hosted by the initiative for renewable energy and the … · 2020. 1. 7. · $5.6m 12 year...
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Hosted by the Initiative for Renewable Energy and the Environment 27 January 2012 • University of Minnesota, Twin Cities
Dick Hemmingsen, Managing Director, Innitiative for Renewable Energy & the Environment Mayor Chris Coleman St. Paul, Minnesota Commissioner Paul Aasen, Minnesota Pollution Control Agency U.S. Senator Al Franken
Bill Heaney, MN Energy Jobs Association Jay Behnken, Trane
Madonna Rykken, Honeywell Building Solutions Commissioner Rhonda Sivarajah, Anoka County
Andrew Dykstra, Anoka County
Retrofitting of Public Buildings
Agenda
■Overview of Performance Contracting (PC)
■Why use Performance Contracting . . . The Benefits
■Some Myths…Busted
■Case Study – Anoka County
■Questions (if time permits)
Existing MN Legislation
■ Procurement method for state, municipal and k-12
■ Payback requirements varies by sector
■ Provides funding for capital projects
■ Savings offset project costs
■ No new taxes
■ No upfront money required
■ Performance and savings are guaranteed
■ Improves operating efficiency/ Enhances working environment
■ Flexible and unique for each customer
Benefits of PC
Traditional Bid / Spec Performance-Based
Low bid awarded based on specifications Awarded based on performance & lifecycle costs
Project costs funded by capital budget Payments for projects are offset by guaranteed savings freeing up capital for other needs
Piecemeal approach based on available dollars
Comprehensive approach
Up-front fee for evaluation/studies No up-front fee required
Performance & savings are not guaranteed Long-term performance & savings are guaranteed
Multiple contracts with multiple vendors One contract, single-point accountability
Contractors have no accountability to lifecycle costs
Performance-based contractor is tied to guaranteeing savings over term of contract
Owner assumes risk Performance contractor takes risk
How it Works Performance Contracting is a way to fund improvements with no additional cost to taxpayers.
Existing facility, energy,
operations & maintenance
costs
Before
Existing facility, energy,
operations & maintenance
costs
Excess Savings
Savings Fund Improvements
During
Existing facility, energy,
operations & maintenance
costs
Savings
After
$
The Myths
■ Loss of project control
■ Unsure of guaranteed savings measurement process
■ Project costs more through performance contracting
■ I don’t have a choice of the product manufacturer
■ We have our own skilled personnel
■ Only applies to greater Minnesota areas
Lighting Water Waste Water Street Lighting Parking Meters
HVAC Ice Arenas Swimming Pools Plumbing Fixtures
Building Envelope Issues
Potential Opportunities
. . . & more
Landfill Sites
City of Rochester
Challenges ■ Aging facilities & infrastructure
■ Limited capital
■ Increasing energy & operational costs
Project Details $5.6M
12 Year Agreement
Utility Savings:$502K/year
Operational Savings:$102K/year
Rebates - $300K
Solutions Lighting, Temperature Controls, Water Upgrades
Building Envelope issues
Traffic Signal Upgrades
Steam Trap Repair
Boiler Replacements
Building Automation Systems
Ice Arena Dehumidification, energy recovery & ceilings
Variable speed drives, high efficiency motors & pumps
Fire alarm & security upgrades
•Results ■ Addressed long overdue capital improvements ■ Improved reliability of mechanical systems ■ Improved comfort, efficiency and taxpayer image ■ Environmental benefits – reduced GHG emissions
Anoka County – Government Facilities Challenges ■ Aging facilities & infrastructure
■ Budget shortfalls/limited capital
■ Increasing energy & operational costs
■ Uncomfortable working environment
Project Details ■ $12.5M of facility upgrades
■ Annual energy/operational savings of $873,000
■ 30+ buildings
■ Over 1.4 million square feet
■ 7 phases of work
Solutions ■ Lighting and fixture upgrades ■ Occupancy sensors ■ Exterior photocells ■ Energy efficient motors and pumps w/ VFD’s ■ Water saving retrofits on fixtures ■ Energy management system ■ Central heating & cooling plant upgrades ■ Mechanical system improvements ■ Temperature control system upgrades ■ On-site generator to manage peak demand ■ Training of staff ■ Measurement and verification
Results ■ Addressed long overdue capital improvements ■ Improved reliability of mechanical systems ■ Improved comfort, efficiency and taxpayer image ■ Environmental benefits
Questions
Madonna Rykken | 612.865.1492 Business Development Manager Honeywell Building Solutions [email protected] Jay Behnken | 651-468-2715 Comprehensive Solutions Manager Trane Minneapolis/St. Paul [email protected]
MEPC Meeting
April 7, 2011
Andrew Dykstra
Director of Facilities Management and Construction (763) 323-5385
Anoka County
Anoka County Facilities
Anoka County Parks and Recreation
Facilities
Anoka County Library Facilities
Anoka County Facilities
Total of 2,500,000 square feet of buildings.
