texas energy services coalition
TRANSCRIPT
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Overview of the Texas ESC Chapter
Theresa Sifuentes – Public Sector Co-chairProgram Manager-LoanSTAR, SECO
Kevin Vaughn – Private Sector Co-chairMarket Manager- Government Energy Solutions, TAC
Americas
Texas Energy Services Coalition
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Introduction toPerformance Contracting
Presenters: Carl Hurst, P.E. - State Government Solutions
Director, Western U.S., Johnson Controls, Inc. Scott Naab, Trane Comprehensive Solutions
Texas Energy Services Coalition
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A. Texas PC Projects
B. Energy Conservation Legislation
C. Performance Contracting 101
Topics of Discussion
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High interest from the legislature Plenty of available funding Good for the state’s budget Bond Review Board approves these
projects You aren’t the first Long history of successful projects
Before we begin…
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Prior Projects - State
J ob Name Project Price Annual Savings Market Financing Method
TEXAS STATE AGENCIESHHSC Phase I $13,894,980 $1,293,815 State TPFA/LoanSTAR
HHSC Phase II $11,545,023 $1,075,001 State TPFA/LoanSTARHHSC Phase III $13,129,700 $1,401,477 State TPFA/LoanSTARHHSC Phase IV $11,445,213 $1,208,606 State TPFA/LoanSTARHHSC Phase VI $5,153,072 $479,822 State TPFA
Texas Parks and Wildlife $2,493,951 $109,077 State TPFATxDOT- Houston Traffic Signal $3,950,000 $618,000 State Internal Funding
$61,611,939 $6,185,798
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Prior Projects – Higher Ed
J ob Name Project Price Annual Savings Market Financing Method
TEXAS HIGHER EDUCATIONLamar University $13,747,451 $1,319,637 Univ TPFA
Midwestern State Univ. $1,093,421 $157,047 Univ Municipal LeaseTexas A&M Commerce $2,963,930 $293,293 Univ Internal Funding
Texas State Tech College $990,755 $72,252 College TPFATexas Womans University $19,356,139 $2,158,166 Univ TPFA
Univ. of N Texas $9,045,454 $1,235,000 Univ TPFAUNT Health Science Center $3,200,000 $286,654 Univ TPFA
Weatherford College $2,400,000 $340,000 College Municipal LeaseVernon College $1,700,000 $180,000 College Municipal Lease
Temple J r. College $2,400,000 $227,000 College Municipal Lease$56,897,150 $6,269,049
G u a ra n te e b y Y e a rs to
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Prior Projects- Local Gov’t
J ob Name Project Price Annual Savings Market Financing Method
City of Carrollton $1,686,411 $185,052 City Municipal LeaseCity of Dallas $25,000,000 $3,400,000 City LoanSTAR/LeaseCity of Elgin $960,495 $99,183 City Municipal Lease
City of Fort Worth $5,500,000 $750,000 City LoanSTAR/LeaseCity of Harlingen $1,279,890 $121,015 City Municipal Lease
City of Tyler $18,600,000 $2,200,000 City BondsDenton County $557,746 $69,970 County Municipal Lease
Fort Bend County $1,479,373 $176,602 County Municipal LeaseMcClennan County $6,200,000 $600,000 County Municipal Lease
Walker County $382,867 $26,313 County Municipal LeaseCity of Galveston $10,000,000 $1,300,000 City LoanSTAR
Valley International Airport $874,825 $80,549 Muni Municipal Lease$72,521,607 $9,008,684
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Current State Agency PC Projects
Texas Department of Criminal Justice
Texas Youth Commission
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Existing Statute
State Agencies 2166.406 Texas Government Code
City/County 302 Local Government Code
State Higher Ed. 51.927 Texas Education Code
School Districts 44.901 Texas Education Code
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Senate Bill 1811 – 1997 Allows Higher Education to utilize TPFA
House Bill 3530 - 1997 Allows State Agencies to utilize performance
contracting House Bill 2492 - 1999
Extends term to 15 years House Bill 3286 – 2001
Allows water conservation
History of Enabling Legislation
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House Bill 2277 - 2001 Clarifies RFQ procurement options Clarifies bonding issues Allows TPFA financing for State Agencies Third Party Engineer review
House Bill 2278 – 2001 Establishes SECO in Comptrollers Office Requires State Agencies to implement energy
conservation measures meeting the requirements of Section 2166.406 Texas Government Code
History of Enabling Legislation
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2166.406 Texas Gov Code– (f)- term of ESPC contract limited to 15 years– (g)- ESPC projects may be financed with TPFA’s
Master Lease Purchase Program– (h)- contractor must guarantee savings– (I)- agency shall procure ESPC using professional
services by 2254.004 (RFQ) and independent 3rd party engineer shall review cost savings
– (j)- legislature shall base agency’s appropriation for energy and water on the sum of:
the agency’s estimated annual energy and water costs; plus
the annual energy and water cost savings resulting from the ESPC (thus finding the annual project payment)
2166.406 Texas Gov. Code
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2113.301 Texas Gov Code (appropriations)– (b)- Before a state agency may use appropriated money to
make a capital expenditure for a state facility purpose, the state agency must determine whether the expenditure could be financed with money generated by a utility cost savings contract
– (c) If it is practicable to do so, a state agency that is using
appropriated money must finance a capital expenditure for a state facility purpose with money generated by a utility cost savings contract.
