FEMP Assistance

Meeting Forest Service Needs

Energy Savings Performance ContractingESPC

Definition of ESPC

• ESPC is a no-upfront-cost contracting method. The contractor incurs the cost of implementing energy conservation measures (ECM) and is paid from the energy, water, wastewater and operations savings resulting from these ECMs.

ESPC Achievements*

• $1.9 Billion Investment

• $5.2 Billion Savings

• Annual energy savings:

16 trillion Btu Equivalent to the energy consumed by 173,000 households or a city of a half million.

*2005 data, reported June 2006.

ESPC Achievements• Over 400 Federal ESPC projects through FY05

• 19 different Federal agencies and departments in 46 states

• DOD has done 60% of the projects and 70% of the investment dollars

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Why do an ESPC?• Meet energy reduction and environmental goals

– Affirm agency commitment to these goals

• Improve facilities: comfort and reliability• Provide critical facility data• Save taxpayer money• Faster process• Better quality• Good for community relations• Fixed price contracts - change orders aren’t needed• Avoid cost of delay and inaction• Fast construction• Avoid deferred maintenance

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More on: Why do an ESPC?

• ESCO has incentive to find all ECMs• ESCO has incentive to provide high quality

equipment that will perform long after installation• ESCO has incentive to do all punch list items timely• ESCO has incentive to commission well

Pay a lower utility bill Pay the contractor Achieve cost savings for the government

Reallocate the Government’s Utility BillReallocate the Government’s Utility Bill

Takes precedence over FARTakes precedence over FAR

Allows unsolicited proposalsAllows unsolicited proposals

Specifies procurement procedures and Specifies procurement procedures and bases for selection of ESCOsbases for selection of ESCOs

DOE ESPC Final Rule DOE ESPC Final Rule (1995)(1995)

The Two Types of Super ESPC

General (by DOE Region)General (by DOE Region)

Technology Specific (National)Technology Specific (National)

PhotovoltaicsPhotovoltaics

GeothermalGeothermal

Biomass and Alternative Methane FuelsBiomass and Alternative Methane Fuels

Solar ThermalSolar Thermal

Verifies guaranteed savings: 1. ESPCs are financed using avoided cost as a revenue to service debt.

2. A critical part of this financing tool is the ESCO-provided savings guarantee.

3. M&V assures the government that savings have been fully achieved before full payment is made to ESCO.

For a successful DO, both parties must understand and agree on the M&V strategy.

Why Do You Need M&V?

Interagency Agreement

• FEMP provides technical assistance FEMP provides technical assistance to assure a successful ESPC.to assure a successful ESPC.

• To get started, FEMP provides free To get started, FEMP provides free services without the need for an IAA.services without the need for an IAA.

• After the IP phase, FEMP services are After the IP phase, FEMP services are provided on a cost reimbursable basis. provided on a cost reimbursable basis. The IAA spells out level and cost of The IAA spells out level and cost of FEMP project facilitation.FEMP project facilitation.

Super ESPC Key Points• Guaranteed Savings are Mandatory

• Measurement and Verification is Mandatory

• Contract term cannot exceed 25 years

ESPC Process Requires

• Require project facilitator

• Require financing competition

• Emphasis on M&V and Pricing

• Change in contractor selection process

Super ESPC steps

• ► Meet with DOE• ► Pick Contractor (ESCO)• ► Initial Proposal (IP)• ► Notice of Intent (NOI)• ► Detailed Energy Survey

(DES)• ► Delivery Order

• ► Final Design• ► Installation• ► Acceptance• ► 1st Year Measurement

& Verification (M&V)• ► Annual M&V• ► Complete contract

BAMF Super ESPC ProcessImplement

DO

InitialProposal

NOI & DO RFP

Detailed EnergySurvey

Negotiate Final DO

Kickoff

Meeting

Phase

1

Phase

3

Phase

2

Phase

4

Biomass and Alternative Methane Fuels Energy Services Companies (ESCOs)

BAMF ESCOsNation-wide Coverage

• Ameresco Federal Solutions

• Constellation Energy Services

• DTE

• Energy Systems Group

• Honeywell

ESCOs byDOE Regions

(Regional ESPC)

WESTERN• Honeywell

International• Johnson Controls• NORESCO, LLC• Honeywell

Building Solutions (SES)

WESTERN• Honeywell

International• Johnson Controls• NORESCO, LLC• Honeywell

Building Solutions (SES) CENTRAL

• Ameresco Solutions

• Honeywell International

• Johnson Controls• NORESCO, LLC• Honeywell Building

Solutions (SES)

CENTRAL• Ameresco

Solutions • Honeywell

International• Johnson Controls• NORESCO, LLC• Honeywell Building

Solutions (SES)

SOUTHEAST• Ameresco Solutions • Chevron USA• Johnson Controls• NORESCO, LLC• Honeywell International• Honeywell Building Solutions (SES)

SOUTHEAST• Ameresco Solutions • Chevron USA• Johnson Controls• NORESCO, LLC• Honeywell International• Honeywell Building Solutions (SES)

MID-ATLANTIC• Constellation

Energy Services• Honeywell

International• NORESCO, LLC• Select Energy

Services

MID-ATLANTIC• Constellation

Energy Services• Honeywell

International• NORESCO, LLC• Select Energy

Services

MIDWEST• Constellation Energy

Services• Ameresco Solutions• Johnson Controls• NORESCO, LLC• Honeywell Building

Solutions (SES)

MIDWEST• Constellation Energy

Services• Ameresco Solutions• Johnson Controls• NORESCO, LLC• Honeywell Building

Solutions (SES)

NORTHEAST• Honeywell International• Johnson Controls• NORESCO, LLC• Select Energy Services• Honeywell Building

Solutions (SES)• Consolidated Edison

Solutions

NORTHEAST• Honeywell International• Johnson Controls• NORESCO, LLC• Select Energy Services• Honeywell Building

Solutions (SES)• Consolidated Edison

Solutions

For contact info: www. eere.energy.gov/femp/financing/superespcs_espcescos.html

Super ESPC Workshops for 2008Super ESPC Workshops for 2008

Check with us about Intro and Advanced ESPC training Check with us about Intro and Advanced ESPC training workshops for 2008.workshops for 2008.

