1. FEMP Assistance Meeting Forest Service Needs Energy Savings Performance Contracting ESPC

2. Definition of ESPC
ESPC is a no-upfront-cost contracting method. The contractor incurs the cost of implementing energy conservation measures (ECM) and is paid from the energy, water, wastewater and operations savings resulting from these ECMs.

3. ESPC Achievements* $1.9 Billion Investment $5.2 Billion Savings
Annual energy savings:
16 trillion Btu
Equivalent to the energy consumed by 173,000 households or a city of a half million.
*2005 data, reported June 2006.

4. ESPC Achievements Over 400 Federal ESPC projects through FY05
19 different Federal agencies and departments in 46 states
DOD has done 60% of the projects and 70% of the investment dollars

5. Why do an ESPC? Meet energy reduction and environmental goals
Affirm agency commitment to these goals
Improve facilities: comfort and reliability
Provide critical facility data
Save taxpayer money
Faster process
Better quality
Good for community relations
Fixed price contracts - change orders aren’t needed
Avoid cost of delay and inaction
Fast construction
Avoid deferred maintenance

6. More on: Why do an ESPC? ESCO has incentive to find all ECMs
ESCO has incentive to provide high quality equipment that will perform long after installation
ESCO has incentive to do all punch list items timely
ESCO has incentive to commission well

7. Reallocate the Government’s Utility Bill
Pay a lower utility bill
Pay the contractor
Achieve cost savings for the government
Basics 2.4 Financing Provided and No Up-Front Capital Costs
The features of Super ESPCs that are often most attractive to agencies are the financing and guarantee of cost savings. With no up-front capital outlay by the agency required, the ESCO provides all labor, materials, equipment, and engineering design for improvement projects to reduce energy costs. The contracts require the ESCOs to finance and implement energy-conservation measures (ECMs) for their agency customers and guarantee that these improvements will result in a specified level of annual cost savings. In return, the ESCO receives firm-fixed-price payments from the guaranteed cost savings. The ESCO and the customer agree on annual payments that are less than the cost savings guaranteed for the year, structuring a project with a long enough term to ensure that the savings are sufficient to pay the ESCO for its work.

8. DOE ESPC Final Rule (1995) Takes precedence over FAR
Allows unsolicited proposals
Specifies procurement procedures and bases for selection of ESCOs

9. The Two Types of Super ESPC
General (by DOE Region)
Technology Specific (National)
Photovoltaics
Geothermal
Biomass and Alternative Methane Fuels
Solar Thermal

10. Why Do You Need M&V? Verifies guaranteed savings:
1. ESPCs are financed using avoided cost as a revenue to service debt.
2. A critical part of this financing tool is the ESCO-provided savings guarantee.
3. M&V assures the government that savings have been fully achieved before full payment is made to ESCO.
For a successful DO, both parties must understand and agree on the M&V strategy.

11. Interagency Agreement
FEMP provides technical assistance to assure a successful ESPC.
To get started, FEMP provides free services without the need for an IAA.
After the IP phase, FEMP services are provided on a cost reimbursable basis. The IAA spells out level and cost of FEMP project facilitation.

12. Super ESPC Key Points Guaranteed Savings are Mandatory
Measurement and Verification is Mandatory
Contract term cannot exceed 25 years

13. ESPC Process Requires Require project facilitator
Require financing competition
Emphasis on M&V and Pricing
Change in contractor selection process

14. Super ESPC steps ► Meet with DOE ► Pick Contractor (ESCO)
► Initial Proposal (IP)
► Notice of Intent (NOI)
► Detailed Energy Survey (DES)
► Delivery Order
► Final Design
► Installation
► Acceptance
► 1st Year Measurement & Verification (M&V)
► Annual M&V
► Complete contract

15. BAMF Super ESPC Process
Phase 4
BAMF Super ESPC Process
Implement DO
Phase 3
Phase 2
Negotiate Final DO
Exit ramp
Phase 1
Detailed
Energy
Survey
NOI & DO RFP
Initial
Proposal
No obligation exit ramp
Kickoff
Meeting

16. Biomass and Alternative Methane Fuels Energy Services Companies (ESCOs)
BAMF ESCOs
Nation-wide Coverage
Ameresco Federal Solutions
Constellation Energy Services
DTE
Energy Systems Group
Honeywell