Inefficient Infrastructure
Increasing IAQ Requirements Physical Asset
Deterioration
Degrading Building Envelope
Obsolete Control Systems
Aging HVAC
Why Anoka County Did a Project?
Aging Infrastructure/Deferred Maintenance
Increasing Energy and Operating Costs
Occupancy Comfort Issues
Lack of Funding $$$
Types of Projects
Lighting Retrofit Energy Management System Upgrades Energy Efficient Motors/Variable Speed Drives Central Heating and Cooling Plant Replacements Dual Duct Ventilation System Conversion Back-up Generators Temperature Control System Repairs Water Conservation Insulation Replacement Power Factor Correction Miscellaneous Improvements
Financial Results
$12.5 million in projects – 7 phases – Over 10 years
Energy and Operational Cost Reduction Exceed $873,000 annually (for all 7 phases).
Annual Energy & Operational Savings by Year
Janet Streff Manager, State Energy Office
Minnesota Department of Commerce
How the State’s Guaranteed Energy Savings Program and Public Building Enhanced Energy Efficiency Program Can Help.
Encouraging Energy Efficiency and Public
Building Retrofits in the State of Minnesota
• Minnesota Department of Commerce • Division of Energy Resources
• State Energy Office • Providing energy information
for over 35 years… • Energy conservation, efficiency, &
renewables • Through technology, analysis, grants,
programs, & public outreach • Data, reports, publications, presentations,
website, call center, training, public events 21
• Getting Started – Tools • Access B3 Benchmarking Website
• Building Construction Data –
• Square footage, operational equipment, occupancy and usage
• Energy Consumption Data –
• Electrical and natural gas – kW, kWh, therms
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• Benchmarking your buildings gives you the information you need to get started
• MN has benchmarked 6,400 of its public buildings
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0
20
40
60
80
100
120
10 40 70 100 130 160 190 220 250 280
Annual KBtu/sq. ft.
Num
ber o
f Bui
ldin
gs
50% Over Code
Set Energy Code Target Range
Best Candidate Buildings for Investing Energy Efficiency Dollars
Dramatic difference in return on investment for retrofit $$
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•Mechanical Systems •Heating Systems •Ventilation Systems •Air Conditioning •Electrical Systems •Energy Management Systems
•Lighting Retrofits •Building Envelope •Water Conservation •Renewable Energies
• MN Public Sector Programs • Public Buildings Enhanced Energy
Efficiency Program (www.PBEEEP.org) • Retrocommissioning through extended
studies • Smaller capital projects
• Guaranteed Energy Savings Program • Revamping state performance contracting
program via Dayton’s Executive Order 11-12 • RFQ for energy service companies 1/30/12
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• Legislative Background – State Energy Improvement Financing Program • Minn. Stat §16B.321 – 16B.322 enacted in 2008 to
address two fundamental constraints to reducing energy consumption in state buildings: • Access to expert technical assessment to
identify measures to reduce energy consumption
• Access to financing to implement recommended measures
• Economic feasibility is determined by ability to pay back financing out of savings realized by energy improvement project
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Through People and Organizations
Program: Center for Energy and Program Administrator Environment (CEE)
Provider: PBEEEP Qualified Contractor(s) Complete projects
State Department of Commerce, Div of Energy Resources
Local Government: City, County, School District Project Building Owner
Enhances public building energy efficiency through retro- CX and retrofits •Reduces energy use •Reduces operating costs •Reduces greenhouse gas
emissions •Creates/retains jobs •Promotes renewable, alternative
energy sources
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• Guaranteed energy savings program reinvigorated through Executive Order 11-12
• DER staff provide technical, financial and contractual assistance to local units of government seeking building retrofit programmatic support.
