cost Benefit: Energy: $252,054 (PFS cost benefit) Cost Avoidance: $1,036,095 (Heating System Replacement) $501,552 (less PHA cost contribution) Total Cost Benefit$785,472 Metering / Verification Method: Type C (Actual) Other Grants: NYSERDA : $122,552 Weatherization: $295,000

  27. Buffalo Housing Authority Phase I PHA Size: 3,500 dwelling units. EPC Approach: ESCO - Siemens Contract Cost: $16,668,005 + $57,059 yearly monitoring fee. Energy Savings: $900,516 / year; $10,806,191 over 12 years. HUD Incentive: Freezing The Rolling Base PHA Cost Benefit: Energy: $1,907,560 ( over 12 years ) Cost Avoidance: $18,000,000 (Heating System Replacement) $6,468,264 (less PHA cost contribution) Total Cost Benefit:$13,439,296 Metering / Verification Method: Type A & C (Actual) Other Grants: NYSERDA : $3,329,445

  28. Chattanooga Housing Authority PHA Size: 3,109 dwelling units. EPC Approach: ESCO - Honeywell Contract Cost: $9,997,234 + $47,478 yearly monitoring fee. Energy Savings: $1,384,798 / year; $16,617,576 over 12 years. HUD Incentive: Add-On Subsidy PHA Cost Benefit: Energy: $3,115,795 (PFS cost benefit) Cost Avoidance: $6,539,847 (Heat Pumps) $0.00 (less PHA cost contribution) Total Cost Benefit:$9,655,842. Metering / Verification Method: Type A & C (Actual)

  29. Ithaca Housing Authority PHA Size: 341 dwelling units. EPC Approach: PHA Developed – NYSERDA AMP Program Contract Cost: $330,069. Energy Savings: $31,185 / year; $374,220 over 12 years. HUD Incentive: Add-On Subsidy PHA Cost Benefit: Energy: $70,165 (PFS cost benefit) Cost Avoidance: $0.00 $0.00 (less PHA cost contribution) Total Cost Benefit:$70,165.. Metering / Verification Method: Type C (Actual) Other Grants: NYSERDA : $24,020 Weatherization: $79,300

  30. Rochester Housing Authority PHA Size: 3,200 dwelling units. EPC Approach: ESCO – Siemens Contract Cost: $6,318,657. + $98,388. yearly monitoring fee. Energy Savings: $631,220. / year; $7,574,640. over 12 years. HUD Incentive: Freezing The Rolling Base PHA Cost Benefit: Energy: $422,000. total + rate escalation Cost Avoidance: $2,204,000. Elevator Upgrades & Smoke Detectors. $0.00 (less PHA cost contribution) Total Cost Benefit:$2,626,000. Metering / Verification Method: Type C (Actual)

  31. New Britain Housing Authority PHA Size: 1,300 dwelling units. EPC Approach: ESCO – Ameresco Contract Cost: $3,140,983. + 14,000. yearly monitoring fee. Energy Savings: $333,697. / year; $4,004,364. over 12 years. HUD Incentive: Freezing The Rolling Base PHA Cost Benefit: Energy: $750,828. (PFS cost benefit) Cost Avoidance: $1,100,000. (Heating System) $500,000 (less PHA cost contribution) Total Cost Benefit:$1,350,828. Metering / Verification Method: Type C (Actual)

  32. Overview Financial Needs Financial Incentives For Energy Success Stories Options for Contracting How HUD Can Help The HUD Review Process

  33. HUD Performance Funding System Options Available Energy Service Company (ESCO) Developed PHA Developed PHA functions as their own ESCO

  34. Options for Contracting ESCOs offer turnkey proposals for all steps in a performance contract and guarantee savings. Financing Installation Construction Management Service and Maintenance Energy Assessment Annual Monitoring and Certification ESCOs generally not interested in PHAs < 500 units

  35. Options for Contracting PHAs<500 units may be able to contract with an ESCO jointly with another PHA. HUD allows aggregation of PHAs for a performance contract

