Why Choose ESPC? (What s the Difference?)

Transcription

1 Session: Project Financing Why Choose ESPC? (What s the Difference?) Kurmit Rockwell DOE Federal Energy Management Program 1 Rhode Island Convention Center Providence, Rhode Island

2 ESPC Basics Financial Advantages Fund energy improvements with no up front capital costs (save appropriations for other needs) Leverage appropriations to build more comprehensive projects Free up $ for other investment and mission support Obtain long payback energy conservation measures (ECMs) by bundling with short payback ECMs Optimize use of agency operations & maintenance (O&M) and repair & replacement (R&R) funds Experienced ESCOs add value ESPCs are a hedge against rising energy prices 2

3 ESPC Gives ESCO Incentives to Serve Agency Needs Find all ECMs Do all punch list items in timely manner Commission well Assure optimal O&M Purchase quality equipment Contractual protection of savings: ESCO is required to guarantee savings (M&V 4.0 is now required for DOE ESPC IDIQ) 3

4 Well established Process, With Benefits of Lessons Learned FEMP services and assistance FEMP Federal Project Executives (FPEs) Assistance with choosing option Project facilitators Technology/energy experts from DOE laboratories Free ESPC training; ESPC resources and tools on FEMP website FEMP Life of Contract (LOC) services Backstop to agency throughout performance period Help with annual M&V and changes. Ensure that: Guaranteed savings are realized ESCO and agency comply with their contractual obligations throughout contract term 4

5 FEMP ESPC Best Practices Well Earned Wisdom* Focus of FEMP best practices: How teamwork within agency acquisition team and with ESCO is vital to project success How to conduct an efficient and compliant ESCO selection Critical outcomes of review which support task order award Key checks and steps in final negotiations and task order award Strategies for minimizing delays which erode project value Best practices guide agencies efforts with critical tasks and decision points: Getting a useful preliminary assessment from the ESCO Managing and reviewing the investment grade audit (IGA) Managing IGA and proposal review Critical outcomes of review Preparing for negotiations and award Measurement & Verification * on FEMP ESPC Resources web page under Essential ESPC Education, implementingfederal energy savings performance contracts 5

6 ESPCs Deliver Guaranteed Cost Savings and Performance Every federal ESPC must guarantee: A specified level of cost savings (one total dollar amount) Specified equipment performance (standards of performance such as temperature and lighting levels) Assurances of guarantees in ESPCs M&V requirements Commissioning Government witnessing PF and subject expert review of key documents M&V is a good thing. When done well, M&V will: Reduce uncertainty of the savings to a reasonable level Allocate risks appropriately Potentially identify O&M issues 6

7 Beyond Guaranteed Savings and Performance FEMP s analysis of data from DOE ESPC M&V reports* indicates that on average: ESCOs guaranteed 97% of the estimated cost savings Projects verified achieving 102% of the estimated cost savings 105% of the guaranteed cost savings * Reported Savings From DOE ESPC Program: FY 2014, Bob Slattery, Oak Ridge National Laboratory, ORNL/TM 2015/110 saving performance contract projectperformance 7

8 225% 200% 175% 150% Verified Percentage of guaranteed annual cost savings reported in 156 ongoing DOE ESPC projects* (each bar is one project) 125% 100% 75% 50% 25% 0% 8 * Source: Reported Savings From DOE ESPC Program: FY 2014, Bob Slattery, Oak Ridge National Laboratory, ORNL/TM 2015/110

9 More Beyond Guaranteed Savings There are more savings associated with ESPC projects than are contractually defined Actual annual savings to agency budgets: 174% to 197% of contract savings Static baseline Savings beyond term (useful life of equipment exceeds contract term) ESCO guarantees less than 100% of estimated savings Underestimates of equipment performance Underestimates of utility rate escalation FEMP study: Beyond Guaranteed Savings: Additional Cost Savings Associated With ESPC Projects web.ornl.gov/sci/ees/etsd/btric/publications/publication% pdf 9

10 Why Choose ESPC? Scope DOE ESPCs can be done anywhere, worldwide, and projects can be bundled across states lines and utility territories. True performance guarantees and contractual assurances to back them Commissioning, government witnessing, and M&V are required Experienced ESCOs add value Savings beyond the guarantee Well established process, best practices, and FEMP support ESPC is well suited to implementing comprehensive projects (but not projects under $1 2 million) 10

11 Energy Savings Performance Contracting Training Opportunities ESPC Workshops In person, On site Comprehensive 3 day workshops 3 times per year On site (dependent on availability of funding) Online, Interactive Training CEUs awarded FEMP14 Measurement and Verification in ESPCs FEMP15a ESPC: An Advanced Guide FEMP20 ESPCs: Five Phases to Success! FEMP36 Realizing the Potential of Under Utilized ECMs in ESPCs FEMP Certificate Series CEUs awarded Project Financing through Energy Savings Performance Contracts Online, Pre Recorded No CEUs Introduction to Alternative Financing for Energy Efficiency and Renewable Technologies Just in Time ESPC Series: 1. Managing Your Investment Grade Audit **Relaunch August 2016** 2. Critical Path to Success **Relaunched June 23, 2016** 3. Crossing the Finish Line to Award **Relaunch August 2016** Financing and Pricing Evaluation for ESPCs Combined Heat and Power in ESPCs ESPCs: Quality Assurance Over the Life of the Contract FEMP etraining No cost, no travel Available 24/7 Online, open-access courses Instructors with Federal sector experience In-depth courses completed at your pace FEMP is an Authorized Provider of IACET CEUs For more information visit:

12 For More Information Kurmit Rockwell ESPC Program Manager U.S. Department of Energy Federal Energy Management Program