Check with us about on-line or on-site training.Check with us about on-line or on-site training.

Energy 2008Energy 2008August, 2008August, 2008Phoenix, ArizonaPhoenix, Arizona

ESPC info on the Web:ESPC info on the Web:http://www1.eere.energy.gov/femp/financing/superespcs.htmlhttp://www1.eere.energy.gov/femp/financing/superespcs.html

Super ESPC Workshops for 2008Super ESPC Workshops for 2008

Check with us about Intro and Advanced ESPC training Check with us about Intro and Advanced ESPC training workshops for 2008.workshops for 2008.

Check with us about on-line or on-site training.Check with us about on-line or on-site training.

Energy 2008Energy 2008August, 2008August, 2008Phoenix, ArizonaPhoenix, Arizona

ESPC info on the Web:ESPC info on the Web:http://www1.eere.energy.gov/femp/financing/superespcs.htmlhttp://www1.eere.energy.gov/femp/financing/superespcs.html

More ESPC Info

Forest Service ESPC - History

Edd Bills

Biomass and Alternative Methane Fuels (BAMF) Super ESPC

Project Facilitator

Forest Service ESPC - History• 1998 Region 6 Corvallis Forestry Lab, Heating retrofit & Bldg

Automation Systems

$740,528 Cost - $769,001 Total Savings - 10 Year Term

• 2005 Region 2 Mystic Ranger District Office, Biomass Heat

$211,449 Cost - $397,726 Total Savings - 20 Year Term

Project aborted at Final Proposal due to size (economics)

• 2005 Region 4 Idaho City Ranger District Compound

Biomass heat and power

Project aborted before Initial Proposal due to size (economics)

Forest Service ESPC - CurrentRegions 2/4 Region-wide ESPC

• Biomass Heat, Lighting, Wind, Solar, Water

• Region 2, Part 1 - $1.9 Million cost - $2.9 Million total savings - 15 year term

• Region 4 Part 1 - $2.1 Million cost - $3 Million Savings (estimate)

• All indications point to at least 2 successful projects

Regions 2/4 Region-wide ESPC cont’d• Region 2 - Detailed Energy Survey (DES) in-progress• Region 4 - Initial proposal 1st wk of Dec 07

ESCO Proposed Model• Part 1 – Large enough for project viability small enough

for investigation efficiency. – One volunteer Forest has comprehensive DES.– All Forests in the region investigated for light and water. – Measures of interest are considered (e.g. Forest has wind).

• Part 2 – Ideas coming out of Part 1 applied.– All interested Forests have DES.– Large scale biomass heat and/or power will be considered.

FS Currently Exploring ESPC

• Regions 2/4

• Region 1

• Region 3

• Job Corps

• Research Stations

• Forest Products Lab

Forest Service ESPC Lessons Learned• “Bundle” small projects for success

• Region(s)-wide effort is an excellent method of bundling (is a national ESPC possible?)

• Grass roots interest is essential – Each Forest must stand alone – – Energy savings are retained locally

• One Contracting Officer over several projects is very beneficial - cuts 6 months off a project.

• Grants and Agreements people add an approval layer

Forest Service ESPC Challenges

• Educating Contracting (and Grants/Agreements)

• Working around fire season

• Investigating spread-out, and remote locations

• Economical Measurement and Verification (M&V) on Energy Conservation Measures (ECMs) at small, spread-out, and remote locations

Recommendations to Streamline the ESPC Process at FS

• Execute a National Interagency Agreement out of FS HQ (avoids duplication from region to region)

• Assign a “specialist” Contracting Officer for ESPC

Forest Service Biomass Issues

• Size is everything – Small is challenging– Small facilities must have help from lighting, water, etc

to make ESPC economical.– Currently the threshold seems to be around 30,000 ft2

• Midsize biomass heat can pay back quickly

• Fuel procurement responsibility is an issue

FEMP Support for the Forest Service

Biomass and Alternative Methane Fuels (BAMF) Super ESPC

Technical and Team Lead

How can we help?• Biomass expertise within FEMP

• DOE – FEMP Training

• Contract Officer Training

• Dean Graham – familiar with FS and ESPC

Wood-to-EnergyUsing wood:

• Reduces hazardous forest fuels – promotes healthy forests

• Reduces use of fossil fuel

• Lowers net carbon to the atmosphere

• Helps meet EPAct 2005 and Executive Orders

• Saves energy dollars

FS – DOE Synergy• Large Scale Biomass Power Plant(s) for

Federal Sector Power.

• Power Purchase Agreements

• Energy Parks – Ideal locations for heat and power applications

FS – DOE Opportunities

Fuel Fuel AvailableAvailable

High Voltage High Voltage Grid NodesGrid Nodes

Favorable Favorable State for State for WheelingWheeling

DOE Southeast Region

Geothermal Heat Pump ESPC

Photovoltaic ESPC

Biomass ESPC

Doug Culbreth

U.S. Department of Energy

Carson.culbreth@ee.doe.gov

919-870-0051

Contact