Alternative Finance & Mitigating Deferred Maintenance

1. Alternative Finance & Mitigating Deferred Maintenance May 21, 2013 Kurmit Rockwell PE, CEM, LEED AP DOE FEMP

2. FEMP Mission FEMP works with key individuals to accomplish energy change within organizations by bringing expertise from all levels of project and policy implementation to enable Federal Agencies to meet energy related goals and to provide energy leadership to the country.

3. FEMP-supported Alternative Financing Programs Several vehicles that allow agencies to fund energy improvements without up-front capital costs or special appropriations

4. FEMP Contacts —Federal Financing Specialists (FFSs) Northeast Tom Hattery Northeast Region plus State Dept. 202-256-5986thomas.hattery@ee.doe.gov WestMidwest Scott Wolf Western Region including N. Marianas, Palau, Guam, American Samoa; plus East, South, and Central Asia;the Pacific; and Near East 360-866-9163 scott.wolf@ee.doe.gov SoutheastMidwest Doug Culbreth Southeast Region plus Europe and Western Hemisphere 919-870-0051carson.culbreth@ee.doe.gov www1.eere.energy.gov/femp/financing/espcs_financingspecialists.html

5. ESPC Overview Contracts that allow agencies to do energy projects with no up-front capital cost and no special appropriations from Congress.

6. ESPCs are Budget-Neutral Reallocate the Government’s Utility Bill:  Stop paying for waste and pollution  Start paying for efficiency  BeforeESPC AfterESPC Term PerformancePeriod Excess Savings Savings Payments to ESCO $for Energy + Related Operations &Maintenance $for Energy + O&M $for Energy + O&M

7. Comparison of DOE ESPC IDIQ and UESC

8. Why Agencies Use ESPCs • Fund energy improvements with no up-front capital costs • Preserve appropriations for other needs • Obtain long-payback ECMs by bundling with short-payback ECMs • Take advantage of ESCO experience • Operations, maintenance & repair can be included in contract • They deliver long term guaranteed improvements, savings, and performance • Bundle facilities across utility territories and regions

9. Milestones in the ESPC Process

10. ESCOMust Assure and Guarantee Equipment Performance • Assurances: • Design standards • Standards of service (temperature, humidity levels, etc.) • Post-installation M&V • Commissioning • Defined consequences for substandard performance (typically agency withholds amount of savings shortfall from payment) • Responsibility for O&M/R&R

11. ESCO is Ultimately Responsible for O&M and R&R • O&M and R&R of installed equipment are the ESCO’s responsibility • O&M and R&R TASKS, however, may be assigned to ESCO or agency • General approach is described in contract in Risk, Responsibility, and Performance Matrix • Details are in M&V Plan or other parts of TO • Who will carry out O&M and R&R tasks • How performance will be verified • What to do if tasks are not performed

12. How ESPCs Address Deferred Maintenance • New equipment models in like-for-like replacements will almost always require less maintenance • Equipment choices can emphasize maintenance costs, e.g., replace standard HVAC with ground-source heat pumps • By including recommissioning of (non-ESPC) equipment in the task order = maintenance • Ask your ESCO how an ESPC task order can address your maintenance backlogs

13. Want to Know More? For more about FEMP Alternative Financing Google: “FEMP Project Funding” “FEMP Alternative Finance Training” Contact Information Kurmit Rockwell, PE, CEM, LEED AP Kurmit.Rockwell@ee.doe.gov 202-586-2078