1. Phoenix Convention Center Phoenix, Arizona ESPC Overview Project FinancingESPC Large and Small: The Basics of ESPC Tom Hattery, DOE-FEMP Federal Project Executive Oak Ridge National Laboratory [August XX, 2015]

2. Energy Exchange : Federal Sustainability for the Next Decade ESPC is a no-upfront-capital-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. 2 Definition of ESPC

3. Energy Exchange : Federal Sustainability for the Next Decade Meet energy reduction and environmental goals –Affirm agency commitment to these goals 2-in-1 performance contract with guarantees Improve facilities: comfort and reliability Provide critical facility data Better quality Interoperability Good for community relations Avoid cost of delay and inaction Fast construction Avoid deferred maintenance 3 Why do an ESPC?

4. Energy Exchange : Federal Sustainability for the Next Decade ESCO has incentive to find all ECMs ESCO has incentive to do all punch list items timely ESCO has incentive to commission well 4 More on: Why do an ESPC?

5. Energy Exchange : Federal Sustainability for the Next Decade 25 year maximum task order term Annual cost savings must exceed payments Annual measurement and verification (M&V) of savings is required Performance guaranteed ESCO is responsible for O&M – agency may perform O&M (negotiable) 5 ESPC Features

6. Energy Exchange : Federal Sustainability for the Next Decade 6 ESPC Nuts & Bolts

7. Energy Exchange : Federal Sustainability for the Next Decade Reallocation means: 7 Reallocate the Government’s Utility Bill Stop paying for waste and pollution Start paying for efficiency!

8. Energy Exchange : Federal Sustainability for the Next Decade 8 Initial Proposal Estimated Savings Estimated Energy Costs Others assumed constant (not affected by ESPC project) Initial Proposal Estimates ESCO Services Debt service System 1 System 2 System 3 System 4 Plug Process & other Baseline System 1 System 2 System 3 Only a subset of energy- related systems can be retrofitted and be paid for by savings. Other energy use is ignored — but it all can vary with weather, usage, etc. Savings

9. Energy Exchange : Federal Sustainability for the Next Decade Two types of savings may be used to pay the ESCO 1. Energy cost savings 2. Energy-related cost savings 9 Savings Must Exceed Payments

10. Energy Exchange : Federal Sustainability for the Next Decade ► Pick Energy Services Co ► Preliminary Assessment ► Investment Grade Audit ► Task Order Award 10 Typical Major ESPC steps ► Final Design ► Installation ► Acceptance ► Annual M&V* *DOE now provides life-of-contract support

11. Energy Exchange : Federal Sustainability for the Next Decade 197% contract savings static baseline savings beyond term underestimate of equipment performance underestimate of utility escalation Oak Ridge National Laboratory study 11 Beyond contracted for savings

12. Energy Exchange : Federal Sustainability for the Next Decade ESPC savings achievement: 100+% Appropriated savings achievement: 67% From CTS and M&V data, Lawrence Berkley National Laboratory Study 12 Beyond contracted-for savings (cont’d)

13. 13 Measurement & Verification Core to the success of ESPC

14. Energy Exchange : Federal Sustainability for the Next Decade 14 ESPC Training

15. Energy Exchange : Federal Sustainability for the Next Decade ENABLE is a new ESPC program For small Federal facilities Standardized, streamlined process using GSA Schedule ECMs: lighting, water, basic HVAC controls, HVAC equipment replacement and solar PV 15 ESPC ENABLE Overview

16. Energy Exchange : Federal Sustainability for the Next Decade 16 Tom Hattery Federal Project Executive Oak Ridge National Laboratory U.S. Department of Energy Federal Energy Management Program thomas.hattery@ee.doe.gov 202-256-5986