1. ESPC Net-Zero Challenge
The program I will explain is the GSA Net Zero Renovation Challenge.
I will start with a few background information and I will talk about deep retrofits, ESPCs and GSA goals.
In the current fiscal environment the Federal Government is facing a situation where funding for new construction is $0 and for renovations is near $0.
On the other hand Federal mandates and laws require agencies to their energy consumption and carbon footprint.
Mandates require GSA to reduce energy consumption by 30% by Renovation a few buildings and reducing energy by up to 20% will not get us there.
GSA recognized that the only way to meet these targets with private funding is to stretch the scope of ESPCs.

2. Overview President’s Performance Contract Challenge Background on GSA
Energy Mandates
American Recovery and Reinvestment Act
Deep Retrofits
GSA ESPC Net Zero Renovation Challenge
What’s Next?

3. Progress Targets & Milestone Targets
To track Agency progress, CEQ/FEMP has developed Milestone Targets and Progress Targets
Milestone Targets are major project development milestones. If an agency fails to get 100% of its total project investment by the milestone target date, a “ ” is earned on its Progress Report.
Progress Targets track agency progress: if an agency’s project investment amount is not 25, 50, or 75 percent of its Milestone Target by the prescribed dates, it earns a “ ”.

4. Explanation of Progress Report
As of May 15, 2012, only one Milestone has been reached. The next is due July 15, 2012
Milestone Targets occur when 100% of committed project investment is at a milestone stage by the due date
An agency will earn a red dot if they miss a Milestone Target
Progress Targets measure total committed in progressively higher 25%, 50%, and 75% levels as the due date approaches
Project Development Milestones
A grey dot indicates no Milestone or Progress Targets are due.
An agency will earn a yellow dot if they miss a Progress Target
This chart shows the distribution of the agency’s current project investment among project development stages as reported in OMB Max. “No start/no data” is the amount of project investment either not started or lacking data.
This chart breaks down total project investment by contract vehicle used. The “Investment Gap” is the difference between agency commitment and total current project investment.

5. Resources
FEMP
GSA
Resources available to each of your sites: FFS, PFs, GFO contracting mentors, contracting support from DLA, Huntsville, private contractors. Extensive training and technical information on the web.
An extensive ESCO network .

6. Program Options: A new option for many small sites
Most large and medium sites will be well served through the standard ESPC and UESC offerings.
Small sites should explore FEMP’s newest program option: ESPC ENABLE.
Pilot program designed to make projects at small sites cost effective for agencies and ESCOs.
Projects will be executed through GSA Schedule 84, using a new set of automated and standardized tools and contract templates.
FEMP has identified five agencies to partner with to establish agency specific approaches to implementing ESPC ENABLE projects.

7. Near Term Deliverables
May 15: $ Projects ≥ $ Commitment?
July 15: Acquisition Plans Complete; Projects’ Timelines Established
August 15: Notices of Opportunities Issued
Federal Environmental Executive will follow up with agencies not meeting these milestones to identify strategies /actions to meet the milestones.

8. Background on GSA GSA consists of: 9,624 buildings in 11 regions
Public Buildings Service (PBS)
Federal Acquisition Service (FAS)
Office of Governmentwide Policy
(OGP)
other staff offices
9,624 buildings in 11 regions
1,530 owned and 8,094 leased (2010)
370.2 million rentable square feet, or 34.4 million square meters
Landlord for 400 federal agencies, bureaus and commissions with space for over 1,000,000 tenants
66 LEED certified projects
2 LEED Platinum
25 LEED Gold
23 LEED Silver
LEED Certified
35 in owned space
31 in leased space
The picture on the slide is the GSA HQ building in DC. The building is currently under renovation. GSA is leading by example, reducing the carbon footprint, reducing space, consolidating offices. Moving back 6000 people in the building that used to house 2000 people.

9. GSA Energy Profile
Currently represents 9.3% of civilian agency energy usage, 3.7% of Federal total
Has achieved ~16% in energy reduction from 2003 baseline (source: FY2010 OMB Scorecard on Sustainability/Energy)
This slide shows some statistics which illustrate the size and scope of the federal government as a consumer. We, as the federal government have a substantial impact on the environment simply based on our footprint. As the largest domestic buyer and user of energy, the federal government can also have a positive impact in the area of sustainable procurement, especially in the way that we drive industry to meet our product and services needs in a sustainable way.
Federal Government:
Single largest domestic buyer and user of energy
Manages or owns nearly 1 in every 5 acres in the U.S.
In October of 2009, President Obama stated, "As the largest consumer of energy in the U.S. economy, the Federal Government can and should lead by example when it comes to creating innovative ways to reduce greenhouse gas emissions, increase energy efficiency, conserve water, reduce waste, and use environmentally responsible products and technologies."

