ENERGY PERFORMANCE CONTRACTING (EPC)

FOR STATE AGENCIES & PUBLIC BODIES

Division of Energy

nam.nguyen@dmme.virginia.gov 09.07.18

VIRGINIA ENERGY MANAGEMENT PROGRAM (VEMP)

• Energy Performance Contracting (EPC) •Demand Response Program (DR) • State energy fuel procurement contracts • Technical advisor on energy issues

ENERGY SAVINGS PERFORMANCE CONTRACTING

• Cost-effective tool to facilitate energy efficiency, renewable energy, and water savings without adding any financial burden to the taxpayer

• Uses future avoided utility costs to pay off the original investment, plus financing and maintenance costs over the term of a contract

• Energy Services Companies (ESCOs) provide a corporate guarantee that savings will be greater than the costs of financing

• ESCO reimburses the owner for any shortfall and is accountable to take corrective actions to ensure savings will be met in the following years

• DMME provides engineering and technical assistance and an approved streamlined process with model procurement and contracting documents

ESPC PROGRAM IN VIRGINIA

$-

$30,000,000

$60,000,000

$90,000,000

$120,000,000

20022003

20042005

20062007

20082009

20102011

20122013

20142015

20162017

State/Higher EdPublic Body/Local

EPC ESPC Investment by YearMore than $860M since 2001

WESTERN TIDEWATER REGIONAL JAIL CASE STUDY

• Western Tidewater Regional Jail opened in 1992

• $4.7 Million energy performance contract with Siemens, 9 months construction

• Replace outdated lighting to LEDs and water systems (electronic flushing, on/off) with more energy efficient equipment

• Guaranteed savings of $350,000 to $400,000 a year, or ESCO must make up difference

• 15 Year loan will be paid with money saved on energy costs

PAGE COUNTY PUBLIC SCHOOLS CASE STUDY

VCU CASE STUDY

Project AT-A-Glance:

• Fourteen buildings • Over 80 Energy Conservation Measures (ECMs) • Project cost of $19.8M • $1.4M guaranteed annual energy savings • Include annual M&V cost • Include annual service contracts • 13.8 Years payback • Schneider Electric· Replace an aging air cooled chiller in Strauss Laboratory building

· Refurbish the energy recovery systems in Kontos and Smith buildings · Replace aging and failed steam traps · Replace aging boiler in Oliver Hall & Cabell Library · Repair and upgrade the cooling towers at Tomkins McCaw Library and Oliver Hall · Repair major mechanical items at Kontos and Smith buildings · Replace an aging Building Automation System (BAS) at Sanger Hall · BAS upgrades and optimization in 10 buildings · Upgrade to LED light fixtures in 12 buildings · Repair building envelope in 12 buildings · Upgrade water fixtures in 12 building · Install condensate recovery in 4 buildings to reduce cooling tower water consumption

Projected 23% reduction in energy consumption and 20% reduction in VCU’s total emissions

ADVANTAGES OF DMME ESPC PROGRAM

• The authorizing statute requires that the project be budget-neutral • Annual energy and operational cost savings will meet or exceed the amortized cost of energy conservation measures

• ESCO to provide a 100 percent performance guarantee bond

• ESCO to provide an annual reconciliation of the guaranteed energy cost savings, and shall be liable for any annual savings shortfall that may occur

• Streamlined procurement process

• No time-consuming advertisement

• DMME already has pre-qualified ESCOs based on experience, bonding, insurance, SWAM and other criteria

• DMME provides free technical and engineering support to local government and state agencies

• DMME facilitates coordination between customers and ESCOs

• ESCO represents single point of accountability

FLEXIBILITY OF ESPC PROGRAM

• Local government can structure contract to: • Provide desired level of control by county staff; and

• Take full advantage of county engineering staff knowledge of facilities, systems, schedules, etc…

• DMME provides technical support, but government makes all decisions

• DMME shares its experience from industry standards and/or other state & local projects

• DMME provides project management support only; direct PM by local building energy managers and/or building engineers ensures success

• Projects are customizable to fit needs

EPC PROCESS

• Inform DMME of intent

• Back of the Envelope (BOE) kick off meeting

• BOE audit from ESCOs with no charge

• ESCOs submit BOE audit findings/presentations & interviews

• Agency selects two or more ESCO’s and begins negotiations

• Agency selects a single partner (ESCO) and signs the MOU for the Investment Grade Energy Audit (IGA)

• The IGA is a complete and exhaustive audit to determine energy consumption and savings potential

• Upon completion of the IGA , local jurisdiction defines the project from the audit and negotiates the energy contract based on its needs

PRE-QUALIFIED ESCO’S ( A S O F N OV E M B E R 2 0 1 7 )

15 Pre-qualified Energy Service Companies (ESCO’S) certified by the State of Virginia

ABM Building Services

AECOM

AMERESCO

Clark Energy Group

CMTA Inc.

CONSTELLATION NEWENERGY

Energy Systems Group

Honeywell Building Solution

Johnson Controls

NORESCO

Schneider Electric

Siemens

Southland Industries of Virginia

Trane U.S. Inc.

Wendel Energy Services

OTHER CONSIDERATIONS

•Open book, itemized pricing •No change orders/firm fixed pricing • If the ESCO misses something, they pay

•Overhead and profit/audit fees are negotiated • You select equipment, no low bid • You HELP select subcontractors • If you have a viable project, you are already paying for an EPC by

paying the utility companies $ that could be reallocated to upgrade your facilities.

MEASUREMENT & VERIFICATION (M&V)

• International performance measurement and verification protocol (IPMVP) to measure energy savings •M&V options depend upon the scope of work •Match option to risk, you do not want to pay $50 to verify $10 in

avoided costs. • Yearly reconciliation required by Virginia Code •DMME review/consultation

EPC CUSTOMERS

• Public Schools

• Counties

• Universities

• Department of Corrections (DOC)

• Virginia Employment Commission (VEC)

• Virginia National Guard Department of Military Affairs (VNG-DMA)

• Museums

• Department of General Services (DGS)

• Department of Forensic Science (DFS)

• Department of Behavioral Health and Development Services (DBHDS)

CONTACTS

Charlie Barksdale

Phone: (804) 840.6932

Email: charlie.barksdale@dmme.virginia.gov

Nick Polier

Phone: (276) 523.8190

Email: nick.polier@dmme.virginia.gov

ENERGY PERFORMANCE CONTRACTING (EPC)

FOR STATE AGENCIES & PUBLIC BODIES

Division of Energy

nam.nguyen@dmme.virginia.gov 09.07.18