WHO IS A GOOD ESPC CANDIDATE?

1. WHO IS A GOOD ESPC CANDIDATE? Characteristics of ESPC Candidates Characteristics of Non-candidates

2. ESPC CUSTOMERS • Need infrastructure improvements • Realistic financial approach • Looking for energy efficiency help • Best value buyers • Looking for partnership with ESCO • Leadership involved in process • Understand the technical drivers

3. NEED IMPROVEMENTS • Older facility • Critical equipment at end of useful life • High annual utility consumption and cost • High maintenance and/or repair costs • Can’t maintain comfortable environment • Significant cost reduction opportunities • Stable building usage for foreseeable future • Urgency

4. REALISTIC FINANCIAL APPROACH • Understand utility bills, maintenance costs and facility usage patterns • Have target list of improvements • Realistic about internal funding • Savings must pay all project costs? • Other $$ available? • Willing to share knowledge with ESCOs

5. LOOKING FOR HELP • Energy efficiency not in your mission • Looking for technical assistance • Staff not threatened by ESCO • No threat of job elimination • Staff willing to surrender “Ownership” of energy equipment

6. BEST VALUE BUYERS • Energy performance contracting ≠ low bid • Fully value all costs and savings • Lifetime energy costs • Lifetime maintenance costs • Other utilities (water, sewer, etc.) • Environmental emissions

7. LOOKING FOR PARTNERSHIP • Typical ESPC is 10-15 years • ESCO has substantial interest in operations for length of contract • Cooperative relationship • Not a zero sum game • Both parties seek to minimize energy costs and maximize facility comfort and usefulness

8. LEADERSHIP INVOLVED • An energy performance contract is a business deal - not an engineering exercise • Technical details don’t solve business problems • Keep business and technical discussions in phase • Don’t expect the ESCO to spend $$ on studies if facility can’t make a commitment

9. OTHER SOURCES OF MOTIVATION • Deregulation • Expected savings? Realistic? • New technologies • Distributed generation • Third generation lighting/controls • Willingness to take technical risks • Is the facility a pioneer?

10. UNLIKELY CANDIDATES FOR ESPC • Cream skimmers • Don’t employ life cycle costing • Unrealistic savings expectations • No perceived urgency • Leery of long-term debt • Don’t need or want ESCO partnership

11. PRIORITIZING FACILITIES • Size of utility bills? • Square footage of buildings? • Type/Use of buildings? • One building or one campus • Rate buildings with Portfolio Manager (www.energystar.gov/benchmark)

12. ENERGY STAR: PORTFOLIO MANAGER • Works for most state facilities • Delivers ratings of 1-100 • Easy to use and free • Agencies can confirm ratings • Good motivator www.energystar.gov/benchmark

13. Is 10 MPG high or low for an automobile? Is 80 kBtu/SF/YR high or low for a building? Fuel Efficiency MPG Energy Efficiency 1 - 100 ENERGY STAR PORTFOLIO MANAGER

14. ENERGY STAR: PORTFOLIO MANAGER • Rate • Energy performance baseline • Compare • Within state and against similar facilities • Inform • Energy improvement plan • Track and Measure • Over time

15. Reward & Learn Tune Invest Best investment opportunities are in lower quartiles, where there is the greatest potential for improvement O&M improvements will yield savings and label candidates High scoring buildings provide lessons learned and label candidates PORTFOLIO MANAGER:SETS PRIORITIES 100 75 50 25

16. PORTFOLIO MANAGER:CHANGES APPROACH • Makes energy performance data public • Creates momentum for energy-efficiency projects • Moves motivation from operations to “bottom line”

17. PORTFOLIO MANAGER:DATA REQUIRED • Zip Code • Climate and weather normalization • Energy Consumption • 12 consecutive months • Space Type Data • Square footage, hours of operation, data centers, computers, and occupancy

18. CONCLUSION • Evaluate agencies and facilities • Use US EPA benchmarking tools • Be realistic with ESCOs • If an agency or facility is not ready today, it may be ready in a few years