10. GSA Office of Federal High Performance Green Buildings
Research
Adoption
Players
Roles
Relationships
Influences
Established under EISA 2007 Section 436 to:
Coordinate and disseminate high-performance green building research (partnership with DoD, Fort Carlson)
Establish green practices to be used throughout the life of a Federal facility
Coordinate with other agencies to identify opportunities to demonstrate innovative and emerging green building technologies and concepts
Dramatically reduce the economic & environmental footprint through innovation, education and technology transfer
Move transformative ideas from theory into practice through a human and digital ecosystem of strategically interconnected activities
Apply Federal “test bed” research to develop evidence-based guidance, best practices, decision-making tools and education
Facilitate transformation of the building industry through Federal market leadership

11. Sustainability & Regulations
Laws
▪ National Environmental Policy Act, 1969
▪ Clean Air Act, 1970; amended 1990
▪ Energy Policy and Conservation Act, 1975
▪ Resource Conservation & Recovery Act, 1976;
amended 1994
▪ National Energy Conservation Policy Act, 1978
▪ Energy Policy Acts, 1992, 2005
▪ Energy Independence and Security Act, 2007
Executive Orders
▪ Greening the Government through Waste Prevention, Recycling & Federal Acquisition
▪ Greening the Government through Efficient Energy Management
▪ Developing & Promoting Biobased Products and BioEnergy
▪ Greening the Government through Leadership in Environmental Management
▪ Federal Real Property Asset Management
▪ Strengthening Federal Environmental, Energy, and Transportation Management
▪ Federal Leadership in Environmental, Energy, and Economic Performance
Executive Order (2007)
Energy consumption reduced 3 percent annually through FY2015 or 30 percent total relative to FY2003 baseline
Energy Independence and Security Act of 2007
Codified Executive Order 13423’s 3 % annual reduced energy consumption requirement
New / renovated Federal buildings reduce fossil fuel use by:
55% by 2010
80% by 2020
carbon-neutral by 2030
Reduce fossil fuel use by 55% by 2010 (relative to a 2003 baseline (CBECS))
Energy Policy Act of 2005
Federal government’s renewable energy consumption: 3% from FY
5% in FY
7.5% in FY2013 and after
The Energy Independence and Security Act of 2007 (EISA 2007) established energy management goals
and requirements. Today, 97% of GSA's greenhouse gas (GHG) emissions come from energy
consumption in Federal buildings and leased space. GSA will increase its investment in energy and water
conservation projects across its inventory of owned Federal buildings in order to reduce facility energy
intensity to 48,926 BTU/GSF by FY This amounts to a 37.5% reduction from the FY 2003 baseline
of 78,282 BTU/GSF.

12. American Recovery and Reinvestment Act (ARRA)
The HOW: along came ARRA
Purpose:
Creating and saving jobs fast
Investing in infrastructure with long-term economic benefits
Convert fed buildings to high-performance green
Increase domestic renewable energy capacity
5.5 B total
1 B for new construction of courthouses, LPOEs, and Federal buildings
4.3 B for modernization and sustainability of existing buildings
Projects in all 50 states, DC, and two territories
Projects picked with designs that are complete or in process with focus on energy
Projects that can be developed and awarded quickly
Projects that can be completed before 2015
Green Building Modernizations
Focused On High-Performance Green Building Projects $4.3 B
Full and partial building modernizations $3.2 B
Limited scope projects (including energy projects) $800M
Small projects $300M
One overarching criteria used by GSA to select the best projects for accomplishing the goals of ARRA:
Transforming Federal buildings into high-performance green buildings
Increased GSA’s capability to construct and transform federal buildings into high-performance green buildings
Jump-started GSA’s effort to meet mandated energy and water conservation targets in the years to come.
Performance Criteria for Whole and Partial Building Modernization

13. Recovery Act Portfolio Energy Use Reduction
The combined Recovery Act portfolio of Major Modernization and Limited Scope projects will be 30% more energy efficient than the CBECS2 national average.
Recovery Act projects are expected to reduce energy consumption by 18% across 447 buildings (for Major Modernization, Limited Scope, and Small Projects).
Average annual cost savings is an estimated $44.4M per year.
2 Commercial Building Energy Consumption Survey (CBECS) national average energy intensity = 90 kBtu/sq. ft
PBS 2003 and 2009 baseline energy intensity on Recovery Act projects from GSA's Energy Usage Analysis System (EUAS)

14. Recovery Act Deep Retrofits
A deep retrofit is a modernization that is anticipated to achieve an energy reduction of at least 50%.
Of the 45 Recovery Act modernization projects, six are anticipated to reduce overall energy consumption by at least 50%.
Five of the deep retrofits are projected to reduce overall energy consumption from 53%-68%.
Five of the deep retrofit modernizations are utilizing renewable energy technologies to reduce overall energy consumption.
An additional twelve limited scope and modernization projects anticipate achieving an energy reduction between 40% and 50%.
All Recovery Act buildings undergoing Major Modernization projects are expected to achieve enough gains in energy efficiency to meet EISA 2007 requirements.
GSA needs a framework to standardize sustainable design and construction processes and promote collaboration between offices to efficiently meet sustainability goals.

