1. ENERGY PERFORMANCE CONTRACTING (EPC)
VABSO Conference
May 19, 2016
Roanoke, VA

2. GOVERNOR’S EXECUTIVE ORDER 31
SIGNED OCTOBER 16, 2014
15% REDUCTION BY 2017 USING BASE
STRONGLY ENCOURAGED TO USE EPC
STATE AGENCIES AND PUBLIC BODIES
ADMINISTRATION SERIOUS ABOUT ENERGY CONSERVATION
BUDGET REDUCTIONS
EPC IS A GREAT FINANCIAL TOOL
DMME SUPPORT

3. WHAT IS EPC? LEGISLATION PASSED IN 2001
PERFORMANCE CONTRACTING ALLOWS YOU TO GREEN/UPGRADE YOUR FACILITIES AND PAY FOR THE UPGRADES BY REALLOCATING EXISTING ENERGY DOLLARS
USING A SELF FUNDING PROJECT FREES UP EXISTING $ TO FUND OTHER UNFUNDED NEEDS IN THE DISTRICT

4. OVERVIEW OF IMPLEMENTING AN EPC
ENERGY PERFORMANCE CONTRACT (EPC)
DGS CONTRACT # DEB FOR ALL PUBLIC BODIES
18 PRE-QUALIFIED ESCO’S
AMERESCO, ABM Building Services, Atlantic Constructors, Bay Electric Co. Inc., Comfort Systems USA, Constellation New Energy, Energy Systems Group, Honeywell, Johnson Controls, Lifecycle Construction Services, NORESCO, PEPCO, SIEMENS, Schneider Electric, Southland Industries, TRANE, US Energy Management, Wendel Energy Services LLC,
CONTACT 4 OR MORE FROM THE PRE-QUALIFIED POOL
ESCO’S MEET WITH YOU TO DISCUSS THE PROJECT (KICK OFF MEETING)
ESCO’S PERFORM A “BACK OF THE ENVELOPE” (BOE) AUDIT
INTERVIEW AND DISCUSS THE BOE AUDITS
SELECT 1 OR MORE ESCO’S AND BEGIN NEGOTIATIONS.
SELECT 1 ESCO AS YOUR ENERGY PARTNER AND SIGN THE MOU FOR THE INVESTMENT GRADE ENERGY AUDIT (IGA)
UPON COMPLETION OF IGA YOU DEFINE THE PROJECT FROM THE AUDIT
NEGOTIATE THE ENERGY CONTRACT
DMME SUPPORT THROUGHOUT THE PROCESS
**LOCAL DOLLARS CAN BE APPLIED TO PROJECT

5. OVERVIEW OF IMPLEMENTING AN EPC
SUPPORT FROM ALL LEVELS OF MANAGEMENT
CONSIDER YOUR FINANCING OPTIONS
INSURE SAVINGS MEET PAYMENT SCHEDULE
PUBLIC BODIES:
TAX EXEMPT LEASE PURCHASE
VA SAVES PROGRAM VIA VRA (LIMITED FUNDS)
VIRGINIA RESOURCES AUTHORITY (VRA)
BONDS THROUGH GOVERNING AUTHORITY
THIRD PARTY FINANCING
OUTRIGHT PURCHASE

6. OVERVIEW OF IMPLEMENTING AN EPC
LOCAL $ CAN BE USED TO “BUY DOWN” THE PROJECT, CODE STATES: “Such contract may also provide capital contributions for the purchase and installation of energy conservation and facility and technology infrastructure upgrades and modernization measures that cannot be totally funded by the energy and operational savings.”
CIP
OUT OF POCKET
CAPITAL $

7. OVERVIEW OF IMPLEMENTING AN EPC
OTHER THAN “ENERGY UPGRADES”, CODE STATES:
Such contract may also provide capital contributions for the purchase and installation of energy conservation and facility and technology infrastructure upgrades and modernization measures that cannot be totally funded by the energy and operational savings.
Security issues
Other technological/modernization measures
VOIP

8. IMPLEMENTING AN EPC DEFINE YOUR PROJECT WHAT ARE YOUR GREATEST NEEDS?
OLD CHILLER THAT IS INEFFICIENT
STEAM LINE LEAKS OR STEAM TRAPS
HIGH ENERGY COSTS (ELECTRIC, HEATING FUELS, ETC.)
HIGH WATER CONSUMPTION
BUILDING ENVELOPE… ROOFS, WINDOWS, ETC.
OLD BOILERS
OLD HVAC EQUIPMENT
FREQUENCY DRIVES
LIGHTING
CONTROLS

