navigating the prop 39 maze part 2 february 6, 2014 presented by: rick brown, president terraverde...
TRANSCRIPT
Navigating the Prop 39 MazePart 2
February 6, 2014
Presented by: Rick Brown, President
TerraVerde Renewable Partners, LLC
Tyler B. Dockins, Attorney at LawLozano Smith
Table of Contents
1. Proposition 39: Current Status
2. Energy Project Scoping Issues
3. Prop 39 Sole Source Prohibition
4. Q & A
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Proposition 39 UpdateFunding
Allocation of funding – the 2013-14 State Budget allocated $381 M in Prop 39 funds to K-12 School Districts. Funds are being distributed to Districts on a per-student basis plus a weighting for Free and Reduced Price Meals ADA, with small school minimum guarantees. Annual allocations through FY 2018-19 are yet to be determined; Prop 39 funds count towards the State’s Prop 98 requirement.
Rollover – Schools will be able to roll over their allocation year to year in order to pay for larger projects. The smallest LEAs will be able to bundle funding in years one and two.
Planning Allocations-Districts were eligible to apply for “planning dollars” as of November 1; second round in January 31st; third round later in the spring.
Energy Project Loans--Allocates $28 million to State Energy Conservation Account at CEC for low interest and no-interest loans for eligible projects and technical assistance.
Workforce Development--Provides $3 million for competitive grants to community based organizations for job training and workforce development.
Energy Audit--Allocates $5 million to Conservation Corps for workforce training and development.
“Entitlements”: http://www.cde.ca.gov/fg/fo/r14/prop39cceja13result.asp
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Proposition 39 Update
ProcessApplication Guidelines--Required California Energy Commission (CEC), in consultation with the California Dept. of Education (CDE) and the California Public Utilities Commission (CPUC), to develop guidelines for project expenditures and applications, including energy benefit estimates, energy savings cost assumptions, benchmarks, energy surveys and audits, and cost-effectiveness determination.
Draft Guidelines were released Sept 28th
Final Guidelines were released Nov. 19th CEC approved final guidelines Dec. 19th
Application Materials released Jan. 31st
Accountability – Schools will be subject to front-end project verification and back-end reporting.
Required Prop 39 DeliverablesExpenditure Plan and Application
Expenditure Plan General Form A: a financial summary of how the District intends to spend its Proposition 39 award funds
Expenditure Plan Project Summary Form B(s): the eligible energy project(s) proposed at each of the District’s schools or sites
Utility Data Release Authorization form(s)
Back-up documentation: additional information providing justification for the Expenditure Plan
Project Expenditures Report
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Prop 39 Funding and Project Development Process
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Project Scoping: TerraVerde Energy Report Card● Conduct on all sites and systems: energy benchmarking, usage, and cost analyses● Determine the highest potential energy and cost savings opportunities
Project Asset Management● Monitor and analyze performance data● Conduct necessary O&M and warranty
management● Complete Prop 39 Project Expenditures Report
ConstructionPlanning
Prop 39 Project Development
Targeted Investment Grade Audit● Present a detailed cost-benefit analysis for each of the
highest potential energy savings opportunities
Application & Project Verification● Develop Prop 39 Expenditure Plan and Application based
on a prioritization of projects that meet the District’s objectives and requirements and conform with the Prop 39 guidelines
Competitive Bid● Conduct a competitive bid process● Identify best options for project
installation, procurement, and financing; support contracting
Installation● Oversee on-site installation and
commissioning of the projects
Prop 39 Eligible Project Examples
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Lighting Energy Efficiency Measures:
• Replace incandescent light with compact fluorescent (CFL)
• Replace incandescent/down light/flood with light‐emitting diode (LED) light
• Replace incandescent Exit Sign to LED Exit sign
• Replace CFL Exit Sign to LED Exit sign
• Convert T12 fluorescent lamps to T8 with electronic ballast
• Convert T12 or T8 fluorescent lights to linear LED lamps
• Replace 32 Watt T8 lamps with 28 Watt T8 Lamps
• Replace exterior mercury vapor lights with induction or LED lights
• Replace exterior high pressure sodium lights with induction or LED lights
• Install occupancy control for intermittently occupied rooms
HVAC/Mechanical Efficiency Measures:
•Replace incandescent light with compact fluorescent (CFL)
•Replace old packaged/split HVAC unit with high‐efficiency HVAC
•Replace old heat pump with high‐efficiency heat pump
•Replace boiler or furnace with high efficiency condensing type
•Seal existing leaky duct
•Install premium efficiency motors
•Install variable speed drive for pumps and fans
•Install new programmable/set back thermostat
•Replace storage water heater with instantaneous water heater
Plug‐Load Efficiency Measures:
•Install smart strip/PC management to control computers/printers
•Install vending machine occupancy control.
Simple PV Self‐Generation Project:
•School‐owned Solar PV system
•Solar PPA
Application and Expenditure PlanThere were no big surprises; the application requirements did not vary in an meaningful way from what was described in the Guidelines adopted by the CEC in December.
However, the application requirements are sufficiently detailed that completion will take a good bit of focused effort.
Good news: there are more online calculators provided than were anticipated, narrowing the scope of what is needed from an energy audit to get your application approved.
More good news: one important new clarification included in the materials is that Bond proceeds or any local capital funds (e.g. developer fees) that don’t require some form of payback can be considered “grant” funding for the purposes of reducing the denominator in the Savings to Investment Ratio. This could help bring up the SIR of energy conservation measures that might otherwise not meet the required 1.05 threshold.
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Benchmarking
Measuring and comparing the “energy use intensity” of buildings per square foot
kBTU = Thousand British Thermal Units
Combination of …
kWH: thousand watt hours of electricity and
Therms: units of energy for natural gas, propane, fuel oil.
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Benchmarking Example
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Line indicates average Energy Use Intensity for the selection
Notes: 1. kBTU - thounsands of British Thermal Units is a combined measure for electricity and gas/propane usage.2. Peer Group - school Districts in the same geographic and climate zone.
ENERGY USE INTENSITY CHARTS
0 10 20 30 40 50 60 70 80 90 100 110 120 130 140 150
You vs. Your Peer Group kBTU/sf - yr
Your Peer Group
You
-
20
40
60
80
100
120
Energy Use Intensity per SitekBTU/sf - yr
Strategic Audit Scoping
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Online Calculators
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Lighting Energy Efficiency Measures: ECM 1 Replace incandescent light with compact fluorescent ECM 2 Replace incandescent light with light‐emitting diode (LED) light ECM 3 & 4 Convert incandescent/CFL exit sign to LED exit sign ECM 5 & 6 Convert T12 fluorescent to T8 with electronic ballast or LED lamps ECM 7 Replace 32 watt T8 lamps with 28 watt T8 lamps ECM 8 & 9 Replace exterior mercury vapor/HPS with LED/induction lights ECM 10 Install occupancy control for intermittently occupied rooms HVAC/Mechanical Efficiency Measures: ECM 11 Replace old packaged/split HVAC unit (up to 65 kBTU) with high‐efficiency HVAC ECM 12 Replace old heat pump (up to 65 kBTU) with high‐efficiency heat pump ECM 13A Replace boiler with high‐efficiency condensing boiler ECM 13B Replace furnace with high‐efficiency condensing furnaceECM 14 Seal existing leaky duct ECM 15 Install variable speed drive for pumps and fans ECM 16 Replace manual thermostat with programmable thermostat ECM 17 Replace old motor with premium efficiency motor ECM 18 Replace storage water heater with gas‐fired tankless water heater
Plug‐Load Efficiency Measures: ECM 19 Install smart strip/PC management to control computers/printers ECM 20 Install vending machine occupancy control Simple Photovoltaic (PV) Self‐Generation Project ECM 21 Install PV System
Prop 39 S.I.R. Formula
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SIR (Savings to Investment Ratio) is defined as follows:
Energy Cost Savings + Maintenance Savings
(Project Cost) – (Rebates) – (Other Grants) – (Non Energy Benefits)SIR =
• Non Energy Benefits are to be calculated as 5% of project cost.
• Rebates and other grants will vary by utility company and technology.
• This calculation will need to be done for each individual Energy Conservation or Clean Energy Measure and again for the combined Project or Portfolio.
• An SIR of 1.05 is the threshold a project or portfolio must meet to receive approve in your “Expenditure Plan”
S.I.R. Portfolio Estimate Example
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Assumptions:Discount Rate 5.10%Maintenance Savings (% of Project Installation Cost) 2.00%Non-Energy Benefits (% of Project Installation Cost) 3.00%Energy Cost Escalation Rate 2.10%Inflation Rate 2.00%
Energy Conservation MeasureEnergy Savings
Maint. Savings Numerator Project Cost
Less Grants & Rebates
Less Non Energy
Benefits Denominator S.I.RUpgrade existing Energy Management System $238,484 $31,098 $269,582 $103,661 ($20,251) ($3,110) $80,301 3.36Upgrade T8 light fixtures/lamps from 32W to 28W $362,733 $21,087 $383,820 $210,870 ($12,570) ($6,326) $191,974 2.00Install Occupancy Sensors $78,797 $11,643 $90,440 $72,770 ($4,087) ($2,183) $66,499 1.36Replace HVAC units $970,146 $792,540 $1,762,686 $2,641,800 $0 ($79,254) $2,562,546 0.69 Totals / Weighted Average SIR $1,650,160 $856,369 $2,506,528 $3,029,101 ($36,908) ($90,873) $2,901,320 0.86
Economic/Effective Useful Life YearsEnergy Management System 15Interior Fixture 15Interior Lamps 4Occupancy Sensors 8HVAC Units (packaged/split) 15
The Energy Project Challenge
How does a School District…
Achieve actual cost savings results that match expectations?
Conduct a transparent procurement process that gets the benefits of competitive bidding without a lot of administrative hassle?
Achieve net positive cash flow savings without upfront expense; minimize balance sheet impact?
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Q & A
If you have any questions, please ask using the Questions pane as shown below.
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Contact Information
Rick Brown, PresidentTerraVerde Renewable Partners, LLC1100 Larkspur Landing Circle, Suite155
Larkspur, CA 94939T: 707.953.2885
Tyler B. Dockins, Attorney at LawLozano Smith
4 Lower Ragsdale Drive, Ste. 200 Monterey, CA 93940
T: 831.646.1501 | F: [email protected]
www.lozanosmith.com
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