15. Recovery Act Case Study
Net-zero energy target
Platinum LEED rating goal
Historic Building
123 kW PV array to produce 170,000 kWh a year (greater than 50% of the building’s historical annual electricity use)
Ground source heat pumps
ECMs: lighting control and monitoring, demand controlled ventilation, plug load management measures, thermally improved building envelope.
Building physics analysis used
CO, Grand Junction Wayne N. Aspinall Federal Building & US Courthouse
CO, Grand Junction Wayne N. Aspinall Federal Building & US Courthouse
Original construction completed in 1918
The 1938 addition extended the building to the east.
GSA will transform the 92-year-old Wayne Aspinall Federal Building and Courthouse in Grand Junction, Colo., into the country's first net-zero energy building of its type, enabling it to produce as much energy as it consumes. Now, GSA is opening up that net-zero energy use concept to the private sector.
The project is pursuing a net-zero energy target and is working toward a Platinum LEED rating.
The project is installing a 123 kW PV array that is estimated to produce 170,000 kWh a year – greater than 50% of the building’s historical annual electricity use*.
The project team will install a ground source heat pump system to further reduce energy requirements for the building’s HVAC systems.
Additional energy reduction measures include lighting controllability and monitoring, demand controlled ventilation, plug load management measures and a thermally improved building envelope.
Building physics analysis has been used to study space thermal comfort, natural ventilation and daylighting potential, envelope thermal performance, renewable energy potential, as well as the whole building's energy performance.
Based on the building’s 2009 electricity baseline in EUAS
Variable refrigerant flow heating and cooling (air-cooled)
Demand controlled ventilation using multi-parameter system
0.6 W/sf avg. lighting power density
Interior storm window with solar film
Dedicated outdoor air system with heat recovery & indirect evaporative cooling
Daylighting / occupancy controls
Wireless sensors
Energy sub-metering
Integrated building automation system
R-30 cool roof
Solar thermal service hot water

16. Approach to Net Zero Recommended Approach
Reduce Demand
On Site Renewables
Net Zero
Electricity consumption in the commercial building sector doubled between 1980 and 2000,and is expected to increase another 50% by 2025*
Energy consumption in the commercial building sector will continue to increase until buildings can be designed to produce enough energy to offset the growing energy demand of these buildings
The DOE has established an aggressive goal to create the technology and knowledge base for cost-effective zero-energy commercial buildings (ZEB) by 2025
We know that a ZEB starts with greatly reduced energy needs(energy efficiency) so that the balance of the energy load can be supplied by (onsite/offsite) renewable technologies
Zero-Energy Buildings: Boundary Definitions and Energy Flows
Grid Connection Is Allowed and Necessary for Energy Balances
Prioritize Supply-Side Technologies to Those Available On Site and within the Footprint
Source: RMI

17. “Deep Energy” Retrofit
Process Differentiators
Building Owner Involvement
Integrative Design
Advanced Auditing, Modelling, LCCA
Ongoing M&V
Occupant Engagement
Results:
Larger Energy Savings
Improved Project Economics
ESPC projects at GSA sites have not historically achieved true deep energy retrofits (greater than 50% energy savings from current operations). There is evidence that deep energy retrofits improve the economics of efficiency, and achieve bigger energy savings and other benefits at equal or lower cost,
while producing much larger energy savings (more than 50%) than conventional, shallow retrofits.
What is deep retrofit? Deep retrofit has been defined as energy savings more than 50%.
The major areas that buildings are contributing is through efficient technologies and smart controls, which can get us to 38 percent. Additional chunk of savings, up to 17 percent on top of that that could get us to up to 70 percent savings total through integrative design…working together as a team, cross disciplinary, cross sport.
Bigger savings at equal or lower costs by leveraging building synergies and timing.
Broader conversations with owners (to reframe opportunity, establish common goals and metrics)
Integrative design to Tunneling through the cost barrier
Ongoing metering and M&V, not only to ensure the building is operating as intended but to share data with occupants/tenants
Tenants can be the biggest driver of energy
Additionally, supported by research and a GSA study released last year HPGB use less energy, water, has lower operating costs and has higher occupant satisfaction.
Phase 2
Phase 1
Domestic water use
- 11%
Energy use
- 25%
- 26%
Operating costs
- 22%
- 13%
General building satisfaction
+ 21%
+ 27%
CO2 equivalent emissions
- 34%
- 33%

