© 2010 AirAdvice, Inc. Using Energy Services to Drive Maintenance and Retrofit Sales

© 2010 AirAdvice, Inc. Series Schedule – Using Energy Services To… Session 1 – April 14 th Ensure Maintenance Agreement Renewals Session 2 – April 21 st Win New Maintenance Agreements Session 3 – May 4 th Drive Retrofit Project Revenue

© 2010 AirAdvice, Inc. It’s No Accident…

© 2010 AirAdvice, Inc. Service Business Key Performance Indicators You Can’t Manage What You Can’t Measure

© 2010 AirAdvice, Inc. The Financial Leverage of Service Total PM Agreements$3.02 Service / Repairs$7.48 Retrofit Projects$5.41 Total$15.91 Each $1 of service agreements generates the equivalent of $15.91 in new revenue PM Agreements $1

© 2010 AirAdvice, Inc. “Cancellation Proof” Your PM Agreements 1.Probe for financial pain 2.Make energy is relevant (gain permission) 3.Demonstrate potential savings (benchmark) 4.Identify specific “low/no cost” measures that will immediately reduce costs and improve cash flow 5.Implement and verify

© 2010 AirAdvice, Inc. Debunking the 2 Myths That Prevent Energy Services Programs from Moving Forward 1.“Energy costs can’t be controlled” 2.“Reducing energy spend will take a lot of capital”

© 2010 AirAdvice, Inc. Energy Service Agreement™ Sales Process Get the Meeting 1 st Meeting - Introduction Building Survey / Energy Benchmark Present the Proposal Close the Service Sale Not an Opportunity Today Confirmation / Verification Sell Energy Services ~ 3% of cold calls result in a meeting ~ 1 in 6 1 st meetings result in a PM agreement

© 2010 AirAdvice, Inc. Case Study 138,000 sf Built-up system –Chiller –Boiler Pneumatic, constant volume control system

© 2010 AirAdvice, Inc. Energy Benchmark

© 2010 AirAdvice, Inc. Temperature Low-Cost Energy Savings Identified Fix control issues Eliminate weekend operation

© 2010 AirAdvice, Inc. Carbon Dioxide Low-Cost Energy Savings Identified Fix economizer / ventilation control

© 2010 AirAdvice, Inc. Low Cost Energy Savings Identified Increase cooling / decrease heating setpoints Optimize temperature control and lighting scheduling Fix economizer / improve ventilation control Boiler lockout above 60  F Over $70,000 of energy waste eliminated for $6,000 investment

© 2010 AirAdvice, Inc. Retrofits are the Pot of Gold

© 2010 AirAdvice, Inc. Agenda – Session 3 1.Current economic climate for retrofit projects 2.Retrofit project sales process 3.Psychology of the sale 4.Proving value with monitoring and verification 5.Using utility rebates to your advantage

© 2010 AirAdvice, Inc. Current Economic Climate

© 2010 AirAdvice, Inc. Retrofit Project Sales Process 1 st Meeting Building Survey Energy Analysis Not an Opportunity Today Close the Project Sale Present Proposal Implement Retrofit Performance Verification

© 2010 AirAdvice, Inc. Sources of Leads Existing Service Base Bid Spec / RFPs

© 2010 AirAdvice, Inc. Retrofit Project Sales Process 1 st Meeting Building Survey Energy Analysis Not an Opportunity Today Close the Project Sale Present Proposal Implement Retrofit Performance Verification

© 2010 AirAdvice, Inc. Building Survey / Energy Analysis Define a process that is:  Repeatable  Scalable  Credible

© 2010 AirAdvice, Inc. Trade Offs Simplicity | Complexity Automation | Manual Labor

© 2010 AirAdvice, Inc. Guideline Document ASHRAE RP-669 / SP-56

© 2010 AirAdvice, Inc. Types of Energy Audits – ASHRAE Definitions Preliminary Energy Use Analysis Level I – Walk-Through Analysis Level II – Energy Survey and Analysis Level III – Detailed Analysis

© 2010 AirAdvice, Inc. Preliminary Energy Use Analysis Analyze historic utility use and cost Develop an EUI Compare to similar buildings Energy Benchmark

© 2010 AirAdvice, Inc. What’s the Difference? Level I Walk-Through Analysis Level II Energy Survey & Analysis Level III Detailed Analysis Focus of Audit Documenting systems and operations Rough estimate of savings potential No / low cost measures Energy consumption by end use More rigorous estimate of savings potential No / low cost and capital measures Detailed analysis of subsystems Investment-grade estimates of savings potential Capital measures Inputs Utility bills Site drawings Site walk-through Interviews Level I items, plus measurement of key environmental parameters Level II items, plus measurement of key equipment operational parameters Outputs Checklists Engineering estimates Spreadsheet calculations More complex spreadsheet calculations Simple computer energy models Complex computer energy models

© 2010 AirAdvice, Inc. Data Collection Data Loggers Building Automation System Trend Logs Custom Data Acquisition Systems

© 2010 AirAdvice, Inc. Typical Analysis Methods Hand Calculations Spreadsheets Computer Models

© 2010 AirAdvice, Inc. Retrofit Project Sales Process 1 st Meeting Building Survey Energy Analysis Not an Opportunity Today Close the Project Sale Present Proposal Implement Retrofit Performance Verification

