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Energy Performance Contracts

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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  1. Energy Performance Contracts Chip Barnes

  2. 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

  3. 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

  4. 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)

  5. 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

  6. 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)

  7. 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

  8. 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

  9. 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)

  10. 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

  11. 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

  12. PG County Performance Contract • ESCO – Johnson Controls • Contract Covered: • County Courthouse • Police Service Complex • Corrections

  13. 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

  14. Project Savings • $12,201,640.00 over 14-yr period! • $871,546.00 per year! • $72,629 per month!

  15. 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”

  16. 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

  17. Questions?

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