Advanced Strategies and Analytics for campus green revolving funds

Part 2 of an AASHE/SEI webinar series on green revolving fund implementation October 2, 2013

Rob Foley, SEI Joe Indvik, ICF International John Onderdonk, Caltech Matthew Berbee, Caltech

Rob Foley Consultant Sustainable Endowments Institute

Speakers

Joe Indvik Consultant ICF International

John Onderdonk Director of Sustainability Programs Caltech

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Matthew Berbee Energy Manager Caltech

Implementation Series

Introductory Guide to Implementation and Management January 2013

“Implementation Strategies for Campus Green Revolving Funds” Webinar April 2013

Green Revolving Funds: A Guide to Implementation & Management August 2013

History of the BDGC

Billion Dollar Green Challenge

History of the BDGC

The Green Revolving Fund Model 1. The fund must finance measures that reduce resource use, save energy, or mitigate greenhouse gas emissions.

2. The fund must have a formalized revolving component, so that at least some of the savings from projects are repaid to the fund.

Introduction

Implementation Guide Research Process

Facility Managers

Energy Managers

Presidents

Students

Trustees

CFOs

Sustainability Directors

Interviews Research and Data

Greening the Bottom Line 2012

School Case Studies

Experience

GRF Charters

Billion Dollar Green Challenge

Consulting

Conferences Partner

Organizations

Second Nature AASHE

ACUPCC

ICF

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Employing M&V

Focus of today’s presentations

Available at GreenBillion.org/guide

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Employing M&V

Upcoming Opportunities To learn more about Green Revolving Funds

and sustainability in higher education

AASHE 2013, next week in Nashville, TN! Green revolving fund events at AASHE include: •A plenary presentation on investing in energy efficiency

•A panel on the benefits and varieties of green revolving funds across institutions

•A student workshop on pitching a GRF on your campus

Effective M&V

Fund Analytics

Introduction

Using smart data to track, design, and manage a GRF

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A Tale of Two Funds

Caltech Case Study

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Fund Analytics to evaluate, select, and track projects

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Fund Analytics

Payback period =

Return on Investment (ROI)

Upfront cost ($)Annual savings ($/yr)

Annual savings ($/yr)Upfront cost ($)

i.e. rate of return, annual yield

Quick, easy, understandable, and commonly used

Does not account for cost of capital or volume of savings

Can be expressed as annual (here) or lifetime

Same disadvantages as payback period

Allows comparison with investment returns (with caveats)

=

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Fund Analytics

Net Present Value (NPV)

Internal Rate of Return (IRR)

Incorporates cost of capital and risk into discount rate

Unintuitive

Incorporates the time-value of money (i.e. discounting)

Unintuitive

Allows for use of a “hurdle rate”

=

= �𝐒𝐒𝐒𝐒𝐒𝐒𝐒𝐒𝐒𝐒𝐒𝐒𝐒𝐒 𝐒𝐒𝐒𝐒 𝐲𝐲𝐲𝐲𝐒𝐒𝐲𝐲 𝐭𝐭 $ − 𝐂𝐂𝐂𝐂𝐒𝐒𝐭𝐭 𝐒𝐒𝐒𝐒 𝐲𝐲𝐲𝐲𝐒𝐒𝐲𝐲 𝐭𝐭 $

𝟏𝟏 + 𝐝𝐝𝐒𝐒𝐒𝐒𝐝𝐝𝐂𝐂𝐝𝐝𝐒𝐒𝐭𝐭 𝐲𝐲𝐒𝐒𝐭𝐭𝐲𝐲 𝐭𝐭

N

t=0

Captures total volume of savings

Hinges on discount rate

Discount rate that sets NPV equal to 0

Does not account for volume of savings

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Fund Analytics

Net present what? Telling a good story that everyone can understand

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Fund Analytics

Sample GRF Portfolio Performance Analysis

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Employing Effective M&V

Measurement and verification in a GRF context

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Employing M&V

The IPMVP is a good place to start

Retrofit Isolation: Key Parameter Measurement

Retrofit Isolation: All Parameter Measurement

Whole Facility Measurement

Calibrated Simulation

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Employing M&V

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Employing M&V

Pros

Cons

Considerations

• Increased confidence • Protection against cost overruns • Problem detection • Performance improvement over time

• Cost • Staff time • Advance planning

• To measure or not to measure Institutional politics Budgeting process Project size Technology type

• Phase out • Payment ceiling • Rolling metering plan • M&V as investment

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Two Funds How modeling can inform fund design

A Tale of

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Fund #1 Fund #2

Projects repay 100% of annual savings

Start with $1M

Total repayment obligation of 120%

Projects repay 90% of annual savings

Total repayment obligation of 100%

Slightly more aggressive Slightly less aggressive

Finance projects that cost $600k

with 3-yr payback

A Tale of Two Funds

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How do these funds perform over a 10-year period?

