Big Ten Sustainability ConferenceNovember 14-15, 2010

Funding Strategies:Energy Savings Projects and

Seed Grants Funding Strategies

Energy Savings Projects

Energy Savings Projects and Seed Grants Funding Strategies

Energy Savings Projects Program Components

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• Commissioningo Continuous Commissioning (CCX)o Rapid Commissioning (RCX)

• Guaranteed Energy Savings Projects (GESP’s)

• Energy Savings Projects (ESP’s)

• Energy Conservation Measures (ECM’s)o Seed Grants

Energy Savings Projects and Seed Grants Funding Strategies

Annual Budgets

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• Guaranteed Energy Savings Projects (GESPs) and Energy Savings Projects (ESPs ) – 10 yr payback

• $5,000,000 to $10,000,000

• Applies to all University facilities

• Energy Conservation Measures (ECMs) – 5 yr paybacko Commissioning = $580,000o Stand alone = $500,000o Incorporated in Projects = $500,000o Applies only to E & G facilities

Energy Savings Projects and Seed Grants Funding Strategies

PENN STATE’sTraditional Guaranteed Energy Savings Project (GESP)

Contracting Process

Energy Savings Projects and Seed Grants Funding Strategies

UNIVERSITYIMPROVEMENTS

ANNUAL UTILITY BUDGET

UTILITY PAYMENTUTILITY

COMPANYREVENUE

ENER

GY SAVIN

GS

$ spent should not increase as a result of a GESP

Measurable or Guaranteed Results

Energy Savings Projects and Seed Grants Funding Strategies

Organized Process

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The Guaranteed Energy Savings Act (GESA) is provided for under Chapter 37 of Act 57 (1998),and as amended by Act 77 (2003).

In the Commonwealth of Pennsylvania, energy performance contracting was standardizedthrough the procurement code………………

Energy Savings Projects and Seed Grants Funding Strategies

Traditional Guaranteed Energy Savings Program Process

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Month 1 2 3 4 5 6 7 8 9 10 11 ?

 Site

Selection                      

   Letter of Interest                    

     ESCO Proposals

             

           Investment Grade Audit

       

                 Funding/ Contracts      

                   Construction

Energy Savings Projects and Seed Grants Funding Strategies

Penn State’s Process

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1. Select Project Sites2. Issue Request for Letters of Interest3. Select up to 3 ESCOs from LOIs and Issue RFP4. Evaluation and Selection of ESCO5. Execute Energy Audit Contract6. Audit conducted by ESCO approved by Penn State7. Negotiate and execute GUARANTEED ENERGY SAVINGS

CONTRACT8. Determine financing method and secures monies9. Construction Period begins10. Project accepted and approved11. Guaranteed period commences12. Ongoing project monitoring

Energy Savings Projects and Seed Grants Funding Strategies

GESP Process

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1) Select Project Sites• A campus or group of buildings• Similar customers• Similar needs• Target projects of $2,000,000 to $4,000,000• Establish the selection committee

Example: Penn State Altoona 2007 FY utility cost = $1,400,00020% Expected Savings = $280,000 over 10 years = $2,800,000Selection Committee:

• Director Housing & Food Service• Director Business Operations• Assistant DBO• Foreman Operation and Maintenance• Heat & Vent Technician• Project Manager• Mechanical Engineer

Energy Savings Projects and Seed Grants Funding Strategies

GESP Process

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2) Issue request for letters of interest (LOI)• List of 18 qualified ESCOs from the DGS site• ESCO reference projects• Team member qualifications• ESCO financial information

3) Select 3 ESCOs and issue the RFP• The RFP establishes the foundation of the GESP• Requirements, terms, and conditions• Expectations and selection process• Schedules for meetings, proposals and presentations

4) Evaluation and selection of ESCO• From 3 proposals select 1 ESCO to complete an IGA• Written proposal evaluation• Interview Evaluation• DGS forms available

Energy Savings Projects and Seed Grants Funding Strategies

GESP Process

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5) Execute the Investment Grade Audit Agreement (IGA)• The next step in the contractual process• Builds on the RFP• The IGA agreement is absorbed into the GESA

6) Audit conducted by ESCO• Partnership between the ESCO and the owner• Commonly takes 3 to 6 months• Measure from the proposal are refined• Cost and savings can not vary by 10%• The IGA report becomes the basis of the GESA

7) Negotiate and Execute Guaranteed Energy Savings Contract

Energy Savings Projects and Seed Grants Funding Strategies

GESP Process

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8) Determine the financing method• Penn State uses internal financing• ESCO offer a wide range of options