9. IMPLEMENTING AN EPC
AFTER YOU HAVE DEFINED YOUR NEEDS AND GIVEN CONSIDERATION TO HOW YOU WOULD LIKE TO FINANCE YOUR PROJECT…
SELECT A MINIMUM OF 4 CONTRACTORS TO PERFORM THE BOE AUDIT.
REFER TO CONTRACTOR QUALIFICATIONS AND SELECT BASED ON PROJECT NEEDS.
CONTRACT ALLOWS FOR SOLE SOURCE UNDER CERTAIN CONDITIONS
CONTROLS

10. IMPLEMENTING AN EPC SELECT THE FACILTIES TO INCLUDE IN THE BOE
SET UP A KICK-OFF MEETING WITH THE SELECTED ESCO’S
NEED TO PROVIDE THE ESCO’S CERTAIN INFORMATION ON FACILITIES IN BOE
FACILITY DATA
UTILITY DATA (3 YEARS OF ACTUAL BILLS)
MAINTENANCE HISTORY

11. IMPLEMENTING AN EPC TEMPLATES GENERIC EMAIL INVITATION
GENERIC BOE AGENDA
REQUEST FOR THE BOE FORM
SAMPLE EVALUATION CRITERIA
SAMPLE SCORING SHEET
MOU FOR INVESTMENT GRADE AUDIT (IGA)
SAMPLE CONTRACT

12. IMPLEMENTING AN EPC
SET A DEADLINE FOR THE BOE, REMEMBER THE MORE TIME YOU ALLOW THE BETTER THE INFORMATION (TYP 8-12 WEEKS)
ESCO’S WILL SCHEDULE INDEPENDENT VISITS TO YOUR SITE
FORM A SELECTION COMMITTEE
WHEN YOU RECEIVE THE BOE’S ALLOW TIME FOR THE COMMITTEE TO REVIEW THEM AND SET UP YOUR INTERVIEWS
DMME SUPPORT
BOE PROCESS IS AT NO COST

13. IMPLEMENTING AN EPC
NEGOTIATE WITH 1 OR MORE ESCO’S & SELECT A PARTNER BASED ON ABILITIES, APPROACH, LONGTERM PARTNERSHIP, HISTORY, ETC
IMPORTANT TO REMEMBER YOU ARE SELECTING A PARTNER AT THE BOE, NOT THE FINAL PROJECT
SET UP A KICK OFF MEETING TO DISCUSS THE “IGA AND WATER SAVINGS AUDIT”
THE COST OF THE IGA CAN BE ROLLED INTO YOUR ENERGY CONTRACT (COST CAN BE NEGOTIATED)
ESCO MUST MEET 85% OF SAVINGS/110% OF COST AS SUBMITTED IN BOE (FOR SAME SCOPE)

14. IMPLEMENTING AN EPC ALLOW TIME FOR YOUR IGA
ONCE THE IGA IS COMPLETE, MAKE SURE EVERYONE IS IN AGREEMENT WITH THE APPROACH TO THE PROJECT & PROJECTED COST AVOIDANCE
YOU SELECT THE PROJECT FROM THE IGA!
INERACTIVE SPREADSHEET WITH ECMS/FIMS
IF EVERYONE IS IN AGREEMENT PROCEED WITH THE ENERGY CONTRACT. IF YOU CHOSE NOT TO PROCEED THE ESCO IS PAID FOR THE NEGOTIATED COST OF THE IGA IF THEY MET THE “85%/110%” THRESHOLDS.
DMME MUST REVIEW & APPROVE THE PROJECT FOR STATE AGENCIES. SAME REVIEW FOR PUBLIC BODIES AT NO COST
DMME SUPPORT THROUGHOUT THE PROCESS

15. CONSTRUCTION
Construction can typically take anywhere from 6 months to 18 months depending upon the complexity of the project.
PROJECT MANAGEMENT!
Weekly/BIWEEKLY status meetings
Safety, security, Documentation, etc
There will be “bumps” along the way as with most construction projects
ESCo PAID THROUGH SCHEDULE OF VALUES FOR COMPLETED WORK

