Pioneering Resiliency: Building Performance and New Energy Opportunities

Transcription

1 Pioneering Resiliency: Building Performance and New Energy Opportunities

2 Today s Best Opportunities for Energy Projects

3 Disclaimer This publication and any accompanying exhibits are intended to provide general recommendations regarding handling loss and risk prevention. The publication is not intended to be a complete analysis for every situation which may occur, nor is it intended to include all steps or processes necessary to adequately protect you or your business. You should always consult an attorney and/or insurance advisor for advice regarding specific situations unique to you and your business. Energi is not responsible for any misinterpretation of the information contained herein or any legal proceedings which may occur from its use. This material is copyrighted and all rights are reserved. Energi Insurance Services, 2014.

4 Panelists Christopher Lohmann Vice President of Alternative Energy Solutions Energi Arvin Vohra Enlighted / PPA-Solutions Matthew Brown Principal Harcourt Brown & Carey Bob Hinkle President & CEO Metrus Energy Caitlin Gross Manager, Business Development NECA Corey Clive CEO Venergy Group

5 Arvin Vohra

6 Matthew Brown Principal Harcourt Brown & Carey

7 Bob Hinkle President & CEO Metrus Energy

8 Introduction to Metrus Energy OUR COMPANY: Metrus develops, owns and operates large-scale energy efficiency (EE) projects for C&I clients nationwide OUR SOLUTION: Metrus Efficiency Services Agreement (ESA) turns EE into a resource for customers. Metrus deploys project equity, coupled with third-party debt, to finance 100% of the upfront cost of retrofit projects. Customers pay only for realized energy savings PARTNERS: Metrus partners with leading energy service companies ( ESCOs ) and contractors to design, construct, maintain and guarantee ongoing project performance ACCOLADES: White House and U.S. DOE Better Buildings Challenge partner; Climate Change Business Journal 2013 award for energy efficiency (EE) business innovation; Track record of closed ESA deals with major customers, ESCOs and lenders

9 The ESA: Typical Project Profile Typical Project Scope Building automation & controls Lighting retrofits & controls Compressed air (leak detection & repair) Utility tariff rate optimization Heating, ventilation, & air conditioning Central plant systems Boiler replacement & system improvements Pumps, fans, motors, drives Cogeneration (onsite generation) Typical Project Profile Clients are typically private sector commercial, industrial, healthcare and higher education Multiple energy efficiency measures are blended into single project scope of work Total project size is typically $3-10 million Average simple payback on a project is usually between 3 and 7 years Project term is typically 10 years

10 Metrus ESA Defines the Relationships Two key contracts govern each project: 1) Efficiency Services Agreement ( ESA ) with the Customer 2) Efficiency Services Performance Contract ( ESPC ) with the ESCO Project Installation ESCO designs and installs the project, provides long-term maintenance, and guarantees performance CUSTOMER ESA Metrus funds 100% of project cost Repayment based on savings Metrus takes title to EE equipment Metrus pays for selected maintenance costs Typical duration of 5 to 10 years, with periodic buy-outs ESCO METRUS ENERGY ESPC Turnkey project installation and maintenance contract, backed by the ESCO s performance guarantee (utilizing an Energi energy savings policy)

11 Delivering an Integrated Solution Metrus ESA structure removes first-cost barriers and charges only for realized energy and operational savings END TO END SOLUTION DEVELOP PROJECT FUND & IMPLEMENT ONGOING SERVICES Partner w/leading ESCOs Identify savings opportunities Develop services program Fund 100% of total EE project cost Minimize business disruptions Monitor performance Maintain equipment Identify new EE opportunities Roll-out across facilities