17. ESCOs by DOE Regions (Regional ESPC)
MIDWEST
Constellation Energy Services
Ameresco Solutions
Johnson Controls
NORESCO, LLC
Honeywell Building Solutions (SES)
NORTHEAST
Honeywell International
Johnson Controls
NORESCO, LLC
Select Energy Services
Honeywell Building Solutions (SES)
Consolidated Edison Solutions
ESCOs by DOE Regions (Regional ESPC)
MID-ATLANTIC
Constellation Energy Services
Honeywell International
NORESCO, LLC
Select Energy Services
WESTERN
Honeywell International
Johnson Controls
NORESCO, LLC
Honeywell Building Solutions (SES)
CENTRAL
Ameresco Solutions
Honeywell International
Johnson Controls
NORESCO, LLC
Honeywell Building Solutions (SES)
SOUTHEAST
Ameresco Solutions
Chevron USA
Johnson Controls
NORESCO, LLC
Honeywell International
Honeywell Building Solutions (SES)
For contact info: www. eere.energy.gov/femp/financing/superespcs_espcescos.html

18. More ESPC Info Super ESPC Workshops for 2008 Energy 2008 August, 2008
Check with us about Intro and Advanced ESPC training workshops for 2008.
Check with us about on-line or on-site training.
Energy 2008
August, 2008
Phoenix, Arizona
ESPC info on the Web:

19. Forest Service ESPC - History
Edd Bills
Biomass and Alternative Methane Fuels (BAMF) Super ESPC
Project Facilitator

20. Forest Service ESPC - History
1998 Region 6 Corvallis Forestry Lab, Heating retrofit & Bldg Automation Systems
$740,528 Cost - $769,001 Total Savings - 10 Year Term
2005 Region 2 Mystic Ranger District Office, Biomass Heat
$211,449 Cost - $397,726 Total Savings - 20 Year Term
Project aborted at Final Proposal due to size (economics)
2005 Region 4 Idaho City Ranger District Compound
Biomass heat and power
Project aborted before Initial Proposal due to size (economics)

21. Forest Service ESPC - Current
Regions 2/4 Region-wide ESPC
Biomass Heat, Lighting, Wind, Solar, Water
Region 2, Part 1 - $1.9 Million cost - $2.9 Million total savings - 15 year term
Region 4 Part 1 - $2.1 Million cost - $3 Million Savings (estimate)
All indications point to at least 2 successful projects

22. Regions 2/4 Region-wide ESPC cont’d
Region 2 - Detailed Energy Survey (DES) in-progress
Region 4 - Initial proposal 1st wk of Dec 07
ESCO Proposed Model
Part 1 – Large enough for project viability small enough for investigation efficiency.
One volunteer Forest has comprehensive DES.
All Forests in the region investigated for light and water.
Measures of interest are considered (e.g. Forest has wind).
Part 2 – Ideas coming out of Part 1 applied.
All interested Forests have DES.
Large scale biomass heat and/or power will be considered.

23. FS Currently Exploring ESPC
Regions 2/4
Region 1
Region 3
Job Corps
Research Stations
Forest Products Lab

24. Forest Service ESPC Lessons Learned
“Bundle” small projects for success
Region(s)-wide effort is an excellent method of bundling (is a national ESPC possible?)
Grass roots interest is essential
Each Forest must stand alone –
Energy savings are retained locally
One Contracting Officer over several projects is very beneficial - cuts 6 months off a project.
Grants and Agreements people add an approval layer

25. Forest Service ESPC Challenges
Educating Contracting (and Grants/Agreements)
Working around fire season
Investigating spread-out, and remote locations
Economical Measurement and Verification (M&V) on Energy Conservation Measures (ECMs) at small, spread-out, and remote locations

26. Recommendations to Streamline the ESPC Process at FS
Execute a National Interagency Agreement out of FS HQ (avoids duplication from region to region)
Assign a “specialist” Contracting Officer for ESPC

27. Forest Service Biomass Issues
Size is everything – Small is challenging
Small facilities must have help from lighting, water, etc to make ESPC economical.
Currently the threshold seems to be around 30,000 ft2
Midsize biomass heat can pay back quickly
Fuel procurement responsibility is an issue

28. FEMP Support for the Forest Service
Biomass and Alternative Methane Fuels (BAMF) Super ESPC
Technical and Team Lead

29. How can we help? Biomass expertise within FEMP DOE – FEMP Training
Contract Officer Training
Dean Graham – familiar with FS and ESPC

30. Wood-to-Energy Using wood:
Reduces hazardous forest fuels – promotes healthy forests
Reduces use of fossil fuel
Lowers net carbon to the atmosphere
Helps meet EPAct 2005 and Executive Orders
Saves energy dollars

31. FS – DOE Synergy
Large Scale Biomass Power Plant(s) for Federal Sector Power.
Power Purchase Agreements
Energy Parks – Ideal locations for heat and power applications

32. FS – DOE Opportunities Fuel Available Favorable State for Wheeling
High Voltage Grid Nodes

33. Geothermal Heat Pump ESPC U.S. Department of Energy
Contact
DOE Southeast Region
Geothermal Heat Pump ESPC
Photovoltaic ESPC
Biomass ESPC
Doug Culbreth
U.S. Department of Energy