A Tale of Two Funds

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$0

$1,000,000

$2,000,000

$3,000,000

$4,000,000

$5,000,000

$6,000,000

$7,000,000

$8,000,000

0

1

2

3

4

5

6

7

8

9

1 2 3 4 5 6 7 8 9 10

F1 Projects

F2 Projects

F1 Savings

F2 Savings

Fund #1 Projects Complete

Fund #2 Projects Complete

Year

Proj

ects

Savings

Modeling Results

A Tale of Two Funds

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$0

$1,000,000

$2,000,000

$3,000,000

$4,000,000

$5,000,000

$6,000,000

$7,000,000

$8,000,000

0

1

2

3

4

5

6

7

8

9

1 2 3 4 5 6 7 8 9 10

F1 Projects

F2 Projects

F1 Savings

F2 Savings

Fund #1 Projects Complete

Fund #2 Projects Complete

Year

Proj

ects

Savings

Modeling Results

A Tale of Two Funds

R R R R R R R R R

R R R R R R R R

R R R R R R

R R R

R R R R

R R

R

R

R

R

R

R

R

R

R

R

R

R

R

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$0

$1,000,000

$2,000,000

$3,000,000

$4,000,000

$5,000,000

$6,000,000

$7,000,000

$8,000,000

0

1

2

3

4

5

6

7

8

9

1 2 3 4 5 6 7 8 9 10

F1 Projects

F2 Projects

F1 Savings

F2 Savings

Fund #1 Projects Complete

Fund #2 Projects Complete

Fund #1 Cumulative Savings

Fund #2 Cumulative Savings

Year

Proj

ects

Savings

Modeling Results

A Tale of Two Funds

California Institute of Technology

AASHE WebinarAdvanced Strategies and Analyticsfor Campus Green Revolving Funds

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caltech overview

quick facts:private research university in Pasadena, CA

• 4.4 Million SF of buildings• 125 acres in urban setting• $2.4B replacement value

campus population: ~7,000 • 300 faculty; 600 research scholars; 2,200 students; 3,900 employees• Caltech named top university in the world (Times Higher Education)• 31 Nobel Laureates• founders of Intel, DirecTV, Beckman Instruments, MATLAB

energy use• 120+ GWH electricity annually 

− energy Intensity ~285 MBTU/SF− average UC Campus ~ 180 MBTU/SF

• $15M+ annual utility bill

challenge: facilitate development of the newest technology and entrepreneurial spirit of Caltech while minimizing energy consumption

caltech energy conservation investment program (CECIP)

Energy projects are financed from a capital revolving fund, the Caltech Energy Conservation Investment Program (CECIP).

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“The cost to the utility budget during a CECIP project does not change (vs. budget).  What does change is that a portion goes to utility bills, and a portion to debt service” 

‐‐ Brewer, M. Caltech, Controller, 2012

Guiding Financial Mantra

Capital Revolving

Fund

Implement ECM

Utility Savings

ElectricityGasWaterCECIPAB32

utility budget mix

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37%

59%

4%

2009: $19.7M

ElectricityGasWaterCECIPAB32

utility budget mix

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2014: $15.6M

34%

36%

6%

18%

6%

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

MWh

fiscal year

1990‐2013

historical power consumption

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CECIP Program Inception2009

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

MWh

fiscal year

1990‐2013

historical power consumption

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CECIP Program Inception2009

 ‐

 2,000,000

 4,000,000

 6,000,000

 8,000,000

 10,000,000

 12,000,000

 14,000,000

Sept Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug

kWh

2008‐2013

2008 2009 2010 2011 2012 2013

historical power consumptionnon‐CECIP energy drivers

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110,000

111,000

112,000

113,000

114,000

115,000

116,000

117,000

118,000

119,000

120,000

MWH

FISCAL YEAR

100,000 sqft added5 fume hoods added

64,000 sqft added102 fume hoods added

47,000 sqft added

45,000 sqft renovated13 fume hoods added

30,000 sqft renovated24 fume hoods added

campus energy drivers since CECIP inception211,000 sqft added

192,000 sqft renovated144 fume hoods added

$0.0

$0.5

$1.0

$1.5

$2.0

$2.5

$3.0

$3.5

$4.0

$4.5

$5.0

millions

program performance (2009 to present)