12 Facility Merrimack, NH Greenlawn, NY Nashua, NH BAE Headquarters 467,000 ft 2 mixed-use office, 492,000 ft 2 mixed-use office, 686,000 ft 2 mixed-use office, 509,000 ft 2 mixed-use office, mfg, environmental testing mfg, environmental testing mfg, environmental testing mfg, environmental testing Project Scope Lighting retrofits Building automation Air compressor replacement Transformer replacement Demand control ventilation Operational best practices Lighting retrofits Building automation Boiler & chiller replacement Demand control ventilation Variable frequency drives for AHU & water pumps Lighting retrofits Boiler plant improvements VAV & control upgrades Energy policy Building envelope Lighting retrofits Boiler replacements Variable frequency drives & motors Energy policy Building envelope Project Cost ~ $1.0 million ~ $2.2 million ~ $2.3 million ~ $2.2 million Annual Savings Results: Major Industrial Retrofits Metrus success with BAE guides other multi-site opportunities in its pipeline Key BAE project stakeholders include Siemens and Bank of America > $200,000 in utility savings > 1.1 million kwh > 31,000 therms of NG Various non-energy operational savings ~ 400 tons of CO 2 > $300,000 > 300,000 kwh > 125,000 therms of NG Various non-energy operational savings ~ 800 tons of CO 2 > $310,000 > 700,000 kwh > 125,000 gals fuel oil Various non-energy operational savings ~ 950 tons of CO 2 > $310,000 > 875,000 kwh > 135,000 gals fuel oil Various non-energy operational savings ~ 1,150 tons of CO 2 Term Annual O&M and M&V Performanc e to Date Simple payback: > 5 years ESA term: 10 years Simple payback: > 7 years ESA term: 11 years Simple payback: > 6 years ESA term: 10 years > $60,000 > $35,000 > $37,000 > $50,000 Operating 3+ years 1% to 3% over-performance in all years Operating 2+ years 1% to 2% over-performance in all years Operating 1+ year 1% to 2% over-performance in Year 1 Simple Payback: > 6 years ESA term: 10 years Operating 1+ year 5% over-performance in Year 1

13 Results: Large Healthcare System Project with Kuakini Health System positions Metrus with hospital operators Key stakeholders include Energy Industries, New Resource Bank and Energi Project Characteristics Total Project Cost: $5.8 million Project Scope: Key measures include new chiller plant, lighting upgrade, energy management system, new steam boilers and air-handling unit VFDs Savings: $1.1 million annual savings: Electricity: 3.4 million kwh Natural Gas: 10,800 therms Non-energy: $32k of avoided costs Project Timing: Construction underway; project start-up at end of Q ESA Terms ESA Term: 10 years ESA Services Charge: Rate for kwh and therm savings is set at a level 22% below utility rates. Metrus and customer share savings greater than projected performance Ongoing Services: ESA includes $80k/year in ongoing maintenance and measurement & verification (M&V) costs Insurance Policy: Energy savings guarantee insurance from Energi (Hannover RE)

14 Results: Fortune 50 Company First Fortune 50 and first in a low-power-price geography (midwest) Partnered with Siemens and Bank of America Project Characteristics Total Project Cost: $3.1 million Project Scope: Lighting upgrades, chiller replacements, demand control ventilation and other HVAC upgrades Savings: $483k annually includes: Electricity: 3.8 million kwh Natural Gas: 31,300 therms Non-energy: $158k of avoided costs Plus avoided CO 2 : 3,615 tons/year Project Timing: Construction underway now; project start-up at end of Q ESA Terms ESA Term: 10 years ESA Services Charge: ESA Rate for kwh and term savings is set approximately 5% below current utility rates Ongoing Services: ESA includes $25k/year in ongoing maintenance and measurement & verification (M&V) costs

15 Maximize the Size of the Prize for Partners Eliminate a critical barrier to sales Broaden ESCO/contractor market to include private sector customers: Commercial & Industrial Hospitals & Higher Education Increase deal size: Multi-measure, multi-facility projects Expand scope and total project size Implement longer payback period projects Roll-up multiple customer sites into a scalable programmatic solution Lock in recurring services revenue for ESCOs/contractors

16 Deliver Enhanced Value to Customers Benefit Avoid Capital Outlay Use Savings to Pay for the Project Reduce Operating Expenses Enhance Reliability of Operations ESA Payments are an Operating Expense Reduce Exposure to Utility Uncertainty Expand Feasible Project Scope Description Metrus pays for all design and implementation costs, enabling customers to conserve capital for core business investments ESA service payments are based solely on the realized energy and operational savings created by the project ESA service payments are set below the current utility price, which immediately improves the bottom line Under the terms of the ESA, Metrus pays for periodic maintenance services to ensure long-term reliability and performance of the project equipment The ESA is designed to be an off-balance sheet financing solution with regular payments similar to a standard utility bill During the term of the ESA, service payments escalate at a fixed annual rate below historical utility price increases By circumventing the traditional capital budgeting process, Metrus unlocks longer (3+ year simple payback) projects with higher upfront costs and deeper operational benefits