© 2010 AirAdvice, Inc. The Energy Project Proposal

© 2010 AirAdvice, Inc. You Do Not Get Paid… by the hour for complexity by the pound

© 2010 AirAdvice, Inc. You Get Paid For… Providing information useful in decision making Moving projects forward

© 2010 AirAdvice, Inc. Focus on the Financial Decision Maker

© 2010 AirAdvice, Inc. Is Energy Savings a Motivator? “By maintaining proper tire pressure, keeping your engine in tune, and replacing dirty air filters you can improve gas mileage by up to 15%.” U.S. Department of Energy The Psychology of the Sale This savings is equivalent to 1 free tank of gas every other month

© 2010 AirAdvice, Inc. What if someone stole a full tank of gas out of your car…every other month The Psychology of the Sale Would you be more likely to take action?

© 2010 AirAdvice, Inc. The Psychology of the Sale “If you move forward with this project you will save $X per year” “If you do nothing you will continue to waste $X per year” vs. Psychologically, most people will do more to avoid a penalty than to earn a reward

© 2010 AirAdvice, Inc. The Cost of Doing Nothing

© 2010 AirAdvice, Inc. The Psychology of the Sale

© 2010 AirAdvice, Inc. Retrofit Project Sales Process 1 st Meeting Building Survey Energy Analysis Not an Opportunity Today Close the Project Sale Present Proposal Implement Retrofit Performance Verification

© 2010 AirAdvice, Inc. Performance Verification Baseline Period ECM Event Performance Period 1.Measure impact of ECMs ? 2.Ongoing monitoring and verification ? ? Reduce the risk of saying “Yes”

© 2010 AirAdvice, Inc. Two Perspectives Building Owner “Did I get what I paid for?” “Did I get credit for what I provided?” “Did my customer perceive value?” Contractor

© 2010 AirAdvice, Inc. Comparisons Challenges Variables that impact baselines –Weather –Occupancy –Utility Rates

© 2010 AirAdvice, Inc. Methods for Performance Verification 1.Periodic Energy Benchmark 2.Continuous Energy Monitoring System

© 2010 AirAdvice, Inc. Closing the Loop “Adding the continuous energy monitoring and verification application to the BuildingAdvice™ program will really help us close the loop for our customers. Now when we’re proposing a sizeable energy retrofit project we can include a system that will accurately measure and report the actual energy savings delivered. This eliminates a tremendous amount of financial risk for the building owner. We think this will help justify moving forward with more projects.” Rick Cooke Vice President Airco Commercial Services

© 2010 AirAdvice, Inc. Using Utility Rebates to Your Advantage Two types of rebates 1.Prescriptive 2.Custom

© 2010 AirAdvice, Inc. Prescriptive Rebates

© 2010 AirAdvice, Inc. Prescriptive Rebates – Xcel Energy Example: Replacement of ten 20- ton RTUs Proposing high efficiency (12 EER) w/ economizers Efficiency upgrade: ($75 + $5 x (12.0 – 10.2) / 0.1) = $165 / ton $165 / ton x 20 tons / unit x 10 units = $33,000 Economizers: $20 / ton x 20 tons / unit x 10 units = $4,000 Total rebate = $37,000

© 2010 AirAdvice, Inc. Custom Rebates Requires pre-approval and submittal of engineering analysis Xcel Energy provides rebates of up to: –$400 / kW (electricity) –$5 / mcf (gas)

© 2010 AirAdvice, Inc. Energy Analysis Rebates Rebate for a portion of the cost of an energy study or audit AirAdvice can help you work with your utility to understand and approve your energy analysis process

© 2010 AirAdvice, Inc. Biggest Challenge in Working With Utilities Don’t get slowed down

© 2010 AirAdvice, Inc. Case Study 138,000 sf Built-up system –Chiller –Boiler Pneumatic, constant volume control system

© 2010 AirAdvice, Inc. An Energy Benchmark™ Determines Action ENERGY STAR ® Energy Performance Rating Greatest opportunity for improvement Invest in new equipment and enhanced O&M practices Invest Source: ENERGY STAR Recommended Capital Improvements Retrofit chiller plant with variable speed drives on compressor, fans, pumps ($205k) Replace pneumatic system with DDC ($181k)

© 2010 AirAdvice, Inc. Energy Savings Audit

© 2010 AirAdvice, Inc. Why Does This REALLY Matter? From the building owner’s perspective…CASH IS KING! Building value is determined by cash flow NOI = Gross Income – Operating Expenses Income (lease payments) Expenses (taxes, insurance, utilities, depreciation on capital upgrades) Building Value = NOI / Cap Rate

© 2010 AirAdvice, Inc. 99% of all commercial real estate has a mortgage Commercial real estate mortgages are generally short term (3 to 5 years) Refinancing a loan for a property that has declined in value requires cash Reducing operating expenses… –Increases NOI –Increases asset value –Decreases cash required to refinance Why Does This REALLY, REALLY Matter?

© 2010 AirAdvice, Inc. Summary Current economic climate – tight grip on cash Your best leads will come from existing service base Develop a method for energy analysis –Repeatable –Scalable –Credible Highlight the “cost of doing nothing” Include a system of performance monitoring Utilities – friend or foe?

© 2010 AirAdvice, Inc. Questions ? ? ? ? ? ? ? ?