18. Energy Savings Performance Contract (ESPC)
BEFORE PERFORMANCE CONTRACT
PAYMENTS TO
UTILITY
PROVIDERS
AFTER PERFORMANCE CONTRACT
GUARANTEED PORTION
SAVINGS
IN EXCESS
SERVICE
PAYMENTS TO
FINANCING
INSTITUTION
UTILITY
PROVIDERS
What is the purpose of an ESPC? ESPCs allow Federal agencies to accomplish energy savings projects without up-front capital costs and without special Congressional capital improvement appropriations.
How does an ESPC work? The contractor, an Energy Services Company (ESCO), secures financing to implement energy and water conservation measures at Federal facilities and are paid back over time based upon the savings they generate. Savings are measured and verified annually.
How long can an ESPC contract/task order last? Contract/task order terms up to 25 years are allowed by special statute
What happens after the ESPC contract/task order ends? After the contract/delivery order ends, all additional cost savings accrue to the agency.
ESPC Quick Facts
More than 570 ESPC projects worth $3.9 billion were awarded to 25 Federal agencies and organizations in 49 states and Washington, D.C., as of May These projects saved:
• 32.8 trillion Btu annually; equivalent to the energy consumed by a city with a population of 893,000.
• $13.1 billion in energy costs (approximately $10.1 billion goes to finance project investments, leaving a net savings of $3 billion).
Zero or positive net impact on existing budgets.

19. Timing is Key to Profitable Deep Retrofits
Planned Capital Improvement
Major Occupancy Change
Major System Replacement
Upgrades to Meet Code
Fixing an “Energy Hog” “

20. GSA Use of ESPCs $440M invested in ESPC since 1999
Renewed GSA interest and investment in ESPC ($262M in FY10-11)
GSA has been utilizing ESPCs for over 10 years. Total $440 million invested.
Some regions have more experience and has been successfully using this contracting vehicle to finance renovations.
The one contract awarded last year is the White Oak complex in Marlyand.
GSA proposes to employ a Net Zero ESPC Challenge as a tool to further accelerate the use of ESPC’s by the GSA regions in addressing energy reduction goals

21. ECMs in ESPCs
Aside from lighting improvements, ESPC’s are not directly targeting reducing building loads. By reducing heating and cooling loads, envelope measures could reduce the size of the HVAC equipment required, resulting in larger energy savings than are typically seen.
Lighting improvements and Building Automation upgrades were implemented in over 200 projects (>75%) whereas renewable energy systems were only implemented in 71 projects (26%) and building envelope improvements in 37 buildings (14%). (Source: FEMP
1 Rocky Mountain Institute, RetroFit Depot™, Retrofit Industry Needs Assessment Study, Public White Paper

22. Background
October 20, 2011 Administrator Johnson’s Announcement: GSA Challenges Private Sector to Reduce Energy Use at Federal Buildings
October 27-28, 2011 ESPC Charrette
December 2, 2012 Presidential
Memorandum
$2 billion in performance-based
contracts within 24 months
Report planned implementation
schedule by 1/31/2012
Issue NOO in March, 2012
Section 1. Implement and Prioritize Energy Conservation Measures. (a) Agencies shall fully implement energy conservation measures (ECMs) in Federal buildings with a payback time of less than 10 years, consistent with real property and capital improvement plans. Agencies shall prioritize ECMs with the greatest return on investment, leveraging both direct appropriations and performance contracting, consistent with guidance by the Office of Management and Budget (OMB).
(b) The Federal Government shall enter into a minimum of $2 billion in performance-based contracts in Federal building energy efficiency within 24 months from the date of this memorandum. Each agency shall include its anticipated total performance-based contract volume in its plan submitted pursuant to subsection (d) of this section.
(c) In order to maximize efficiency and return on investment to the American taxpayer, agencies are encouraged to enter into installation-wide and portfolio-wide performance contracts and undertake comprehensive projects that include short-term and long-term ECMs, consistent with Government-wide small business contracting policies.
(d) Agencies shall prioritize new projects under this section based on return on investment, develop a planned implementation schedule, and reconcile all investments with actions undertaken pursuant to Executive Order of June 13, 2011 (Delivering an Efficient, Effective, and Accountable Government). Agencies shall ensure that any performance-based contracts are consistent with, and do not duplicate or conflict with, real property plans or planned capital improvements.
(e) No later than January 31, 2012, agencies shall report their planned implementation schedule described in subsection (d) of this section to the Department of Energy's Federal Energy Management Program (FEMP), OMB, and the Council on Environmental Quality (CEQ).
(f) Beginning in 2012, agencies shall incorporate the planned implementation schedule into their annual Strategic Sustainability Performance Plans in furtherance of Executive Order

23. GSA Challenge Goals
Demonstrate best practices for maximizing overall ESPC project energy savings;
Advance progress toward EISA goals;
Accelerate deployment of underutilized and renewable technologies;
Further expose GSA regions to DOE ESPC IDIQ contract process and resulting improvements in ESCO selection;
Identify and understand processes necessary to get to net zero energy;
Identify structural, contractual and technical impediments.

