Energy performance contracts
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Energy Performance Contracts. Chip Barnes. What is an EPC?. Popular way to obtain infrastructure energy efficiency & operational improvements with: No up-front investment by customer Guaranteed energy savings Permanently reduced energy costs. How is this possible?.

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Energy Performance Contracts

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Energy performance contracts

Energy Performance Contracts

Chip Barnes


What is an epc

What is an EPC?

  • Popular way to obtain infrastructure energy efficiency & operational improvements with:

    • No up-front investment by customer

    • Guaranteed energy savings

    • Permanently reduced energy costs


How is this possible

How is this possible?

  • Proposed energy savings are used to pay for the financing of the improvement costs with savings to spare

  • Once improvement costs are paid off (usually 8-12 year term) 100% of savings stays with customer


Areas of potential savings

Areas of Potential Savings

  • Energy Systems including:

    • Lighting – indoor and outdoor

    • Heating Systems – Large Boilers

    • Air-Conditioning – Chillers, Cooling Towers

    • Building Improvements – “Envelope”

    • Controls – sensors, thermostats, etc.

    • Less Maintenance Required (e.g. light bulbs)


Who s involved

Who’s Involved?

  • Customer: Municipalities, Universities, Schools, Hospitals, Military/Gov’t.

  • ESCO – Energy Saving Companies

    • “Big 5” Pepco Energy Services, Constellation Energy, Johnson Controls, Noresco, Energy Systems Group


Benefits drawbacks

Benefits & Drawbacks

  • Benefits:

    • Accountability

    • Risk-Reduction

    • No Capital Outlay – project is financed

    • Cash flow at pre-determined level

    • Risks borne by ESCO

    • Guaranteed Savings

    • Expertise of ESCO

    • Reduced Environmental Impact (footprint)


Benefits drawbacks1

Benefits & Drawbacks

  • Drawbacks:

    • Establishing a baseline can be difficult

    • Difficulty in adjustments once project begins

    • Operational Savings hard to define

    • Costly finance charges

    • Required maintenance agreements expensive

    • ESCO gimmicks

    • Control of Facilities

    • Substantial portion of savings paid to ESCO & finance


The process

The Process

  • Potential areas of savings identified either by customer, ESCO or both

  • Comprehensive Energy Audit Performed by ESCO engineers

  • Contingent cost assigned to engineering study

  • Proposal – results of study presented to client


The proposal

The Proposal

  • Detailed outline of energy and operational improvements (Scope of Work) & associated savings

  • Baseline calculations & project timeline

  • Measurement & Verification (M&V) Guidelines

  • Guarantees – performance bond

  • Maintenance agreement(s)


Challenges

Challenges

  • Long time-table: EPC’s usually take 18-36 months to complete – WHY??

  • Complex Projects

    • Multiple decision-makers: boards, facilities managers, “fiefdoms”

    • Lengthy engineering studies

    • Resistance to Change, Lack of Incentive

    • Difficult to get “buy-in” from all parties


More challenges

More Challenges

  • Capital Project vs Performance Contracts

  • Difficult to get “buy-in” from key players

    • No incentive for facilities manager(s)

    • Resistance to Change

    • Strong Leadership Required – champion needed to drive project


Pg county performance contract

PG County Performance Contract

  • ESCO – Johnson Controls

  • Contract Covered:

    • County Courthouse

    • Police Service Complex

    • Corrections


Improvements

Improvements

  • Project involved retrofit of 8,667 light fixtures

  • Installation of building occupancy sensors

  • Upgrade of building control systems

  • New roof-top A/C units Pump and Motor Replacement

  • New Variable Frequency Motors/Drives

  • Cooling Tower Replacement

  • LEED evaluation of Courthouse


Project savings

Project Savings

  • $12,201,640.00 over 14-yr period!

  • $871,546.00 per year!

  • $72,629 per month!


Other md counties

Other MD Counties

  • Baltimore City – LED upgrade of traffic signals saving $900,000 per year.

  • Howard County – building energy improvements saving $2.4M per year

  • MEA – rotates contracts between “BIG-5”


How you can get involved in your county

How YOU can Get Involvedin Your County

  • Call and/or email your:

    • County executive and councilman/woman

    • Write a letter to the editor

    • Call into talk radio and mention EPC’s


Questions

Questions?


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