WRF Webcast. Public-Private Partnership Opportunities for Water and Water Resource Recovery Utility Energy Projects (WRF #4634) September 28, 2017

Transcription

1 No part of this presentation may be copied, reproduced, or otherwise utilized without permission. WRF Webcast Public-Private Partnership Opportunities for Water and Water Resource Recovery Utility Energy Projects (WRF #4634) September 28, 2017

2 A decade of research and collaboration on energy efficiency and recovery projects go to Research Area: Energy for more

3 Project Resource Access 2017 Water Research Foundation. ALL RIGHTS RESERVED.

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5 Finance Knowledge Portal 2017 Water Research Foundation. ALL RIGHTS RESERVED.

6 Webinar Overview Part I: Scope of Project, Project Landscape & Drivers Emily Hammond, Glen Earl Weston Research Professor of Law, The George Washington University Law School Part II: Utility Case Studies Bruce Tobey, Of Counsel, Pannone Lopes Devereaux & O Gara LLC Part III: Best Practices for W&WRRUs P3 Energy Projects Sean McGinnis, Director, The Horinko Group Part IV: Questions and Discussion

7 Part I: Scope of Project, Project Landscape & Drivers Emily Hammond Glen Earl Weston Research Professor of Law The George Washington University Law School

8 Scope of Project Energy Projects W&WRRUs Public- Private Partnerships (P3s) Three Phases: Conduct comprehensive literature review Develop utility case studies Produce final report with best practices and recommendations

9 Context: Energy at W&WRRUs & Role of P3s Energy Use: As much as 10% of local government s operating budget W&WRRUs can account for 30-40% of electricity in a community U.S. W&WRRUs spend about $4 billion annually on energy Most electricity in the U.S. comes from fossil fuels; environmental implications of high electricity use Energy Projects: Reduce costs, avoid waste, create new revenue streams Leverage tax and other incentives Reduce facility s overall environmental footprint P3s: Contractual arrangement between public and private sector Transfer risk Leverage revenue/incentives to raise capital, tap private expertise

10 Drivers of Energy Projects at W&WRRUs Engineering Drivers save costs, upgrade equipment, enhance reliability, and manage resource streams Environmental/Sustainability Drivers reduce emissions, build resilience, and enhance social responsibility Federal Statutory and Regulatory Drivers investment and production tax credits, statutes and regulations promoting renewable energy, market incentives State Statutory and Regulatory Drivers; Local Ordinances and Policies provide grant funding, set standards, create secondary markets, authorize contracting mechanisms

11 Types of Energy Projects Demand-side measures (efficiency, DR, frequency regulation Combined heat & power (CHP) Other biogas applications (treat & send to market) Cool renewables (solar, wind, in-pipe hydro)

12 Drivers of P3s Access to Private Sector Expertise industry-wide best practices, advanced technologies, enhanced asset management Efficiency Gains economies of scale, input optimization, integrated project delivery, cost and performance guarantees Transfer of Risk regulatory, financial, managerial, performance and technology, project delivery, projections Continued...

13 Drivers of P3s Value for Money project delivery evaluation, life cycle accounting of costs, risks and benefits, making the business case Alternative Financing access to capital, avoid adding to public debt, leverage guaranteed cost savings Accountability outcome-based contractual nature, performance specifications, transparency and oversight Authorization both for P3s (37 states) and PPAs (contracts between buyers and sellers of electricity must be authorized by state law)

14 Structuring P3 Energy Projects: Key Contractual Mechanisms Energy Savings Performance Contracts (ESPC) Combination of project financing-design-upgrading Leverage guaranteed cost savings Power Purchase Agreements (PPA) Guaranteed price on electricity Dedicated revenue and tax credits attract investors Often paired with, or functions as, a P3 Agreement

15 Structuring P3 Energy Projects A Variety P3 Models May Be Used, Depending on Value Analysis E.g., service and consulting, operations & maintenance, design-build, etc. PPA is most common contracting mechanism Design-Build-Own-Operate-Transfer (DBOOT): Common P3 energy project model Leases may also be used for all or part of project

16 Part II: Utility Case Studies Bruce Tobey, Of Counsel, Pannone Lopes Devereaux & O Gara LLC

17 Case Study Goals and Subjects Goals Mix of water and water resource recovery utilities Variety of project types Geographic diversity Differing endpoints Five Case Studies City of Thousand Oaks, CA Solar and cogeneration PPA Village of Ridgewood, NJ Solar and cogeneration PPA Rockland County Sewer District #1, NY ESPC San Antonio Water System Methane collection project Portland Water Bureau (OR) In-line hydro project

18 City of Thousand Oaks, CA: Hill Canyon Wastewater Treatment Plant (HCTP) Public Partner Private Partners Objectives Process Results Images Source: Hill Canyon Wastewater Treatment Plant

19 Village of Ridgewood, New Jersey: Ridgewood Water Pollution Control Facility Public Partner Private Partners Objectives Process Results Image Source: Natural Systems Utilities, LLC

20 Rockland County, New York: Rockland County Sewer District #1 Public Partner Private Partners Objectives Process Results

21 City of San Antonio, Texas: San Antonio Water System Public Partner Private Partner Objectives Process Results Images Source: San Antonio Water System

22 City of Portland, Oregon: Portland Water Bureau Public Partner Private Partner Objectives Process Results Images Source: Sherri Kaven

23 Part III: Best Practices for W&WRRUs P3 Energy Projects Sean McGinnis, Director, The Horinko Group

24 Best Practices for W&WRRU P3 Energy Projects Getting Started Utility Priorities and Energy Project Selection Develop energy priorities and create an action plan Establish an energy improvement leadership team Project delivery evaluation and Value-for-Money analysis Socializing the P3 Project and Making the Case Role of the political champion Engaging and educating all stakeholders Importance of 100% commitment to P3 socialization process

25 Best Practices for W&WRRU P3 Energy Projects Approaching P3 Procurement and Selecting a Partner Designing the procurement process Reviewing project proposals Selecting the optimal partner Creating a Win-Win Partnership Crafting a win-win contract Achieving project success Communicating performance and impact

26 Conclusion As W&WRRUs continue to stress sustainability, cost-savings, revenue stream development, and enhanced reliability, there is good reason to consider the P3 tool as a means to achieve energy project goals.

27 Part IV: Questions and Discussion Contact Information Emily Hammond, Glen Earl Weston Research Professor of Law, The George Washington University Law School Bruce Tobey, Of Counsel, Pannone Lopes Devereaux & O Gara LLC btobey@pldolaw.com Sean McGinnis, Director, The Horinko Group sean.mcginnis@thehorinkogroup.org

28 No part of this presentation may be copied, reproduced, or otherwise utilized without permission. Thank you Comments or questions, please contact: For more information visit: