1. Big Ten Sustainability Conference November 14-15, 2010 Funding Strategies: Energy Savings Projects and Seed Grants Funding Strategies

2. Energy Savings Projects

3. Energy Savings Projects and Seed Grants Funding Strategies Energy Savings Projects Program Components 3 Commissioning o Continuous Commissioning (CCX) o Rapid Commissioning (RCX) Guaranteed Energy Savings Projects (GESP’s) Energy Savings Projects (ESP’s) Energy Conservation Measures (ECM’s) o Seed Grants

4. Energy Savings Projects and Seed Grants Funding Strategies Annual Budgets 4 Guaranteed Energy Savings Projects (GESPs) and Energy Savings Projects (ESPs ) – 10 yr payback $5,000,000 to $10,000,000 Applies to all University facilities Energy Conservation Measures (ECMs) – 5 yr payback o Commissioning = $580,000 o Stand alone = $500,000 o Incorporated in Projects = $500,000 o Applies only to E & G facilities

5. Energy Savings Projects and Seed Grants Funding Strategies PENN STATE’s Traditional Guaranteed Energy Savings Project (GESP) Contracting Process

6. Energy Savings Projects and Seed Grants Funding Strategies UNIVERSITY IMPROVEMENTS ANNUAL UTILITY BUDGET UTILITY PAYMENT UTILITY COMPANY REVENUE ENERGY SAVINGS $ spent should not increase as a result of a GESP Measurable or Guaranteed Results

7. Energy Savings Projects and Seed Grants Funding Strategies Organized Process 7 The Guaranteed Energy Savings Act (GESA) is provided for under Chapter 37 of Act 57 (1998), and as amended by Act 77 (2003). In the Commonwealth of Pennsylvania, energy performance contracting was standardized through the procurement code………………

8. Energy Savings Projects and Seed Grants Funding Strategies Traditional Guaranteed Energy Savings Program Process 8 Month1234567891011? Site Selection Letter of Interest ESCO Proposals Investment Grade Audit Funding/ Contracts Construction

9. Energy Savings Projects and Seed Grants Funding Strategies Penn State’s Process 9 1.Select Project Sites 2.Issue Request for Letters of Interest 3.Select up to 3 ESCOs from LOIs and Issue RFP 4.Evaluation and Selection of ESCO 5.Execute Energy Audit Contract 6.Audit conducted by ESCO approved by Penn State 7.Negotiate and execute GUARANTEED ENERGY SAVINGS CONTRACT 8.Determine financing method and secures monies 9.Construction Period begins 10.Project accepted and approved 11.Guaranteed period commences 12.Ongoing project monitoring

10. Energy Savings Projects and Seed Grants Funding Strategies GESP Process 10 1)Select Project Sites A campus or group of buildings Similar customers Similar needs Target projects of $2,000,000 to $4,000,000 Establish the selection committee Example: Penn State Altoona 2007 FY utility cost = $1,400,000 20% Expected Savings = $280,000 over 10 years = $2,800,000 Selection Committee: Director Housing & Food Service Director Business Operations Assistant DBO Foreman Operation and Maintenance Heat & Vent Technician Project Manager Mechanical Engineer

11. Energy Savings Projects and Seed Grants Funding Strategies GESP Process 11 2) Issue request for letters of interest (LOI) List of 18 qualified ESCOs from the DGS site ESCO reference projects Team member qualifications ESCO financial information 3) Select 3 ESCOs and issue the RFP The RFP establishes the foundation of the GESP Requirements, terms, and conditions Expectations and selection process Schedules for meetings, proposals and presentations 4) Evaluation and selection of ESCO From 3 proposals select 1 ESCO to complete an IGA Written proposal evaluation Interview Evaluation DGS forms available