16. CONSTRUCTION DMME OFFERS HIGH LEVEL PM SUPPORT
Attend progress meetings (weekly, biweekly, monthly)
Insure ESCO is meeting project scope
Available to review any submittals/changes
Available to work with ESCO and owner if disputes arise
Some onsite support as availability allows
Available for reconciling punch list items
Review warranty & project sign off with owner
Cannot be “feet on the ground” project manager

17. CONSTRUCTION
Contact info:
Walid Daniel, pe, cem
(804)

18. Measurement and Verification (M&V)
International Performance Measurement and Verification Protocol (IPMVP)
M&v OPTIONS DEPEND UPON THE SCOPE OF WORK
MATCH OPTION TO RISK, YOU DO NOT WANT TO PAY $50 TO VERIFY $10 IN AVOIDED COSTS.
Yearly reconciliation required by code
DMME SUPPORT/REVIEW

19. EXISTING PROJECTS
Over 51 SCHOOL SYSTEMS have done an epc, many with multiple phases
Totals run OVER $266 million through 2015
Statewide totals for all contracts total over $785 million through 2015

20. EXISTING PROJECTS Bedford County Schools Bristol Schools
Buena Vista Public Schools
Charlotte County Schools
Dinwiddie County Public Schools
Fairfax County Public Schools
Franklin City Schools
Frederick County Schools
Fredericksburg Public Schools
Greene County Public Schools
Greensville Public Schools
Hopewell Schools
Isle of Wight Schools
King & Queen County Schools
Middlesex County Schools
Newport News Public Schools
Norfolk Public Schools
Norton County Schools
Orange County Schools
Page County Public Schools
Pittsylvania County Schools PC
Portsmouth City Public Schools
Prince Edward County Public Schools
Prince William County Schools
Roanoke City Public Schools
Shenandoah County Public Schools
Southampton County Public Schools
Stafford County Public Schools
VA Beach Public Schools
Warren county public schools
Wise county public schools

21. PITFALLS EARLY SUPPORT TOP TO BOTTOM
UNDERSTAND GUARANTEE IS IN UNITS OF ENERGY NOT $
AVOIDED COSTS VS. SAVINGS
FULLY VETTED SCOPE
MASTERPLAN/RENOVATIONS
Analyze buildings scheduled for renovation before including them in project
WARRANTIES… WHAT/WHEN IT STARTS/HOW LONG
TRAINING
COMMISSIONING/RETRO-COMMISSIONING
SCHEDULES FOR COMPLETION AND PENALTIES FOR NOT MEETING THEM
M&V TO MATCH SCOPE
PROPER DOCUMENTATION FOR EVERYTHING!
UNDERSTAND YOUR RESPONSIBILTIES VS. THE ESCO’S RESPONSIBLITIES

22. SUCCESSES ROOFTOP UNITS AHU’s VRF SYSTEMS ROOFS CEILINGS
PLUMBING UPGRADES
FAN COIL UNITS
VFD’S
CONTROLS
BOILERS/STEAM SYSTEMS/TRAPS
CHILLERS
WINDOWS
SECURITY
VOIP
HUMIDITY ISSUES/”M” WORD
LIGHTING/OCCUPANCY SENSORS
OVERALL IMPROVEMENT OF THE WORKING ENVIRONMENT
VERY MINIMAL INTTERUPTION TO THE WORKPLACE
Epc Projects have led to a decrease in backlog of Maintenance Reserve & Capital Improvement needs

23. PARTING THOUGHTS FULL, Open book pricing
No change orders/FIRM FIXED PRICING AND “TURN KEY PROJECT”
If the esco misses something, they pay. No change orders
Overhead and profit/audit fees are negotiated
You select equipment, no low bid
You HELP select subcontractors
IF YOU HAVE A VIABLE PROJECT YOU ARE ALREADY PAYING FOR An ESPC BY PAYING THE UTILITY COMPANIES $ THAT COULD BE REALLOCATED TO UPGRADE YOUR FACILITIES.
AVOIDED ENERGY COSTS ARE BONDED AND GUARANTEED BY YOUR ESCO
IF THE ESCO DOES NOT MEET SAVINGS THE ESCO WRITES A CHECK
DMME SUPPORT THROUGHOUT THE PROCESS AT NO COST

24. Q & A?

25. CONTACT INFO
STATE AGENCIES & PUBLIC BODIES
CHARLIE BARKSDALE CEM, CEP, CMVP, CEA, BEP, CSDP, VCCO
UTILITIES & PERFORMANCE CONTRACTING MANAGER
DEPARTMENT OF MINES, MINERALS & ENERGY