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($9)($8)($7)($6)($5)($4)($3)($2)($1)$0$1$2$3$4$5$6$7

2009 2010 2011 2012 2013 2014* 2015 2016 2017 2018 2019 2020Millions

Paybacks PWP Incentives Original CECIP Model (2009)

CECIP projection

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CECIP projection

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CECIP Outflows

($9)($8)($7)($6)($5)($4)($3)($2)($1)$0$1$2$3$4$5$6$7

2009 2010 2011 2012 2013 2014* 2015 2016 2017 2018 2019 2020Millions

Paybacks PWP Incentives Original CECIP Model (2009)

CECIP projection

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CECIP Outflows

($9)($8)($7)($6)($5)($4)($3)($2)($1)$0$1$2$3$4$5$6$7

2009 2010 2011 2012 2013 2014* 2015 2016 2017 2018 2019 2020Millions

Paybacks PWP Incentives Original CECIP Model (2009)

CECIP CASHFLOW

FY13 total budgeted vs actual (kWh)

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0

50

100

150

200

250

300

350

400

450

500

0

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

12,000,000

14,000,000

CDDkWh

Actual kWh Budgeted kWh 2011 CDD 2012 CDD 2013 CDD

how to make this happen

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• establish program criteria early• communicate the go/no‐go factors to the team• overview of ground‐rules for evaluating retrofit opportunities in laboratory and other critical facilities

• energy retrofit training requirements• detail project closeout requirements beyond traditional punch/O&M/warranty

• requirements to “prove the efficiency benefit”

Projects Must:Exhibit verifiable savings

♦Contain a plan for periodic 

measurement & verification

♦Return on Investment greater than 15%

standard operating procedures

SOP is an energy retrofit “play‐book” that outlines data acquisition requirements per energy retrofit type

what has been done, where is it going

what has been done:• low hanging fruit has been picked up

• campus wide lighting retrofit• premium efficiency fan motors• free cooling, rCx economizers

where are we going:• building air handling optimization

• laboratory HVAC energy retrofits 

($8/SQFT to $3/SQFT) Constant to Variable Volume with Demand Control (6 ACH/4 ACH)

• chilled water distribution optimization

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BTU/Hr represents the energy required to heat or cool waterBTU/Hr = 500  x  gpm x  ΔT

500,000

engineering for a minute

=500 x 500 x 2 (LOW ΔT )

=500 x 200 x 5 (LOW ΔT )

=500 x 100 x 10 (Moderate ΔT )

=500 x 50 x 20 (Good ΔT )

=500 x 33 x 30 (Excellent ΔT )

Increase ΔT, reduce flow, same heat transfer

BTU/Hr represents the energy required to heat or cool waterBTU/Hr = 500  x  gpm x  ΔT

500,000

engineering for a minute

=500 x 500 x 2 (LOW ΔT )

=500 x 200 x 5 (LOW ΔT )

=500 x 100 x 10 (Moderate ΔT )

=500 x 50 x 20 (Good ΔT )

=500 x 33 x 30 (Excellent ΔT )

Increase ΔT, reduce flow, same heat transfer

Take away:  What am I doing to maximize Delta‐T at my facility?

now the important part:proving it works

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measure and prove the performance

• CECIP takes measurement and verification to another level

• In‐house business processes to sustain savings

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one of the ways projects wont payback

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one of the ways projects wont payback

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‐$

‐$

‐$

‐$

0

2

4

6

8

10

12

14

16

the adjustments accumulate quicklyN = 132

0

2

4

6

8

10

12

14

16

the adjustments accumulate quicklyN = 132

Take away:  How does operations currently track BMS configuration changes?

active energy management (AEM)

Visualizations for efficiency

Y= mx + B

Optimal Operating Line

energy management integrated with maintenance

key areas

• building automation warranty management

• operating mode validation• system configuration

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Questions?

Questions?

Rob Foley, Sustainable Endowments Institute rob@endowmentinstitute.org

Joe Indvik, ICF International joe.indvik@icfi.com

John Onderdonk, Caltech john.onderdonk@caltech.edu

Matt Berbee, Caltech matthew.berbee@caltech.edu

Submit questions in the “Questions” pane of the toolbar on the right side

of your screen.

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Thank You!