when performance contracting makes sense
TRANSCRIPT
PERFORMANCE CONTRACTING – HOW TO MAKE IT WORK FOR YOU
20-Ju
ly-2
016
2
ENERGY SAVINGS PERFORMANCE CONTRACTING
3
• Authorized by state law • Agreement between Owner and ESCO to provide
progressive design build of cost-savings measures, with a long-term guarantee
• Financed by CIP, bonds, SRF, grants, lease purchase, etc.
ENERGY SAVINGS PERFORMANCE CONTRACTING
DELIVERY MODEL
4
REQUEST FOR QUALIFICATIONS
PROPOSED ESPCAGREEMENT
INVESTMENTGRADE AUDIT
PROJECTEXECUTION
MEASUREMENT & VERIFICATION
• Qualifications-based selection• Select team for entire project
• Project Goals• Scope/Project Definition• Preliminary Design
• Guaranteed Lump Sum Price• Guaranteed Savings
• Final Design• Procurement• Construction
• Verify Performance• ESCO Corrects or Reimburses
Underperformance
12345
5
EN
ER
GY
SA
VIN
GS
PE
RFO
RM
AN
CE
CO
NT
RA
CT
ING
PROJECTS CAN BE IMPLEMENTED WITH NO RATE INCREASE
DebtService
Energy
Chemicals
Maintenance
Labor
SAVINGS
DebtService
Energy
Chemicals
Maintenance
Labor
Savings applied to capital payments
to fund project
Efficiencyproject creates
savings
RAT
ES
DebtService
Energy
Chemicals
Maintenance
Labor
SAVINGS
SAVINGS
SAVINGS
EXCESS SAVINGS
Typicaloperating
budget
Annual Payment
CASH FLOW
6Utility owns the assets and all savings.
SAVINGS $
CAPITAL $
GUAR
ANTE
E $
CAPITAL $
FINANCING
UTILITY ASSETS
ESCO
SAVI
NGS
$
UTILITY’S ROLE IN SUCCESS
7
A win-win deal is best for BOTH parties
MAINTAIN REASONABLE EXPECTATIONS
8
"Free" audits are not freeESCO’s don’t have free money
THERE IS NO FREE LUNCH
9
Owner participation results in the best projects.
YOU GET BACK WHAT YOU PUT INTO IT
10
ESCO’S ROLE IN SUCCESS
11
The Utility needs to understand the deal, too
CLARITY IS EVERYONE’S FRIEND
12
Open discussion of risk leads to win-win
ALLOCATE RISK OPENLY
13
Systems are complicated and inter-related
KNOW YOUR WATER/WASTEWATER FACILITY
14