9) Construction Period begins

10) Project accepted and approved

11) Guaranteed period commences

12) Ongoing project monitoring

Energy Savings Projects and Seed Grants Funding Strategies

Sample GESP (Altoona Campus)

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Total Projected Savings = $ 363,124Payback = 8.1 years on financed amount

Cost Savings Payback Cost Contribution Savings Payback($) ($/yr) (years) ($) ($/yr) (years)

Lighting Improvements $189,509 $23,100 8.2 $444,060 $65,793 6.7Water Conservation $251,387 $34,743 7.2 $169,178 $23,224 7.3Building Automation Systems $19,919 $1,237 16.1 $693,238 $74,073 9.4Weatherization $20,229 $1,487 13.6 $119,219 $10,344 11.5Energy Awareness $7,377 $2,000 3.7 $15,635 $5,000 3.1Mechanical System Improvements $184,357 $21,851 8.4 $927,799 $575,000 $42,407 8.3Adler Building Systems $443,467 $57,865 7.7

Totals (Hard Costs) $672,778 $84,418 8.0 $2,812,596 $278,706 10.1PSU Fees $5,000 $12,000Upfront Capital (MM) $575,000Amount Financed $677,778 $84,418 8.0 $2,249,596 $278,706 8.1

Finance Term of 10 Years at Annualized Interest Rate of 5.0%

Projected Financed Cost $2,927,374

ECMH&FS E&G

Total Project Cost $3,502,374

Energy Savings Projects and Seed Grants Funding Strategies

Sample GESP (Altoona Campus)

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Total Projected Savings = $ 363,124Payback = 8.1 years on financed amount

Cost Savings Payback Cost Contribution Savings Payback($) ($/yr) (years) ($) ($/yr) (years)

Lighting Improvements $189,509 $23,100 8.2 $444,060 $65,793 6.7Water Conservation $251,387 $34,743 7.2 $169,178 $23,224 7.3Building Automation Systems $19,919 $1,237 16.1 $693,238 $74,073 9.4Weatherization $20,229 $1,487 13.6 $119,219 $10,344 11.5Energy Awareness $7,377 $2,000 3.7 $15,635 $5,000 3.1Mechanical System Improvements $184,357 $21,851 8.4 $927,799 $575,000 $42,407 8.3Adler Building Systems $443,467 $57,865 7.7

Totals (Hard Costs) $672,778 $84,418 8.0 $2,812,596 $278,706 10.1PSU Fees $5,000 $12,000Upfront Capital (MM) $575,000Amount Financed $677,778 $84,418 8.0 $2,249,596 $278,706 8.1

Finance Term of 10 Years at Annualized Interest Rate of 5.0%

Projected Financed Cost $2,927,374

ECMH&FS E&G

Total Project Cost $3,502,374

Energy Savings Projects and Seed Grants Funding Strategies

Sample GESP (Altoona Campus)

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Total Projected Savings = $ 363,124Payback = 8.1 years on financed amount

Cost Savings Payback Cost Contribution Savings Payback($) ($/yr) (years) ($) ($/yr) (years)

Lighting Improvements $189,509 $23,100 8.2 $444,060 $65,793 6.7Water Conservation $251,387 $34,743 7.2 $169,178 $23,224 7.3Building Automation Systems $19,919 $1,237 16.1 $693,238 $74,073 9.4Weatherization $20,229 $1,487 13.6 $119,219 $10,344 11.5Energy Awareness $7,377 $2,000 3.7 $15,635 $5,000 3.1Mechanical System Improvements $184,357 $21,851 8.4 $927,799 $575,000 $42,407 8.3Adler Building Systems $443,467 $57,865 7.7

Totals (Hard Costs) $672,778 $84,418 8.0 $2,812,596 $278,706 10.1PSU Fees $5,000 $12,000Upfront Capital (MM) $575,000Amount Financed $677,778 $84,418 8.0 $2,249,596 $278,706 8.1

Finance Term of 10 Years at Annualized Interest Rate of 5.0%

Projected Financed Cost $2,927,374

ECMH&FS E&G

Total Project Cost $3,502,374

Energy Savings Projects and Seed Grants Funding Strategies

Sample GESP (Altoona Campus)

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Total Projected Savings = $ 363,124Payback = 8.1 years on financed amount

Cost Savings Payback Cost Contribution Savings Payback($) ($/yr) (years) ($) ($/yr) (years)

