financing sustainable water infrastructure upgrades ... · presentation objectives • introduction...

Financing Sustainable Water Infrastructure Upgrades through Performance ContractingRao Chitikela, Chris Kaiser, and John Larson

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Presentation Objectives

• Introduction and an Update on U.S. Water Infrastructure

• Performance Contracting (EPC) for Asset Renewal

• Utility Perspective – The Ongoing Application of EPC by the Norristown Municipal Waste Authority (NMWA)

• Case Studies – Cities of Mount Vernon, Indiana, and Evansville, Indiana

• Conclusions

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A Watershed (in general)

➢Contaminants:▪ Point and Non-Point

Sources▪ Atmospheric

Deposition

➢Watershed Water Quality➢TMDLs

https://www.epa.gov/greatlakes/great-lakes-facts-and-figures

➢ Drinking WaterRegulations

▪ Drinking Water Standards

➢ WastewaterRegulations

▪ Treated Effluent Quality

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US Municipal Water Infrastructure

[ASCE (2012, 2013, 2017), USEPA (2016), AWWA (2016)]

➢ Significant US infrastructure improvement(s) are required – Costs are estimated at $3.6trillion by 2020➢ Spending-to-need ratio – 40% (2010) and projected decline to 26%

(2040)

➢Water systems and facilities

➢54,000 community water systems

➢15,000 wastewater treatment facilities

➢20,000 wastewater pipe systems

➢ Sustainable, upkeep of the US water infrastructure – costs➢ $655-bln; >$1-trillion; >$2-trillion, by 2030

➢ OH: Drinking Water -- $12.2bln; Wastewater -- $14.58bln (by 2030)

➢ PA: Drinking Water -- $14.2bln; Wastewater -- $6.95bln (by 2030)

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ASCE – Infrastructure Report Card 2017

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Water Use Cycle & Asset Management

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Non-Revenue Water (NRW) / Water Loss

• Real, Water Losses - Physical loss of water from the distribution system• Leaks and breaks• Overflows

• Apparent, Water Losses – Water use that is not accounted for• Water meter inaccuracy• Not being a right size or type• Billing system mistakes/errors• Other, inaccurate estimation(s) – flushing, etc.

• Revenue Losses – significant and can be reduced.

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Energy Usage – Municipal Water Processing

City/town

Water Intake, Treatment,

& Distribution

Wastewater Collection &

Treatment

900 – 3,000 kWh/MG

1,000 – 2,700 kWh/MG

5,000 kWh/MG, from water-intake to watershed-return – a spatial average and not a benchmark

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Energy Usage and Process Efficiency UpgradesWater Treatment & Distribution

– Unit operations and process

systems

– Water metering & AMR/AMI

– Water loss Control

– Efficient and right-sized

pumping systems

– Residuals Processing

– Renewable energy

Water Resource Recovery Facilities

– Unit operations and process

systems

– I/I Control

– Efficient and right-sized pumping

systems

– Biosolids Processing

– Renewable energy

Buildings and Surrounding Facility Improvements

- Lighting, HVAC, Fire, Security, Renewable Energy

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Municipal Water & Wastewater Processing Costs

• Second to the employees’ salaries on the annual budgets of cities

• More than 40% of that are energy costs

• Potable or Drinking Water Treatment -- $2/1,000 gal (flow based) (USEPA)

• Wastewater treatment -- $300/MG (10-100 MGD flow based) for energy and biosolids disposal . . . (unpublished data)

• projected, Advanced water and wastewater treatment costs both CapEx and OpEx are significantly high:• Water – for example, usage of advanced systems for algal-

bloom removal . . .• Wastewater – for example, TN to 3.0 mg/L, TP ≤ 0.1

What is Energy Performance Contracting (EPC)?

What EPC is:

A procurement model that requires the project be self funding

It is not a shared savings agreement. State legislation exists for EPC.