• DER is part of the Energy Service Coalition – MN Chapter
• National, nonprofit, organization of public & private sector members, working in partnership with the U.S. Department of Energy
• Working together at state & local level to increase energy efficiency and renew building infrastructure through the use of Energy Savings Performance Contracts
MN Dept. of Commerce Energy Service Companies
MNSCU Product Manufacturers
Local Unions Utility Companies
Renewable Energy Cos Installing Contractors
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Significantly reduce energy use Improve facilities’ environment Reduce deferred maintenance Avoid expenditure of capital Reduce operations and maintenance Improve productivity Reduce waste Fund projects through energy
savings
Energy
Liability Repairs
Savings
Comfort Productivity
• SEE Action Network • State and local effort facilitated by the federal
government that helps states, utilities, and other local stakeholders take energy efficiency to scale and achieve all cost-effective energy efficiency by 2020.
• Existing Commercial Buildings WG goals include enlisting 10 state and 30 local governments to adopt one or more solutions (benchmarking, green leasing, RCx)
• http://www1.eere.energy.gov/seeaction
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• Launched by President in December 2011
• Partners commit to an energy savings pledge, a showcase building, and to share their progress
• MN participants include State of MN, Best Buy, 3M, Cummins – and more?
• 1.6 Billion sq. ft. committed, $2B financing through allies
• 300+ manufacturing facilities
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• GreenStep Cities – 30+ MN cities signed up for voluntary challenge, assistance program •Building efficiency one of 28 best
practices •City policies/programs useful to
other cities •http://greenstep.pca.state.mn.us
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www.MnGreenStep.org
State programs and GreenStep Buildings & Lighting Best
Practices Actions:
1. B3 Benchmarking 2. GESP 3. PBEEEP
Division of Energy Resources Contacts
PBEEEP: Abby Finis [email protected] GESP: Peter Berger [email protected] GESP: Eric Rehm [email protected]
Please use roving microphones for questions and comments
For those joining us online,
please submit questions via chat
Deputy Secretary, U.S. Department of Energy
Mayor Jim Hovland of Edina Former State Senator John Doll
Kate Worley, Co-Executive Director, Minnesota Waste Wise
Retrofitting Private Buildings
EDINA EMERALD ENERGY PROGRAM (PACE)
Mayor Jim Hovland City of Edina
January 27, 2012
EDINA PACE PROGRAM DOCUMENTS •Program Report and Administrative Guidelines •Application and Petition for Special Assessment •Bond Purchase Agreement •Bond Resolution •List of Eligible Improvements •Summary of Financing Process •Flow Chart of Financing Process
Property Assessed Clean Energy Financing
Senator Franken - GreenStep Cities Event January 27, 2011
John Doll Former State Senator, District 40
nearly 35% of U.S. energy use
and carbon emissions come from our buildings
Benefits of Deep Energy Retrofits in Commercial Buildings
• Significant Energy Consumption Savings
•Net Increase in Cash Flow
•Healthier Environments for Tenants and Employees
•Improved Productivity Levels
•Higher Occupancy Rates/Higher Rents
•Improved Marketability of the Property
•Increased Property Values
• Energy Efficiency Credits
Why PACE? PACE provides a pathway to overcome inherent barriers to investing into critical deep energy retrofits in the private sector: short term investment horizons, split incentives, capital competition, high upfront costs, tight credit or low levels of liquidity. It provides a perpetual funding mechanism for EE and RE projects that can overcome the above concerns. And because energy savings make the projects cash-flow positive, and because total asset value is increased, companies improve their financial position without having to tie up any of their equity or debt capacity.
What is PACE?
Property Assessed Clean Energy financing is a local government program that uses a 100+ year old provision of the property tax code to create a land secured financing district that allows property owners to pay for improvements that are in the public interest. In this case, improving building energy efficiency and installing renewable energy upgrades.
PACE Basics
Provides capital to fund energy
retrofit
Pays special assessment on
property tax bill
Contractor paid for retrofit
Energy savings pay for capital improvements
PACE Basics
Commercial Lender
Local Government
ESCO
Property Owner
Pay collected Assessment to lender
Construction Payments
Owner –arranged PACE financing model
Arrange Financing Pay Special
Assessment Through Property Tax
Guaranteed Energy Saving
Performance Contract
Apply for and receive approval
for Special Assessment
Key Provisions of MN PACE • MN Statute 216C.436 authorizes local governments to issue and sell revenue bonds under the program through special assessment on property tax.