– (d) If it is not practicable for a state agency that is using appropriated money to finance a capital expenditure for a state facility purpose with money generated by a utility cost savings contract, the state agency must provide justification to the comptroller for the capital expenditure.
2113.301 Texas Gov. Code
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RP 49 Executive Order SB 5 Efficiency Mandates for buildings Utility Standard Offer Programs Other Utility Incentives State Council on Competitive Gov’t (CCG)
Other Initiatives
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Scott Naab
Trane Comprehensive Solutions
Performance Contracting Overview
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Limited budgets Maintenance problems
or comfort complaints Limited expertise on technologies Too many demands on staff time
to launch new projects
Yet…you want to replace equipment
and modernize your facilities
What problems do you face at your facility?
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An Innovative Solution:
Energy
Performance
Contracting
…a smart way to get better buildings
If you face these problems…you are not alone
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Energy Performance Contracting
Projects pay for themselves!
Savings stack up over time…
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Money otherwise owed to the gas or electric utility pays for equipment!
Here’s How It Works...…
Annual Budget
Annual Budget
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Financed through TPFA master lease program
Annual cost savings exceed annual payments
15-year financing term (per legislation) Does not impact debt ceiling Endorsed by State Legislature &
Governor Results guaranteed by the ESCO
Annual Budget
AFTER Improvements
How is the project funded?
Multi-Year Lease-Purchase Agreement
The money saved from the operating budget is used to make the payments!
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Tax-Free Municipal Lease Purchase SECO LoanSTAR funds Proceeds of bonds Contract with the provider of the Energy
Conservation Measures Utility Rebates Grants
Other Financing Options
Annual BudgetAFTER Improvements
The money saved from the operating budget is used to make the payments!
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Design build process gives agency control of outcome
Single point of responsibility eliminates finger pointing
Guaranteed Results– The equipment will perform as
intended– The project will perform financially as
intended– The ESCO is obligated contractually
by a guarantee
Annual Budget
AFTER Improvements
What about risk?
Performance Contracting projects are significantly lower risk than traditional projects
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Performance Contracting is a Performance Contracting is a Better MethodBetter Method
The “ESCO” is fully accountable for project The “ESCO” is fully accountable for project performance, costs and savings!performance, costs and savings!
Bid/Spec Performance Contracting
Financial Capital/Bond Current Budget
Relationship Only during installation &warranty
Continuous throughout the life of the contract (15 years)
Upfront Fees Yes No
Performance Guarantee
No Operational and financial performance is Guaranteed
Change orders Yes No
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Established Protocols for Measurement and Verification (M&V)
IPMVP - International Protocol for Measurement and Verification Procedures
M&V Plan is required to be reviewed by third party engineer
It is possible to measure actual performance !
Measurement and Verification Measurement and Verification of Project Performanceof Project Performance
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Some Example Measures
Lighting ImprovementsProjects:
Replace fluorescent tubes & ballast Replace fixtures
Benefits: Easily pays for itself within its lifetime Cuts energy cost of lighting system by 25% or more Improved lighting quality Better indoor environment Cooler rooms on hot days (less heat from lighting system) Leveraging opportunity – buy other equipment with savings from
lighting
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Some Example Measures (cont.)
Heating System Improvements
Projects: Replace old boilers Upgrade with better controls
Benefits: Improved comfort Better internal environment Solve maintenance problems Eliminate the need to buy boiler
replacement from capital funds
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Some Example Measures (cont.)
Water Utilization Improvements
Projects: Replace faucets and fixtures Improve irrigation systems and controls
Benefits: Pays for itself through water savings Improved application Solve maintenance problems Modernize & optimize systems
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Biomass Renewables
– Solar– Geo Exchange– Wind
LEED certification Utility rebates Grant money
Other applications/opportunities
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A Key Differentiator of the process…..
Your Partnership with an Energy Service Company (ESCO)
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Identify and evaluate opportunities (energy audit)
Design systems (engineering), specify & purchase
Manage construction
Arrange for financing
Provide long-term energy management services
Guarantee performance!
Your ESCO will put the pieces together
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5 Steps to Success
Decide if performance contracting is right for you(Assess your needs & potential benefits)
Issue an RFQ(Select Energy Services Company (ESCO)
ESCO identifies energy-saving opportunities (Execute an audit contract)
Savings verified by an Engineer (Approved by State Energy Conservation Office)
ESCO implements projects(Develop and execute an Energy Performance Contract)
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Better Buildings! Improved Comfort! Maintenance Problems Solved!
Pay for projects with no up-front funds (your utility budget pays for the projects)
One-stop shopping (single contract for multiple projects)
Many Advantages of Performance Contracting
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ESCO Expertise from onset to completion – Energy efficiency– Operation and maintenance of buildings– Project cost assessment– Project financing– Construction management
Comprehensive, whole-building approach
Training for your staff
Ongoing project monitoring and trouble-shooting to ensure sustained savings
Many Advantages of Performance Contracting (cont.)
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Contact SECO
http://www.seco.cpa.state.tx.us/sa_pc.htm
Theresa Sifuentes,
State Energy Conservation Office
Program Manager
(512) 463-1896
How to get Started
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Questions