  36. Monitoring and HUD Certification PHA Coordinator Design Construction Management Options for Contracting PHAs can contract independently for energy assessment, installation, and monitoring. Energy Assessment Thrid Party Licensed Professional Engineer Required Hire A/E Bid Process Contract Award Financing HUD Approvals

  37. Overview Financial Needs Financial Incentives For Energy Success Stories Options for Contracting How HUD Can Help The HUD Review Process

  38. Explain EPC Process / HUD Requirements Energy Assessment Sample Procurement Documents are Available Approves the Request for Proposal (RFP) Reviews the Energy Audit Approves the Energy Performance Contract Verifies Yearly Energy Savings How HUD Can Help Field Office Assistance

  39. HUD Field Office Review Procedure Energy Performance Contracting July 1, 2004 http://www.hud.gov/offices/pih/programs/ph/phecc/ How HUD Can Help Resources

  40. HUD’s Green Book, “Energy Performance Contracting for Public and Indian Housing: A Guide for Participants”, February 1992,http://www.huduser.org/Publications/pdf/energy.pdf HUD’s Energy Efficient Rehab Advisor, 2003,http://rehabadvisor.pahthnet.org/index.asp HUD’s “Energy Conservation for Housing - A Workbook”, January 1998,http://www.abtassoc.com/reports/D19980034.pdf HUD’s “Utility Allowance Guidebook,” 1998 DOE, International Performance Measurement and Verification Protocols (IPMVP), 2001,http://www.ipmvp.org How HUD Can Help Resources

  41. John H. Miller, P.E., Senior Engineer, HUD PIH at 202-708-0614 x4237 or John_H._Miller@hud.gov Ken O’Connor, General Engineer, HUD PIH Buffalo at 716-551-5755, x5403 or Kenneth_O’Connor@hud.gov HUD Field Office Review Procedure – Pending PIH Notice - Pending How HUD Can Help Resources

  42. Public Housing Energy Conservation Clearinghouse http://www.hud.gov/offices/pih/programs/ph/phecc/ PHECC Newsletter http://www.hud.gov/offices/pih/programs/ph/phecc/newsletter/mar05.pdf Energy Performance Contracting http://www.hud.gov/offices/pih/programs/ph/phecc/eperformance.cfm Energy Star http://www.hud.gov/offices/pih/programs/ph/phecc/federal.cfm How HUD Can Help Public Housing Energy Initiatives

  43. Overview Financial Needs Financial Incentives For Energy Success Stories Options for Contracting How HUD Can Help The HUD Review Process

  44. HUD Field Office – Review Process ESCO Approach PHA Approach Reference – HUD Field Office Review Procedure, July 1, 2005

  45. 8 hrs 80 hrs 8 hrs. Initial Review Yearly Review RFP Contract Verification HUD Field Office – Review Process ESCO Approach PHA Approach

  46. 6 month period - conference calls every two weeks - 40 hours Initial Process Final Approval A/E Contract Yearly Review Prel. Approval Verification Audit HUD Field Office – Review Process PHA Approach

  47. 24 CFR 85.36 Competitive Proposal Method of Procurement Qualifications & Cost Factors / Relative Importance Evaluation Process Evaluate Select Negotiate Award RFP HUD Field Office – Review Process ESCO Approach Initial Review

  48. 24 CFR 990 Energy Conservation Measures Baseline Data Cost Reasonableness Financial Resident Paid Utilities Measurement & Verification Methodology Contract HUD Field Office – Review Process ESCO Approach Initial Review

  49. Energy Conservation Measures (ECM) A spreadsheet is provided that lists each ECM measure by project including: Energy savings, consumption and ECM cost, Current method of metering (master metered, check-metered, retail metered). Verification Methodology - Reference the International Performance Measurement and Verification Protocol (IPMVP) website at www.IPMVP.org EPC – HUD Checklist

  50. Baseline Data Baseline utility consumptions are clearly defined by utility, by month, for three years showing utility consumption and utility cost by project. The PHA has reviewed and verified that the baseline data is correct. The HUD Field Office has reviewed and verified that the baseline data correlates to the financial data as found on form HUD-52722-A. Documentation has been provided to support that all “escalated” rates are reasonable. EPC – HUD Checklist

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