12. Energy Savings Projects and Seed Grants Funding Strategies GESP Process 12 5) Execute the Investment Grade Audit Agreement (IGA) The next step in the contractual process Builds on the RFP The IGA agreement is absorbed into the GESA 6) Audit conducted by ESCO Partnership between the ESCO and the owner Commonly takes 3 to 6 months Measure from the proposal are refined Cost and savings can not vary by 10% The IGA report becomes the basis of the GESA 7) Negotiate and Execute Guaranteed Energy Savings Contract

13. Energy Savings Projects and Seed Grants Funding Strategies GESP Process 13 8) Determine the financing method Penn State uses internal financing ESCO offer a wide range of options 9)Construction Period begins 10)Project accepted and approved 11)Guaranteed period commences 12)Ongoing project monitoring

14. Energy Savings Projects and Seed Grants Funding Strategies Sample GESP (Altoona Campus) 14 Total Projected Savings = $ 363,124 Payback = 8.1 years on financed amount

15. Energy Savings Projects and Seed Grants Funding Strategies Sample GESP (Altoona Campus) 15 Total Projected Savings = $ 363,124 Payback = 8.1 years on financed amount

16. Energy Savings Projects and Seed Grants Funding Strategies Sample GESP (Altoona Campus) 16 Total Projected Savings = $ 363,124 Payback = 8.1 years on financed amount

17. Energy Savings Projects and Seed Grants Funding Strategies Sample GESP (Altoona Campus) 17 Total Projected Savings = $ 363,124 Payback = 8.1 years on financed amount

18. Energy Savings Projects and Seed Grants Funding Strategies Sample GESP (Altoona Campus) 18 Total Projected Savings = $ 363,124 Payback = 8.1 years on financed amount

19. Energy Savings Projects and Seed Grants Funding Strategies 19 ANNUAL UTILITY BUDGET UTILITY PAYMENT UTILITY COMPANY REVENUE ENERGY SAVINGS MAJOR MAINTENANCE BUDGET $575,000 UNIVERSITY IMPROVEMENTS $3,502,374 Sample GESP (Altoona Campus)

20. Energy Savings Projects and Seed Grants Funding Strategies Energy Saving Program Process w/ In-House Labor 20 Month1234567891011? Site Selection Engineering Study and Design Funding/ Contracts Construction Simplified process for working with in-house forces Based on stipulated savings as determined by Penn State energy engineers Reduced cost due to elimination of ESCO profits

21. Energy Savings Projects and Seed Grants Funding Strategies Sample ESP Projects 21

22. Energy Savings Projects and Seed Grants Funding Strategies Sample ECMs 22 Energy Savings Projects with maximum 5 year simple paybacks Continuous Process Occupancy Sensors – HVAC – Many Buildings Lighting – Many Buildings Thermostatic Valves – Many Buildings Batch Process – Lab air flow adjustments – Wartik & Hosler Valve replacement – Leonhard Valve Replacement – South Henderson Heat recovery ACF 1&2 – Research East Heat Recovery – Althouse 100% OA – Rec Hall rm 151 and HVF 05 RTU replacement – Research West

23. Sustainability Seed Grant Program: “Crowd Sourcing” New Ideas

25. Energy Savings Projects and Seed Grants Funding Strategies Goal : To foster basic and applied research, practice, education, and outreach as it relates to sustainability Penn State Institutes of Energy and the Environment partnership with Outreach, OPP & several colleges $350,000 funding available Grants awarded May 2010 Grants need to be by June 30, 2012 Sustainability Seed Grant Program

26. Energy Savings Projects and Seed Grants Funding Strategies Sustainability Seed Grant Program 75 proposals 13 awardees AmountPeople $15,0001 $40,0002 $75,0003+ Encouraging Collaboration

27. Energy Savings Projects and Seed Grants Funding Strategies

28. Results 28 BTU/GSF 24% reduction

29. Energy Savings Projects and Seed Grants Funding Strategies What’s next...? 29

30. Energy Savings Projects and Seed Grants Funding Strategies Endowment Conventional Investments ENERGY SAVINGS What’s next...?

31. Thank you. Comments? Questions?