US Experience with Energy Savings Performance Contracts

Transcription

1 US Experience with Energy Savings Performance Contracts John A. Shonder Oak Ridge National Laboratory Building Systems 2006 Conference Helsinki, Finland March 22, 2006

2 Background U.S. is the world s largest energy consumer, using about BTU (103 EJ) in 2003 Finland uses 100 times less, but in terms of energy use per dollar of GDP 1, our two countries are remarkably similar: U.S. Finland 10.0 MJ/$ 10.2 MJ/$ Both are better than the world average of 10.6 MJ/$, but we both have to improve 1 Source: U.S. DOE EIA International Energy Annual 2003 Primary energy use per 2000 U.S. Dollars using market exchange rates.

3 US Energy use: 39% in residential and commercial buildings Transportation 28% Residential buildings 21% Industry Commercial buildings 18% 33%

4 What we use energy for: end uses in U.S. commercial buildings Computers/ electronics 10% Ventilation 7% Other 16% Lighting 29% Water heating 8% Space cooling 14% Space heating 16%

5 Requirements to reduce energy consumption US Energy Policy Act requires federal buildings to reduce energy use intensity by 2% per year Many U.S. States have passed legislation requiring their agencies to reduce energy use as well Similarly, Finland and EU countries have their own energy reduction goals To meet these goals, we need more efficient equipment in industry, offices, and in our homes. How will we pay for it?

6 ESPCs allow energy conservation goals to be met with no net budget increases

7 What is a Performance Contract? A partnership between a facility owner and a qualified services provider Together, they develop a financial, technical and operational solution that meets specific performance criteria The financial and technical risks are laid out up front, and allocated between the two parties

8 Efficiency improvements in buildings are fueling a robust U.S. ESCO industry ~U.S. $330 million per year in project investment at the federal level (2003) $230 million ESPC $100 million UESC Another U.S. $1 billion per year in project investment in State level projects State, county, municipal government buildings Universities K 12 schools Hospitals

9 Projects involve a wide variety of conservation measures Lighting 17% Boilers 10% BAS / EMCS 11% GSHP 12% HVAC 7% Chiller 12% Renewables 2% Distributed Generation 8% Motors & Drives 4% Other 5% Steam/ Water Distribution 12% Based on ECM prices in the U.S. DOE Super ESPC program

10 ESPCs are being used to meet energy goals, but there are other incentives For public entities, ESPC is usually a much faster way to implement projects Funding requests from government budgets must be made some years in advance Not all funding requests are authorized, so process is uncertain ESPC projects can be funded with no upfront cost Capital funds retained for more pressing needs or used to leverage additional ESPC funding Contracts are firm, fixed price No change orders

11 Other incentives for use of ESPC ESCO provides a single point of contact: design, installation, commissioning, O&M Avoids finger pointing associated with traditional design/bid/build contracts Savings guarantees ensure equipment performs to specifications for life of project Future O&M costs can be fixed at known levels

12 Federal ESPC model Former O&M Subcontractor Electric Utility Energy Savings Facility Upgrades O&M Services O&M Savings Energy Customer Savings Payment for Guaranteed Savings Gas Utility Project Financing ESCO Debt Repayment Financier/ Investor

13 State level ESPC model Former O&M Subcontractor Electric Utility Energy Savings O&M Savings Energy Customer Savings Gas Utility Facility Upgrades, P.P. Services, Guarantee ESCO Upgrades, P.P. Services, Payments Debt Permanent Repayment Project Financing Pay For Security Central Source Investor Debt Repayment

14 U.S. Best Practices: Some characteristics of successful ESPC programs Policy/legal framework Umbrella contracts Project facilitators Savings guarantees backed by measurement and verification Contract centers Project champions

15 Policy/legal framework Regular utility billing Site ownership of utility bills and energy consuming equipment Legal infrastructure permitting ESPC Legal recourse to back savings and performance guarantees

16 Umbrella contract concept ESPCs are complicated technical and financial contracts, and require a great deal of time to negotiate Solution is to pre award broad ESPC contracts to a specific group of qualified ESCOs Satisfy procurement regulations Specify the types of services the ESCOs will provide Multi year, multi quantity Agency can then issue a delivery orders against the contract An example is DOE FEMP s Super ESPC

17 Advantages of umbrella contracts Avoids re inventing the wheel for each project Customer s contract (not the ESCO s) Efficiencies of standardization Additional competition (financing, construction subs) still possible

18 More than 90% of U.S. federal ESPC investment has been through the streamlined umbrella contracts

19 Use of Project Facilitators has proven to be the single most effective ESPC best practice PFs have seen it all guide agency customers to the best resources and practices level the playing field between agency customer and ESCO sit on the agency side of the table

20 Agencies are urged to use a PF Critical knowledge will follow PFs help agency customers achieve fair and reasonable pricing minimize financing costs keep the process on track and start saving ASAP employ cost effective measurement & verification strategies access advanced technologies

21 Measurement and verification plan is necessary to ensure guaranteed savings Savings is a theoretical concept No one can measure the absence of energy consumption or cost At the heart of an ESPC is an agreement on how to calculate savings Usually based on measurements, but other factors apply M&V plan specifies exactly how savings are to be determined

22 Some factors affecting savings Operating hours Plug loads Weather Equipment efficiency Energy prices M&V Plan must consider each of these risks, and allocate them according to each party s responsibility

23 Most successful ESPCs in the US use FEMP/IPMVP M&V Guidelines M&V Option Option A: Based on measured equipment performance, measured or stipulated operational factors, and annual verification of potential to perform. Option B: Based on periodic or continuous measurements taken throughout the term of the contract at the device or system level. Option C: Based on whole building or facility level utility meter or sub metered data adjusted for weather and/or other factors. Option D: Based on computer simulation of building or process; simulation is calibrated with measured data. How savings are calculated Engineering calculations. Engineering calculations using measured data. Analysis of metered data. Comparing different models.

24 Contract centers such as FEMP are another key to ESPC success Award/administer the umbrella contract Set standards for contract use Provide access to PFs and other experts Offer training for agency customers Track/analyze program performance Make periodic adjustments to improve the process

25 Projects need Champions ESPC requires active participation of numerous levels/departments of an organization Facility Manager Contracting Energy manager O&M staff etc. These departments traditionally do not work together Successful ESPC projects have a champion whose objective is success Champion keeps the ball rolling Removes stovepipes Overcomes resistance to change

26 Bottom line: ESPC is standard operating procedure in the U.S. Since 1998, U.S. federal agencies have awarded about $2 billion in ESPC projects These projects are saving 16 trillion BTU (17 PJ) annually Most U.S. States have also passed ESPC implementing legislation, and are actively promoting ESPC use

27 ESPCs have been instrumental in meeting US Federal energy conservation goals