Energy Savings Performance Contracting (ESPC) Pick a logo for the main page of your presentation. Delete the other logo.

What is an ESCO? Energy Services Company (ESCO) Some similarities to a Design/Build firm Turnkey service for energy efficiency projects Expertise in energy engineering Commissions project work Measures and Verifies Energy Savings

ESCO Benefits GUARANTEED: Maximum project cost Energy savings Collaboration between Owner, DES, and ESCO Ability to fast-track Owner involved with contractor selection Owner involved with equipment selection One responsible entity (ESCO) GUARANTEED: Maximum project cost Energy savings Equipment/System performance Presenter 2018-05-04 21:41:02 -------------------------------------------- Joe – 2 min

What is DES’s Role Prequalified Providers Project Oversight Contractual Framework & Coordination Financial Transparency 1986 RCW 39.35 Legislative Authority to GA (Now DES)

Energy and/or Water conservation projects such as: Qualifying Projects Energy and/or Water conservation projects such as: Building lighting Street lighting HVAC modifications Steam & condensate Boiler & chiller systems Energy management control systems Building and grounds water conservation

Financing Current Operational Costs New Operational Costs Before Savings Savings Annual Debt Service New Operational Costs Utility & Maintenance Costs Utility & Maintenance Costs Utility & Maintenance Costs Before During After

Financing Options Energy Service Company (ESCO) Financing State Financing State Treasurer’s LOCAL Program 3 - 5% interest rate 10, 12 or 15 year loan Private Financing Agency intra-budget financing

Department of Enterprise Services Experience Energy conservation in public facilities since 1986 Over 500 projects totaling $300 million Over $100 million in energy cost saved $30 million in utility rebates brought to the projects Clients include state agencies, colleges and universities, cities and towns, counties, school districts, port districts, libraries, hospitals, health districts: Highline College Olympic College Yakima School District Valley Medical Center City of Tukwila King County Tumwater School District Department of Corrections University of Washington Veterans Administration City of Olympia Port of Bellingham …and dozens more Customers:

Sequence of an ESCO Project Project initiated by Interagency Agreement ESCO Selection Measurement & Verification Preliminary Audit #1 Design & Construction #3 #5 #4 #6 #2 Investment Grade Audit

Interagency Agreement DES initiates an Interagency Agreement (IAA) between the State and the client agency DES management fee schedule is included in the IAA The Client signs and DES executes the IAA

ESCO Selection DES pre-qualifies Energy Service Companies (ESCOs) biannually and creates a registry through an RFQ The client reviews qualifications and chooses the ESCO that is right for them ESCO Interviews are optional

Preliminary Audit Walkthrough to identify facilities and systems to study Client establishes cost-effectiveness criteria ESCO conducts a preliminary audit Client and DES review the list of energy conservation measures proposed The client decides whether to proceed with an investment grade audit

4. Investment Grade Audit Up to this point, there is no obligation to pay for ESCO services If you proceed with construction, the cost of the investment grade audit is included in the guaranteed project cost If you do not proceed with construction of energy saving measures which meet your payback criteria, you are billed for the audit If no measures are found that meet payback criteria, there is no cost for the audit

4. Investment Grade Audit (continued) ESCO and DES sign investment grade audit agreement, Client signs funding authorization ESCO develops investment grade audit with cost and savings guarantee Client may list favorable subs and equipment Client and DES review and comment on draft audit ESCO incorporates comments, presents audit results, and submits an energy services proposal (ESP) The ESP includes all project costs

5. Design and Construction Client and DES review energy services proposal ESCO and DES sign construction contract Client signs funding authorization DES issues notice to proceed Client and DES review design documents Bid documents prepared by ESCO Sub-contractors and equipment selected DES manages ESCO project construction DES and Client verify ESCO’s costs and savings

Measurement and Verification First year measurement and verification (M&V) is part of every project M&V is covered under a separate agreement, authorized by the client 2 – 3 years of M&V are recommended for systems which require frequent adjustments, such as controls systems If using loan to fund Energy project may want to extend M&V

Highline College Performing Site survey for crane pick What's coming out of that vault? Uh oh…. Central Heating Plant Direct Buried Piping - VE Engage DES approval for Engineering investigation Develop cost analysis for repair options Expedited Contracting, Tight construction window

What was presented: Options Studied: Cured-In-Place Pipe Lining (Trenchless) Open Cut Excavation and Pipeline Replacement Direct Boring (Trenchless) Satellite Boiler Temporary Boilers (If piping failed prior to a permanent fix) Each Option Included: Overview of the option Advantages Disadvantages Impact of students and staff Timeframe for completion ROM Total Project Cost

B29 Construction B4 9/16/17 9/17/17 10/18/17 11/18/17 1/05/18 11/19/17 Installation Completed Discovery 9/16/17 9/17/17 10/18/17 11/18/17 1/05/18 DES on Board NTP for IGA Report Delivered NTP for Construction 11/19/17

Attractive ESCO Projects Projects with significant Energy/Utility Savings Interior and exterior Lighting (LED) HVAC projects – chillers, boilers, pumps, AHUs, distribution systems, commissioning Water conversation projects Building Envelope Upgrades

Attractive ESCO Projects Projects with some energy savings and significant project complexities Projects that require scheduling work around client requirements on critical deadlines Projects with numerous unknowns like retro commissioning projects or major HVAC renovations Projects that need contractor flexibility Projects that need guaranteed cost & energy savings to apply for grants

Low Bid Vs ESCO Process ESCO Process – Design and Construction are by the same Company. ESCO Process – Project’s cost and energy savings are guaranteed and construction invoicing is “open book”. ESCO Process – You select ESCO from our prequalified list. The ESCO process is your choice. The DES energy program and ESCO have a lot of incentive to ensure successful projects.

Washington Colleges Seattle Central College Highline College Eight ESCO projects – continuous from 2008 to current Has used three ESCOs Started with Commerce grant Highline College Six ESCO projects – continuous from 2011 to current Has used one ESCO Edmonds College Nine ESCO projects – from 2000 to current Received two Commerce grants

DES Commissioning Program Existing Building Commissioning Energy Hogs Control/Comfort Issues Buildings that have not been Commissioned for over 10 Years Prequalified On-Call Commissioning Firms Sequence similar to ESCO projects Commissioning firms are not allowed to do construction activities (agreement – not a construction contract)

DES RCM Program New Program – will start accepting clients/marketing early 2019 Program is intended to provide our clients a pathway to reduce utility costs/carbon emissions and sustain those improvements Program will be flexible in scope and cost. We will tailor to meet your specific needs. Could be whole campus, specific building(s) and/or specific systems Program will partner with the WSU Energy Office to provide training and energy efficiency information. Goal is to train your staff

ELCCAs Strive for “Net Zero Ready” Building Orientation (Future Solar PV) Building Exterior (Insulation/Windows) Roof/Conduits/Electrical system designed for future Solar PV Pay close attention to Mechanical system New Washington State Energy Code limits choices If recommended Mechanical system is new to you and your staff, ask questions and request examples.

Joe Sullivan DES Energy Program 360-407-9377 Joe.Sullivan@des.wa.gov Thank You Joe Sullivan DES Energy Program 360-407-9377 Joe.Sullivan@des.wa.gov