17 Caitlin Gross Manager, Business Development National Electrical Contractors Association

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23 Corey Clive CEO Venergy Group, LLC CVE SDVOB

24 Introduction Established in 2009 Working with the Military and Federal Government Hiring Military and OEF/OIF Combat Veterans for key positions CVE SDVOSB

25 Venergy Group, LLC An Agile Team of Veterans Serving Veterans With Strong Past Performance and Turn-Key Solutions to Meet and Exceed Your Energy Goals.

26 Capabilities Advanced Metering Energy Management Control Systems Lighting Design & Installation Solar(PV) Design/Build Building Envelope Power Quality HVAC Service & Installation Preliminary Assessments Investment Grade Audits Project Management General Contracting

27 Certifications and Contracting Florida State certified General Contractor Florida State Certified Air Conditioning Contractor NABCEP Certified PV Technical Sales OSHA 30 Qualified GSA 03FAC Texas CMBL CVE-SDVOSB Texas Multiple Award Schedule (In Process)

28 Technology Maximum Power Transfer Solution Voltage Control Guard Demand Limiting Controller All patented technology (MPTS based on patented dynamic impedance matching, synchronous processing through proprietary advanced power switching, dynamic, accurate and precise correction )

29 SBA Certified SDVOSB Past Performance U.S. Virgin Islands Army National Guard Project Type: ESPC Micro-Grid Total Project Size: 15 Buildings 220,000 sq. ft. Project Cost: $18,500,000 (anticipated) Date of services: Current ROI: 15 to 18 Years Preliminary Assessment Investment Grade Audit Solar(PV) Design & Installation Lighting Design & Installation HVAC Design & Installation Micro-Turbine Design and Installation Construction Management Site Supervision Project Management Contract Management Logistical Management Permitting

30 SBA Certified SDVOSB Past Performance U.S. Air Force 51 st CES Osan Air Base, Korea Project Type: Redesign and Repari of EMCS Total Project Size: 135 Buildings Project Cost: $571,000 Date of services: 2013 Redesign and Expansion of Wi-Fi Infrastructure Installation of Water and Electric meter infrastructure Integration of meters and EMCS into SCADA software Network Communication Optimization Project Management Construction management System Training As-built creation and presentation

31 SBA Certified SDVOSB Past Performance U.S. Coast Guard, Petaluma, CA Project Type: Installation of Metering System Total Project Size: 450 Advanced Meters/ EMCS Project Cost: $1,324,845 Date of services: Advanced Smart Meters Energy Management Control System 20 Commercial Buildings 127 Residential Units Web Hosting Services Real-time access of data AquiSuite data acquisition servers and ModHopper wireless transceivers Construction Management Project Management

32 Questions

33 Password: Lewisville

34 Energi, Inc.

35 New Technologies Defining Tomorrow s Opportunities

36 Disclaimer This publication and any accompanying exhibits are intended to provide general recommendations regarding handling loss and risk prevention. The publication is not intended to be a complete analysis for every situation which may occur, nor is it intended to include all steps or processes necessary to adequately protect you or your business. You should always consult an attorney and/or insurance advisor for advice regarding specific situations unique to you and your business. Energi is not responsible for any misinterpretation of the information contained herein or any legal proceedings which may occur from its use. This material is copyrighted and all rights are reserved. Energi Insurance Services, 2014.

37 Panelists Christopher Lohmann Vice President of Alternative Energy Solutions Energi Tom Stepien CEO Primus Power Michael Day CEO Rockwood-Consulting George Hernandez Staff Scientist Pacific Northwest Laboratory Brent Hollenbeck Founder & CEO TimberRock Energy Rob Harmon President & CEO EnergyRM

38 Tom Stepien CEO Primus Power

39 Michael Day CEO Rockwood-Consulting

40 George Hernandez Staff Scientist Pacific Northwest National Laboratory

41 Brent Hollenbeck Founder & CEO TimberRock Group

42 Rob Harmon President & CEO EnergyRM

43 Measurement & Verification Challenge Accurately assess energy and demand reduction for a project Reduce uncertainties to transactable levels Account for routine variables such as weather and occupancy Allow future non-routine adjustments, such as plug load and square footage changes Allocate risks to appropriate parties Be fully auditable