24. GSA Challenge Framework
Site Selection: GSA selected buildings for competition across multiple regions
Award Process: Buildings to be awarded with DOE’s streamlined competition process
Recognition: Projects to be evaluated by a panel of independent experts to identify and recognize exceptional performance in a number of technical categories
1. absolute energy savings of pre-retrofit energy use
2. progress towards Federal Government goals for energy, water, fossil fuel, renewable energy, and sustainability
3. financial and technical creativity
4. ability to extend best practices to other Federal buildings.
What’s Next?
Change in Procurement Practice
Change in Budget Practice
Change in Measurement
Criteria for Selecting Vendors
Performance Contracting by Team Negotiation
Change in Fee Structures
Integration with Buildings Operations, Not Just at the Hand-Off, but for Years

25. ESPC Charrette Analysis and Integrated Design 2. Project Economics
3. Delivery Process
4. Occupant
Behavior
5. M & V
The workshop was designed to encourage the ambitious improvement of the ESPC process. To facilitate this type of thinking, RMI asked attendees to set aside incremental solutions and answer: “What single change in the ESPC process would be most impactful for achieving deep savings?” Each attendee wrote down their own headline for the project, and then went around the room and read out their key issue or solution.
The “word cloud” below shows the words that appeared in the various headlines, with the size of the words in proportion to the number of times they were mentioned.
1. Rethinking the funding model (potentially to include a blend of ESPC and appropriations)
2. Redistribution of risk (modifying guaranteed savings approach, government take on some risk)
3. Streamlining the process (speeding up approvals and ESCO selection from 18 month to around a year, or 4 months as Kevin Kampschroer intends) 
4. Bundling and integrating measures (including behavior/including tenants)
5. Discussion of the innovative elements of the process (radical new process/way of thinking)
6. Redefining avoided costs (including O&M savings and non-energy related projects) 
The 5 breakout group topics included:
1. Analysis and Integrative Design
Integrative, whole building analysis and measures are not commonly included in ESPC’s for a variety of reasons including time constraints, risk, confidence in results and unfamiliarity with the process.
2. Project Economics
Deep energy retrofits may need a different angle on funding ESPC projects that takes into account blending appropriated funds with ESPC funding, long term contracting, bundles of ECM’s and aggregated delivery.
3. ESPC Delivery Process
The current ESPC delivery process is too long and lacks consistency among project managers in different agencies.
4. Occupant Behavior
Energy savings strategies that rely on occupant behavior modifications are rarely part of the ESPC process, and this potential savings is unrealized.
5. Measurement and Verification
M&V is complicated and may not be providing the highest value possible, particularly as deeper energy retrofits drive more interactive ECM’s. 
 Kinga and John Shonder, please review this carefully. I tried to rephrase the description, without getting too much into the barriers (the bullet points John put together prior to the workshop were mainly addressed as barriers).

26. Analysis and Integrated Design
Deep savings may not be cost effective over contract term
Lack of information on existing buildings
Typical ESPC process looks at individual ECMs
High risk to
guarantee
deep savings
Integrative analysis is essential to cost-effectively achieve deep energy savings; however, it is typically not part of the ESPC process. The Analysis and Integrative Design breakout group discussed the typical ESPC analysis process and how and when whole building energy modeling and LCCA are employed. The group also discussed engaging innovative technologies in this process and integrating disparate ECMs to achieve bundled, whole building benefits and energy savings.
Deep savings may not be cost effective over contract term Key factor: there is no funding available from agencies
 Identify any preapproved funds available through coordination between energy managers, master planning and capital improvement
 Find solutions to channel saved space into funding for deep retrofits
 Employ bulk purchasing program
 Phase implementation of ECMs capitalize on post cost savings with other planned renovations
There is a lack of information on the existing buildings (e.g., metering, utility data)
GSA can further improve the process by storing and categorizing reports/data into a centralized and searchable database
The typical ESPC process evaluates individual ECMs
The ESPC process needs to change to better evaluate bundles of integrated measures
The law tells you to save energy, but the ESPC process is structured around cost savings (or certain energy related cost savings)
GSA and other agencies must reconcile this disconnect
There is a high risk to guarantee deep savings
 Key factor: it is difficult to accurately model new and innovative technologies
 ESCO engineers have the experience and judgment to guarantee savings.
This could be accomplished through education and training, or by ESCOs hiring a dedicated specialist to fulfill this role
 The energy simulation tools keep up with new and innovative technologies
There is no way to take credit for other savings (e.g., increased productivity, avoided capital costs, etc.)
GSA needs to develop a standard way to assign value for non-energy benefits