Lighting Improvements $189,509 $23,100 8.2 $444,060 $65,793 6.7Water Conservation $251,387 $34,743 7.2 $169,178 $23,224 7.3Building Automation Systems $19,919 $1,237 16.1 $693,238 $74,073 9.4Weatherization $20,229 $1,487 13.6 $119,219 $10,344 11.5Energy Awareness $7,377 $2,000 3.7 $15,635 $5,000 3.1Mechanical System Improvements $184,357 $21,851 8.4 $927,799 $575,000 $42,407 8.3Adler Building Systems $443,467 $57,865 7.7

Totals (Hard Costs) $672,778 $84,418 8.0 $2,812,596 $278,706 10.1PSU Fees $5,000 $12,000Upfront Capital (MM) $575,000Amount Financed $677,778 $84,418 8.0 $2,249,596 $278,706 8.1

Finance Term of 10 Years at Annualized Interest Rate of 5.0%

Projected Financed Cost $2,927,374

ECMH&FS E&G

Total Project Cost $3,502,374

Energy Savings Projects and Seed Grants Funding Strategies

Sample GESP (Altoona Campus)

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Total Projected Savings = $ 363,124Payback = 8.1 years on financed amount

Cost Savings Payback Cost Contribution Savings Payback($) ($/yr) (years) ($) ($/yr) (years)

Lighting Improvements $189,509 $23,100 8.2 $444,060 $65,793 6.7Water Conservation $251,387 $34,743 7.2 $169,178 $23,224 7.3Building Automation Systems $19,919 $1,237 16.1 $693,238 $74,073 9.4Weatherization $20,229 $1,487 13.6 $119,219 $10,344 11.5Energy Awareness $7,377 $2,000 3.7 $15,635 $5,000 3.1Mechanical System Improvements $184,357 $21,851 8.4 $927,799 $575,000 $42,407 8.3Adler Building Systems $443,467 $57,865 7.7

Totals (Hard Costs) $672,778 $84,418 8.0 $2,812,596 $278,706 10.1PSU Fees $5,000 $12,000Upfront Capital (MM) $575,000Amount Financed $677,778 $84,418 8.0 $2,249,596 $278,706 8.1

Finance Term of 10 Years at Annualized Interest Rate of 5.0%

Projected Financed Cost $2,927,374

ECMH&FS E&G

Total Project Cost $3,502,374

Energy Savings Projects and Seed Grants Funding Strategies

Energy Saving Program Process w/ In-House Labor

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Month 1 2 3 4 5 6 7 8 9 10 11 ?

 Site

Selection                      

   Engineering Study and

Design       

       

         Funding/ Contracts              

           Construction

Simplified process for working with in-house forces

• Based on stipulated savings as determined by Penn State energy engineers

• Reduced cost due to elimination of ESCO profits

Energy Savings Projects and Seed Grants Funding Strategies

Sample ESP Projects

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Energy Savings Projects and Seed Grants Funding Strategies

Sample ECMs

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Energy Savings Projects with maximum 5 year simple paybacks

Continuous Process• Occupancy Sensors – HVAC – Many Buildings• Lighting – Many Buildings• Thermostatic Valves – Many Buildings

Batch Process – • Lab air flow adjustments – Wartik & Hosler• Valve replacement – Leonhard• Valve Replacement – South Henderson• Heat recovery ACF 1&2 – Research East• Heat Recovery – Althouse• 100% OA – Rec Hall rm 151 and HVF 05• RTU replacement – Research West

Sustainability Seed Grant Program:“Crowd Sourcing” New Ideas

Sustainability Seed Grant Program:“Crowd Sourcing” New Ideas

Energy Savings Projects and Seed Grants Funding Strategies

Goal : To foster basic and applied research, practice, education, and outreach as it relates to sustainability

• Penn State Institutes of Energy and the Environment partnership with Outreach, OPP & several colleges

• $350,000 funding available • Grants awarded May 2010• Grants need to be by June 30, 2012

Sustainability Seed Grant Program

Energy Savings Projects and Seed Grants Funding Strategies

Sustainability Seed Grant Program

75 proposals

13 awardees

Amount People$15,000 1

$40,000 2

$75,000 3+

EncouragingCollaboration

Energy Savings Projects and Seed Grants Funding Strategies

Energy Savings Projects and Seed Grants Funding Strategies

Results

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BTU

/GSF

24% reduction

Energy Savings Projects and Seed Grants Funding Strategies

What’s next. . .?

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Energy Savings Projects and Seed Grants Funding Strategies

Endowment Conventional Investments

ENER

GY SAVIN

GS

What’s next. . .?

Thank you. Comments? Questions?