•Allows multi-jurisdictional PACE programs through an authorized implementing entity.
• Senior Lien Status (Tax Lien) of Financing not to exceed 10% of assessed value
• Transferability of lien – Financing is land/property secured. A change in ownership of the property does not accelerate or otherwise alter the original payment period.
• “Opt-in” program - All properties within energy financing district are eligible and, if owners qualify under established underwriting rules and guidelines, may participate in PACE program.
•Best Practices and strong underwriting guidelines significantly reduce the risk of default.
• Requires an energy audit or renewable energy system feasibility study
• Program sustainability ensured through quality assurance and controls
•Bonds issued under this subdivision are not a debt or obligation of the issuer or any local government that issued them, nor is the payment of the bonds enforceable out of
Benefits of PACE
To Lenders • Very Low Default Rates
• Better Loan-to-Value Ratio
• Improved property value
•Improved marketability of asset
• Guaranteed revenue stream - Positive cash flow improves property owner’s financial position, thus their ability to repay the financing •ESCO participation provides additional layer of performance security
To Property Owners • No upfront cash needed
• Improved Cash Flow
• Less investment risk •Off-balance sheet financing • Savings to Investment Ratio > 1
• Improved property values/marketability
•Minimizes the split incentive barrier •Property tax liens can pass through to tenants
• Removes Holding Period Bias
•Special assessments can transfer
Commercial PACE
PACE Financing for Commercial Buildings to Reach $2.5 Billion Annually by 2015 – Pike Research, June 2010 According to a new report from Pike Research, PACE programs will continue to proliferate in the United States, and by 2015 investment in PACE financing for commercial buildings will total $2.5 billion annually, under a baseline forecast scenario. This level of investment would result in the creation of 50,000 new jobs, and would mitigate almost 8 million metric tons of carbon dioxide (CO2) emissions, equivalent to taking 1.7 million cars off the road for a year. “PACE programs are gaining momentum around the country, and they represent a very promising mechanism for overcoming many of the barriers to energy efficiency retrofits for commercial buildings,” says Pike Research managing director Clint Wheelock. “The majority of buildings would benefit from energy retrofits, with neutral to positive cash flow in addition to the other environmental and social benefits.”
Building a sustainable future based on clean energy
For more information - Contact: John Doll at 612.366.6822 or [email protected]
Getting Started
Know Utility Rebates Program Rebate Lighting Efficiency Rebates for installing efficient lighting in existing and
new buildings.
Heating and Cooling Efficiency Energy efficient boilers & burners, furnaces, steam traps, chillers, economizers, PTAC’s. Prescriptive & custom.
Motor Efficiency Prescriptive and custom rebates for motors and VFD’s that meet or exceed NEMA premium efficiency standards.
Efficiency Controls Automated building systems controls for lighting, HVAC and others.
Custom Efficiency Projects that involve energy savings but are not included in other programs.
Recommissioning Building system tune-up—improve efficiency of existing operating systems and controls.
Refrigeration Recommissioning Commercial refrigeration system tune-up—improve efficiency of existing refrigeration systems.
50% Bonus Rebate for T12 Lighting through March 31, 2012
If you still have T12 lights, now is the time to act. Financial incentives are their highest.
Pick up a lighting rebate form today
Xcel Energy T12 Bonus Rebate
Catalog private commercial buildings How many, how big, who owns, etc.
Identify private sector targets Prioritize (value, sq. ft., business type, etc.)
Develop outreach plan Who makes contact, when, how, etc.
Conduct energy audits Identify mid-cost vs. ESCO projects
Identify upgrade options & take to City Hall
The Private Sector Continuum
Where to Turn for Help
Useful Resources in Minnesota Green Step Cities
Energy Smart
Your energy utility
Minnesota Division of Energy Resources
Center for Energy and the Environment (CEE)
Minnesota Technical Assistance Program (MnTAP) or Retired Engineers Technical Assistance Program (RETAP) Clean Energy Resource Teams (CERTs)
Your city economic development department
Your county or regional economic development programs
Please use roving microphones for questions and comments
For those joining us online,
please submit questions via chat
Hosted by the Initiative for Renewable Energy and the Environment 27 January 2012 • University of Minnesota, Twin Cities
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