44 IPMVP Protocol Options Option A Spot measurement of isolated equipment with estimated use Option B Direct measurement of isolated equipment energy use Option C Whole-building (utility meter-level) measurement for projects with multiple, interactive elements under stable conditions Option D Engineering simulation where metered data is unavailable, or changing conditions

45 DeltaMeter

46 DeltaMeter

47 DeltaMeter

48 DeltaMeter

49 DeltaMeter

50 DeltaMeter

51 DeltaMeter

52 Essential Advantages Methodology tested on 7,000 buildings Can augment other M&V and DG DeltaMeter M&V approach is patented Hence, the methods are public and transparent There is no black box All parties including the regulators see the same math Savings are metered not deemed Payments can be made on as delivered basis Substantially reduces risk for all parties, improving deal flow

53 Questions

54 Password: Tyler

55 Energi, Inc.

56 Risk Identification, Mitigation, & Financing

57 Disclaimer This publication and any accompanying exhibits are intended to provide general recommendations regarding handling loss and risk prevention. The publication is not intended to be a complete analysis for every situation which may occur, nor is it intended to include all steps or processes necessary to adequately protect you or your business. You should always consult an attorney and/or insurance advisor for advice regarding specific situations unique to you and your business. Energi is not responsible for any misinterpretation of the information contained herein or any legal proceedings which may occur from its use. This material is copyrighted and all rights are reserved. Energi Insurance Services, 2014.

58 Panelists Christopher Lohmann Vice President of Alternative Energy Solutions Energi Mark White Managing Director Bostonia Steven Berkenfeld Managing Director, Investment Banking Division Barclays Mark Duncan VP & GM of Indirect Finance Hitachi Capital America Dennis Quinn Co-Founder & COO Joule Assets Harold Lea President RePower Capital David Clamage CEO Saulsbury Hill Financial

59 Steven Berkenfeld Managing Director, Investment Banking Division Barclays

60 Mark White Managing Director Bostonia

61 Bostonia Overview Bostonia Group LLC ( Bostonia ) provides investment banking, financial advisory, and broker-dealer services to corporate, institutional, and government clients. Bostonia, the holding company, consists of the following entities: Bostonia Partners LLC: provides investment banking and financial advisory services in real estate, corporate, energy, and project finance. Bostonia Global Securities LLC: provides execution services in the sales and trading of structured transactions in the private placement market. Bostonia Overview Bostonia Finance Company LLC: provides asset management services in connection with energy efficiency, distributed generation, and renewable energy programs. Bostonia has structured and executed over $10 billion of real estate, corporate, and energy financings. Bostonia, through its FINRA member broker-dealer BGS, meets the current regulatory requirements for the distribution of tax advantaged products.

62 Bostonia Products & Services INVESTMENT BANKING AND ADVISORY Bostonia works closely with clients to devise the most appropriate execution strategy for their capital needs. Bostonia is an industry leader in the following areas: Real Estate Finance: Advisory and capital arrangement for developers and owners of commercial, retail, mixed-use, and government-tenanted properties. Bostonia specializes in structuring and raising capital for primary market Credit Tenant Lease ( CTL ), Public-Private Partnership ( PPP ), and Enhanced Use Lease ( EUL ) transactions. Government, Institutional, and Corporate Contract Finance: Through longstanding relationships with the major Energy Services Companies ( ESCO s), Bostonia finances for the purchase and installation of new infrastructure and energy equipment that is contracted by corporations, institutions state and local governments, federal agencies, and all branches of the military. Such. transactions are structured as Public- Private Partnerships. Energy Finance: Advisory, asset ownership, and capital raising services for a wide variety of transactions in the energy sector, including renewable energy installations, central utility plants, combined heat and power plants, micro-grids, smart grids,and other energy efficiency and distributed generation measures. Bostonia may act as principal in certain circumstances to develop, own, and operate both traditional and renewable energy projects. Project Finance: Bostonia may act in one or several roles, including: advisor, owner, partner, or capital arranger for a variety of projects in primary markets such as transportation, infrastructure, and power. Public Finance: Advisory and investment banking services to state and local governments.