27. 1. Analysis and Integrated Design
Barriers
Solution
1. Deep savings may not be cost effective over contract term
(No $ available from agencies)
Identify funds available through coordination between energy managers, master planning and capital improvement
Find solutions to channel saved space into funding for Deep Retrofits
Bulk purchasing
Phased implementation of ECMs
2. Lack of info on existing buildings (metered/utility data)
GSA needs to store and categorize reports/data into centralized searchable database
3. Typical ESPC process looks at individual ECMs
Process needs to value bundles of integrated measures
4. Laws tell you to save energy, ESPC process demands $ savings
Disconnect must be reconciled
5. High risk to guarantee deep savings (ability to model new technologies)
ESCO engineers have experience and judgment needed
Tools need to keep up with new technologies
6. No way to take credit for ‘other’ savings (O&M, increased productivity, etc.)
GSA needs to develop a standard way to assign value for these things

28. Project Economics High financing costs
Integration with planned improvement projects
Inclusion of avoided future costs in ESPC including capital and maintenance
Contract duration limits longer payback measures
Deep energy savings through standard ESPCs historically only appear profitable either with extremely high utility rates (Hawaii, Guam) or on extremely inefficient buildings. Installation of comprehensive energy saving technologies would require a substantial contribution of appropriated funds, which may not be available. However, the final result of a guaranteed ESPC can be modified through a variety of levers beyond appropriations funding. Finding synergies between agencies, financiers and customers to redefine project scope and reduce project costs would help enable deep retrofit ESPCs.
It is hard to overcome high financing costs
 Create a centralized effort (perhaps driven by GSA?) to get more preferable interest rates - as close as possible to fed discount rate (.75%) or like term treasury bond.
 Create a case for gathering support (appeal to broader issues, jobs, small business requirements, etc.)
NOTE: This effort should be aligned with Skye Schell’s (FEMP) ongoing efforts to lower ESPC interest rates
There is no integration with planned improvement projects
 Agency/building manager should provide improvement information ahead of time (through RFP or data sharing) to ESCO
 ESCO could fold pre-planned improvement into a larger contract, possibly involving the current O&M provider
There is no inclusion of avoided future (greater than 1-2 years) costs in ESPC including capital and maintenance
 Agencies allow avoided future costs for utility energy service contracts (UESCs) and can authorize for ESCOs
 Clear guidance from central office through to contracting officers is needed
Contract duration limits longer payback measures
 Include the life cycle-costs analysis (LCCA) costs (avoided) as net present value (NPV)
 Treat each energy conservation measure (ECM) differently depending on life cycle or assess based on bundled measures

29. Best-Expedited Schedule
ESPC Delivery Process
Months 1 2 3 4 5 7 6 8 9 10 11 12 13 14 15 16 17 19 18 20 21 22 23 24
28 days
132 days
30 days
45 days
105 days
Best-Expedited Schedule
Longer Schedule
Project planning (28-63 days)
Work w/FFS
Form Acq. Team
Request PF
Prelim. Assessment — ESCO selection ( days)
Notice of Opp.
Select ESCO
Evaluate PA
Send NOIA
TO-RFP (15-35 days)
IGA & Final Proposal (105 – 150 days)
Site/Agency Review (30 days)
GFO Review (14 days)
Final Reviews, Negotiations, and Award (45-55 days)
Project planning
TO-RFP
Final nego’s & award
PA – ESCO selection
IGA & FP
IGA & Final Proposal
Site/Agency Review
GFO
63 days 35
246 days
55 days
150 days
19.5 mos.
12.1 mos.
The current ESPC delivery process is too long and lacks consistency among project managers in different agencies.
This breakout group identified the biggest hurdles for deep energy retrofits in the way ESPCs are currently processed and managed by the GSA, FEMP and participating ESCOs, including the processes for ESCO selection, implementing the IGA, and scoping and implementing the performance contract.
The group identified the following major considerations to address process improvements at a high level:
 Agencies and sites need to be fully bought into deep retrofits
 Should the process be structured to be largely centralized or regionalized? Which best ensures a skilled team?
Should the team perform a quick and effective deep retrofit and/or create a replicable model?
 Retrofits of portfolios of buildings provide increased flexibility and opportunity for cost-effective deep savings (simplified analysis, bundling for financing, etc.). How would the process be structured for portfolios?
 This Challenge will include around 32 buildings. Will GSA (or other agencies) replicate this large-scale ESPC process? Consider how the process is set up in terms of scaling and speed.
 How should (if at all) the process support the GSA objective of diverse ESCO participation?
Major confusion/disagreement on what can be counted as eligible savings
 Clearly define eligible sources of payment; consider O&M, utility rebates, PPA, leasability, and absenteeism
 Define how to demonstrate post-retrofit differential for these savings categories
 Clarify how to address elevated baselines (how much it would have cost had the project invested in proper replacements, maintenance, etc.)
The current ESCO selection process takes too long
 Create a streamlined process to select all 32 project ESCOs in 90 days
 Consider a 3-step process:
1. One notification letter to all 16 ESCOS, with project grid including building data status and team experience level. ESCOs mark those projects in which they are interested
2. GSA team (region/central?) chooses top 3 ESCOs for each job
3. GSA completes final selection through oral interview
Significant project delays occur because regions/sites are not always incentivized to adhere to aggressive schedules
 Establish a midterm review in IGA, with clear evaluation criteria and protocol for follow-up
 Create urgency by enforcing GSA rebates/incentives tied to meeting deadlines
Source: DOE/FEMP 29