The Qualified Provider or an Energy Services Company must Guarantee the savings

Utility and operational expenses are the focus of savings

Savings must be measured and verified using well defined guidelines

Funding can come from lease purchase, SPLOST, bonds, general fund, QECB

What EPC is not:

Performance Infrastructure provides the financial means to:

$

$$

$$$

Cost Savings back to budget Performance Payments Utility/Operational Costs

Before Performance Agreement

DuringPerformance Agreement

After Performance

Agreement

Performance Infrastructure Funding Model

Support mandated and core mission initiatives

Eliminate IRR and ROI Hurdles (No Capital required and Positive Cash-flow Day One)

Reduce deferred maintenance

Upgrade aging infrastructure

Promote financial and environmental sustainability

Where do the savings come from?

Johnson Controls, Inc. —13

EPC – A Collaborative Approach on Asset Renewal

Preliminary Analysis

Detailed Analysis & Design

Implementation Integrated Delivery

1. Determine Final Scope, Pricing & Funding source

2. Detailed Engineering & Energy Study and Report

3. Report Delivery & Performance Contract Agreement

1 2 3 4

1. Interviews with the customer staff

2. Data Collection3. Site Survey4. Preliminary

Proposal

1. Construction2. Commissioning3. Training

1. Measurement& Verification

2. Maintenance and Support

3. Closeout Report

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EPC vs. Bid-Spec Contracting Process

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NMWA – EPC Procurement Process • The NMWA's historic approach to upgrades and improvements• The NMWA's “new” approach utilizing energy performance contracting• The EPC procurement process

• Release RFQ seeking qualified interested ESCO's • Select ESCO to partner with - Johnson Controls Inc. (JCI)• JCI performs preliminary audit to identify potential projects• JCI and NMWA agree that the preliminary audit identified a project worth

pursuing• The NMWA and JCI enter into a project development agreement to move

forward into an Investment Grade Audit (IGA)• Upon completion and approval of the IGA, the NMWA and JCI enter into a

project contract to implement and construct the agreed upon project

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Case Study – Mt. Vernon, Indiana

Water Distribution System• New water meters, and new AMI

system• New booster stations• Water utilities billing • (Engineering for CIP)

Water Treatment Plant Improvements▪ Two (2) Filtration facilities▪ Clear well improvements, LSPs▪ SCADA system improvements▪ Energy-efficient lighting and buildings▪ UV-disinfection system, for crypto-

removal▪ Ohio River intake system upgrades

City of Mount Vernon IN – testimonial: https://www.youtube.com/watch?v=mwJqe6mLifw

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Case Study – Evansville, Indiana

Water Distribution System

• Approx. 63,000 meters – Annual, Project Savings Benefit.

Water Treatment Plant Improvements

• The 14MGD WWTP’s electric spend – 1,593 kWh/MG1,593 kWh/MG

• FOG and biogas-to-energy CHP will meet approx. 50% energy requirements and will provide annual, supplemental-FOG-tipping-revenue.

• This improvement will also drive the plant toward net-zero.

• And, Primary Clarification (a critical process efficiency measure); and Sludge Dewatering Upgrade (Annual, Project Savings Benefit)

City of Mount Evansville IN – testimonial: https://www.youtube.com/watch?v=DRnG8C9OJcA&sns=em

Conclusions• Current upkeep of the US municipal water

infrastructure requires immediate and significant capital investment, estimated at more than $1-trillion.

• Energy, chemical, and other cost-savings need to be part of the cash-flows in project undertaking and for effective budgets.

• Performance infrastructure contracting delivery of asset renewal will provide effective installation and operation, with guaranteed savings and results.

• The energy efficient and sustainable management of municipal water infrastructure is needed NOW.

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Thank You

Rao Chitikela – (412) 310-9452 / rao.chitikela@RCWEESolutions.comJohn Larson – (215) 892-5135 / john@norristownsewer.orgChris Kaiser – (412) 888-9748 / chris.kaiser@jci.com