63 Counterparties and Contract Structure Loan, lease or Off Balance Sheet shared savings structure Who controls the operation and use of the ECMs? O&M, repair and replacement obligations End of term residual and renewal risk, termination provisions. Repurchase obligations or put Utility pricing and effect, other fuels risk Measurement and verification. Stipulated or measured savings Developer, ESCO, customer, guarantor, investment grade counterparties?

64 Construction Risks Term of the construction What are the technologies? Advance rate percentage Equity component ESCO/Developer credit worthiness Performance and payment bonds. Other insurance type enhancements Parental guarantor during construction Letter of Credit Performance Period Risks Financing Risk Lifecycle Measurement and verification ( M&V ) plan Who is performing the M&V and how often is a report issued?. Are ECMs a singular system(cup) or many of the same? Access to utility data. How are increases and decreases addressed in the agreement? Does the agreement allow for baseline adjustments? How is that validated? How is savings performance addressed in agreement. Liquidated damages, Take or pay clause. How are savings guaranteed? Investment or Non-investment grade ESCO, insurance, funded reserves? Who controls the use and day to day operation of the ECMs? Who stand behind repairs and replacement during the financing term? 64

65 Construction Risk Mitigation Strategies Construction funds advance rate Equity component of construction funding sources Construction Term Construction to permanent financing Force Majeure incidents. How addressed in the Contract? Performance and payment bonds Repurchase obligations or put Parental or other investment grade guarantor Liquidated damages

66 Performance Risk Mitigation Strategies Contract and Finance Structuring Developer equity long term participation Debt coverage ratio Funded reserves, debt, savings and O&M Subordinated operating expenses Termination obligations Security interest Take or pay clauses Bifurcated payment structure (capacity/energy) Developer and Other 3 rd Party Enhancements Performance and payment bonds Developer or ESCO-investment or non-investment grade Parental guarantor Energy Savings Insurance (Energi-ESW insurance or other insurance products) Letter of Credit Bond Insurance

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68 Mark Duncan VP & GM of Indirect Finance Hitachi Capital America

69 About Us Founded in 1989, Hitachi Capital America ( HCA ) is a leading investor in high credit-quality transactions In addition to general industries, HCA has developed a specialization in financing the technology and energy sectors We finance a wide array of assets, including traditional hard collateral, IT systems/software, service contracts, and clean technology installations HCA has built a reputation for being a consistent and reliable funding source to its deal partners, which include consultants, vendors, developers, captives, banks, and independent financing companies

70 Innovative SME Energy Efficiency Financing for Controls-Based Solutions Dennis Quinn Co-Founder & COO Joule Assets Inc.

71 Common Energy Efficiency Barriers 35% Capital Availability - I don t have the money 21% Payback/ROI - I need a 3 year payback or less 13% Uncertainty of Savings - It s too risky Source: Johnson Controls BPI ( ) 3 year average

72 Building Efficiency Opportunity Market Composition Total U.S. Commercial Floor Space 87.4 billion sq. ft. 200,001 to 500,000 sq. ft. Over 500,000 sq ft. 1,001 to 5,000 sq. ft. 5,001 to 10,000 sq. ft. 100,001 to 200,000 sq. ft. 10,001 to 25,000 sq. ft. 50,001 to 100,000 sq. ft. Source: CBECS 2012 Preliminary Results 25,001 to 50,000 sq. ft. SME market not addressed by major ESCOs

73 Small and Medium Enterprises Energy Inefficient Majority of SMEs lack building management systems Consequences Temperature set points not maintained Equipment left on over night Energy and money wasted

74 Addressing the SME Market Opportunities SME market comprises ~43B sq. ft. Lack of energy oversight, operational efficiency Challenges Fragmentation Credit underwriting Emerging Solutions NorthWrite s Agile Volt Program

75 Small and Medium Enterprises Energy Inefficient Majority of SMEs lack building management systems Consequences Temperature set points not maintained Equipment left on over night Energy and money wasted

76 Addressing SME Market Opportunity Business Model Development Energi Performance Insurance Joule Assets Funding Rebates Curtailment Service Provider Demand Response Revenues Contractor Energy Reduction Services Guaranteed Energy Cost Savings Commercial Facility