30. Occupant Behavior Difficult to quantify energy/cost savings
Limited good examples of “Behavior ECMs”
Hard to incentivize all occupants
ESCOs have
no control over
occupants
Energy savings strategies that rely on occupant behavior modifications are rarely part of the ESPC process, and this potential savings is unrealized.
Occupant behavior significantly affects the energy saving strategies; therefore it should be seriously taken into consideration especially in deep retrofits. However, energy savings strategies that rely on occupant behavior modifications are rarely part of the ESPC process, and this potential savings is often unrealized.
At the end of the discussion, the breakout group prioritized the following major barriers and solutions
It is difficult to quantify energy/cost savings
 Find opportunities for agencies to share risk with the ESCO
 Create incentive to over-perform
 Stipulate a conservative savings estimate
 Allow occupant behavior savings to be bundled with other measures
There are not many good examples of “Behavior ECMs”
 Create case studies and get the word out
 Start with low risk process-based solutions (e.g., daytime cleaning)
It is hard to incentivize all occupants of varying cultures, generations, and characteristics
 Be more inclusive during design
 Identify obsolete processes used by tenants that are inhibiting energy savings
 Tie savings to issues “bigger than the individual”, such as climate change, resource scarcity, or economic duress.
 Create alternative metrics (e.g., jobs preserved)
ESCOs have no control over occupants and engaging occupants is challenging
• Provide well structured educational programs and trainings to respond to the needs of different audience
Create strategies to let individuals see the big picture yet increase local control for direct correlation of actions to savings.

31. Measurement & Verification
Uncertainty/variability of how building is
operated after installation
Cost, level of effort, and complexity for whole building M&V
Consistency across GSA offices, agencies and regions
Improved baseline performance data
Measurement and Verification (M&V) is critical to increase the success of the energy conservation measure (ECM). During
this session, the groups discussed the biggest constraints to deliver deep retrofits through current M&V methods and protocol,
the ways to modify current M&V methods to better support deep energy retrofits and the strategies to expand the use of M&V
to provide ongoing performance optimization and to educate occupants and maintenance staff.
There is uncertainty/variability of how building is operated on an ongoing basis after installation
 Treat O&M as ECM and have ESCO provide thatservice
 Have O&M contractor address it specifically
 Clearly specify all performance vs. operation responsibilities
The cost, level of effort, and complexity for wholebuilding M&V (including keeping track of adjustment factors, performing sub-metering, client understanding of M&V) is critical
 Perform robust M&V for first year
 Have Option A or Option B for following years.
 Pull M&V out of agencies’ control and have FEMP oversee
There is lack of consistency across GSA offices, agencies and regions
 Apply better standardization throughout
 Have common, more specific M&V methodology across similar projects
 Create a center of competence for M&V (e.g. move to FEMP)
There is poor, absent or incorrect baseline performance data
 Improve baseline efforts
 Have FEMP approve baseline; allow ESCO to submit before price proposal

32. Additional Improvement Opportunities
Improve the ESPC award and M&V process 
Treat O&M as ECM and have ESCO provide that service 
Allow avoided future replacement costs
Share risk 
Accept occupant behavior energy use reduction 
Support multi-building projects 
Improve building energy data base lining
Renegotiate FEMP contract terms 32

33. High Priority Solutions
Reduce time to contract award
Redefine eligible savings
Share risk
Combine funding
Multi-building projects, bundling
Consider occupant behavior programs
Time is money. By reducing/streamlining the ESCO selection and approval processes (currently 18 months on average), GSA can get to savings sooner, reduce costs to ESCOs and add 20-30% from savings to project budgets.
Redefine or clarify eligible savings, particularly as it relates to O&M and avoided capital costs. Including avoided capital and maintenance costs (even over just 1-2 years in the future) can increase project financing. Clear and consistent guidance from GSA on what the ESPC can include is necessary.
Shared risk between the ESCO and the agency would enable deeper savings from ESPCs. Certain risk sharing or interest rate reductions would reduce project costs and make greater energy savings more viable.
For broader uptake of the ESPC process, the GSA program should support aggregated, multi-building projects. Bundling of ESPC projects (and associated financing) could lower analysis costs and financing costs and could make more measures viable.
ESCOs very rarely guarantee occupant behavior energy use reduction – largely because the savings from an occupant behavior program are hard to quantify and verify. ESCOs could incorporate occupant behavior savings into bundles (through the implementation of each measure) instead of as a stand-alone measure. Solutions to share risk, or incentives for ESCOs to over-perform would encourage the inclusion of occupant behavior.
Combining appropriated funding for designated projects with ESPCs could lead to bigger savings, more robust projects and better buildings

