1 | Energy Efficiency and Renewable Energyeere.energy.gov Alternative Finance & Mitigating Deferred Maintenance May 21, 2013 Kurmit Rockwell PE, CEM, LEED AP DOE FEMP

2 FEMP Mission FEMP works with key individuals to accomplish energy change within organizations by bringing expertise from all levels of project and policy implementation to enable Federal Agencies to meet energy related goals and to provide energy leadership to the country.

3 FEMP-supported Alternative Financing Programs Several vehicles that allow agencies to fund energy improvements without up-front capital costs or special appropriations

4 FEMP Contacts Federal Financing Specialists (FFSs) Scott Wolf Western Region including N. Marianas, Palau, Guam, American Samoa; plus East, South, and Central Asia; the Pacific; and Near East Tom Hattery Northeast Region plus State Dept ee.doe.gov Doug Culbreth Southeast Region plus Europe and Western Hemisphere Northeast West Midwest Southeast Midwest www1.eere.energy.gov/femp/financing/espcs_financingspecialists.html

5 Contracts that allow agencies to do energy projects with no up-front capital cost and no special appropriations from Congress. ESPC Overview

6 $ for Energy + Related Operations & Maintenance $ for Energy + O&M Savings Excess Savings Payments to ESCO Before ESPC Performance Period After ESPC Term Reallocate the Governments Utility Bill: Stop paying for waste and pollution Start paying for efficiency ESPCs are Budget-Neutral

7 Comparison of DOE ESPC IDIQ and UESC DOE ESPCsUESCs Private-sector partnerEnergy services company (ESCO) Serving utility company AvailabilityWorldwideWhere offered/authorized Contract typeTask orders under DOE IDIQ or conventional contract GSA Area-wide contracts; Basic ordering agreements Optimum project size$1 – 2 million or largerAny Savings guarantees and M&V RequiredNegotiable (performance assurance required for annual scoring) O & MESCO responsible; who performs is negotiable Negotiable Eligible facilitiesGovernment-ownedWhere government pays utility bill

8 Why Agencies Use ESPCs Fund energy improvements with no up-front capital costs – Preserve appropriations for other needs Obtain long-payback ECMs by bundling with short- payback ECMs Take advantage of ESCO experience Operations, maintenance & repair can be included in contract They deliver long term guaranteed improvements, savings, and performance Bundle facilities across utility territories and regions

9 Milestones in the ESPC Process

10 ESCO Must Assure and Guarantee Equipment Performance Assurances: – Design standards – Standards of service (temperature, humidity levels, etc.) – Post-installation M&V – Commissioning – Defined consequences for substandard performance (typically agency withholds amount of savings shortfall from payment) – Responsibility for O&M/R&R

11 ESCO is Ultimately Responsible for O&M and R&R O&M and R&R of installed equipment are the ESCOs responsibility O&M and R&R TASKS, however, may be assigned to ESCO or agency – General approach is described in contract in Risk, Responsibility, and Performance Matrix – Details are in M&V Plan or other parts of TO Who will carry out O&M and R&R tasks How performance will be verified What to do if tasks are not performed

12 How ESPCs Address Deferred Maintenance New equipment models in like-for-like replacements will almost always require less maintenance Equipment choices can emphasize maintenance costs, e.g., replace standard HVAC with ground- source heat pumps By including recommissioning of (non-ESPC) equipment in the task order = maintenance Ask your ESCO how an ESPC task order can address your maintenance backlogs

13 For more about FEMP Alternative Financing Google: FEMP Project Funding FEMP Alternative Finance Training Contact Information Kurmit Rockwell, PE, CEM, LEED AP Want to Know More?