77 Addressing SME Market Opportunity Requires Third-Party Support Project Performance Insurance grants third party verification and dispute resolution Protects downside risk in performance-based efficiency projects Costs between 3-6% of insured savings

78 NorthWrite s Agile Volt Program Design - ECMs Source: NorthWrite 2014

79 Conclusion >49% of all U.S. commercial floor space is in SMEs Solutions to address SME energy efficiency opportunity require maximizing value of energy reduction assets, energy savings performance insurance and a compelling value proposition to customers

80 Harold Lea President RePower Capital

81 Orchestrate end-to-end funding for renewables Focus between $3 million and $100 million Technology-enabled investment bank alternative

82 Technology-based investment banking alternative for renewables financing Extensive use of expert systems, uniform processes Process transactions up to 10x faster and 50% cheaper than manual processes Efficiencies enable us to target underserved $3M-$100M market

83 Market & Opportunity Segment % $$/yr. Players Utility Projects > $100M 45% $100B/ yr. Goldman, Morgan, etc Specialized CEIB Commercial $1M - $100M 45% $100B /yr. $100B/yr. Opportunity Residential < $1M 10% $25B /yr. Solar City Clean Power Solar Mosaic

84 New Technology Intermediary RePowerCapital Completion Matching Projects Vetting & Scoring Screening Profiling Recruiting Internet Platform Capital

85 Project Profile Automtd Prescreen Reject Doesn t retain us Deal Flow Pd to vet & present Reject Process FUNDABLE Receives general vetting rpt Customized Customized vetting Customized report vetting Customized report vetting report vetting report Investor profiled Investor Profile Investor Profile Investor Profile Investor Profile Funding Manager Completes Transaction, RPC Paid

86 Sample Reports Prescreening Report Quick reference report for developers. Will highlight deficiencies, indicate whether a project is fundable, and whether we have matching investors.

87 Sample Reports Vetting report Customized to each investor s preferences. RPC team scrutinizes project prior to reporting, so all data is analyzed and confirmed. Color coded and scored for quicker analysis.

88 Full Ecosystem

89 David Clamage CEO Saulsbury Hill Financial

90 Questions

91 Password: Pearland

92 Energi, Inc.

93 Next Generation Risk Management Solutions for Energy Project Finance

94 Disclaimer This publication and any accompanying exhibits are intended to provide general recommendations regarding handling loss and risk prevention. The publication is not intended to be a complete analysis for every situation which may occur, nor is it intended to include all steps or processes necessary to adequately protect you or your business. You should always consult an attorney and/or insurance advisor for advice regarding specific situations unique to you and your business. Energi is not responsible for any misinterpretation of the information contained herein or any legal proceedings which may occur from its use. This material is copyrighted and all rights are reserved. Energi Insurance Services, 2014.

95 Panelists Phillip Burke Manager of Underwriting, West Alternative Energy Solutions Energi Patrick Grogan Manager of Underwriting, East Alternative Energy Solutions Energi Rich Vaillencourt Chief Engineer Energi

96 Engineering Best Practices

97 1 st Party Policy=Reduced Complexity 1 st Party Not tied to Guarantee Contract Transaction Developers/financiers/contractors as Named Insureds Engineering underwriting process unchanged Project Characteristics: easily engineered single measure Larger buffer between projected & guaranteed savings Contractual Liability Backstops Insured s guarantee contract M&V, O&M, adjustments determined by Insured s contract Stringent Underwriting of ESPC/Guarantee Contract Named Insured = Contractor

98 Product Defect Protection Readily underwrite-able risk Covers savings shortfall caused by defective equipment ECM technology reviewed on case by case basis Limited applications Will not extend insurance past manufacturer s warranty/guarantee period Must be OEM-verified defect

99 Smaller Can Be Better Coverage for a portfolio of small sites Aggregated portfolio > $400,000 Insurance coverage provided in the aggregate Aggregate Premium/SIR/Limit Technology types: Solar PV, single-ecm & easily monitored/installed technologies

100 Expanding Internationally: UK Expansion Coverage for Projects in the UK expected in Q st Part Policy will be rolled out first Written on Inter- Hannover s Paper Energi Opening Offices & Putting Boots on the Ground Shortly

101 Questions

102 Password: College Station

103 Energi, Inc.