34. ESPC Challenge Buildings
18 million sqft
100,000 – 800,000 sqft
$ million potential project size
$7 million annual savings potential
Benchmarking and setting BTU/sqft targets based on ASHRAE Std. 100.

35. And The Elephant in the Room
We Need To Use Less:
Square Feet

36. E X A M P L E: A R R A P R O J E C T
Broad Range of Opportunities and Challenges
1975 Federal Building
Never Upgraded
Plan:
Updating Cutting Edge ‘Green’
Design
$133 M from Recovery Act
Full Building Modernization
High Aims for Sustainability and Curb Appeal
Construction procurement
underway
Two sample renovation projects illustrate the broad range of opportunities and challenges in
pursuing projects:
Portland OR. Edith Green/Wendall Wyatt Federal Building
(Built 1975; 510,000 SF; multi-tenant 18-story building; modernization and envelope expansion is $161M)
Currently updating this major and cutting edge “green” modernization. Very important asset for 1,100 employees and 15 federal agencies BUT could not get funding. Design had been on-hold pending construction funding for several years BUT the design was kept up to date and is very forward thinking on sustainability. As a result, the cutting edge “green” design is being updated AND it will be a very high performing green building. Construction procurement is underway.
More Details:
Building has not been upgraded since its construction. Located on a downtown Portland city park. Lack of systems upgrades has caused increasing problems and disruptions to building operations. Planned worth will incl. new façade, with 13,000 sf expansion of usable space; security, systems, and seismic upgrades, and space buildouts.
Now, A truly “green” (vegetative) façade curtain wall system is planned – in fact each of the four facades will have different solar treatments – and the vegetative façade will functional seasonally (more shade in the summer, less in the winter, etc.). Although some high performing green elements were previously “value engineered” out of the design, it was easy to add these very smart things back in when ARRA funding became available. A very forward thinking project that had been in the ‘on deck’ circle for a few years, will have its chance to shine. The innovative approach is being rewarded by being ‘ready to go’ and ready to meet the Administration’s enhanced energy goals.
Take Away:
A very worthy project, and a fundamental asset of ours was unable to get sorely needed funding through annual budget process. ARRA provides this once in a “long time” opportunity for funding and because the design team was forward thinking – in aiming high and updating the design -- we are in great shape to take advantage of this opportunity.
Portland, OR

37. EGWW—Shading Reed Construction

38. Broad Range of Opportunities and Challenges
T H E E X T R E M E C H A L L E N G E
Broad Range of Opportunities and Challenges
Historic 1917 Building
Last Upgraded in 1935
Plan:
Modernization with Infill
$161 M from Recovery Act, as Phase I
Must Redesign for Energy Goals
Two sample renovation projects illustrate the broad range of opportunities and challenges in pursuing “shovel ready” projects:
2. Washington DC. GSA Headquarters.
(1917, historically significant; 760,000 SF; GSA is tenant; about 1/3 of building would be upgraded and expanded under ARRA project)
Marquee location near White House is HQ for GSA. Previously completed design had been shelved for several years as project could not get funding under a very competitive environment (What is that old saying: “the cobbler’s son is the worst shod?”).
Now, the ARRA funding will be put to good use in upgrading a building that has been largely untouched in more than 50 years BUT the need for speed presents some challenges:
Challenges/Concerns:
Re-design is needed for improved energy performance and must happen on fast track before going out to bid, but
Building is historic resource, and design must go through 3rd party design review;
Construction budget was set to accommodate expected design changes, but had to be done before re-design was complete;
All the “normal concerns” about a complex renovation in a historic building – late breaking design changes, unforeseen conditions, logistics of phasing and need for leased and internal swing space, 3rd party review, etc. – are supercharged in the high speed funding environment;
Ability to secure second phase construction funding may be impacted by performance on the first phase.
Details:
New infill will create about 110,000 SF of new space. Much of redesign has to do with reducing solar heat gain in those south facing infill structures. Redesign conversation is looking at double-wall construction, photovoltaic panels, etc.
Washington, D.C.

39. Renderings

40. What’s Really Happening in the Office?
Autur and Murmane, 2003

41. Questions?
Kinga Porst Kevin Kampschroer Sharon Conger FEMP: Dr. Timothy Unruh