Hosted by the Initiative for Renewable Energy and the Environment 27 January 2012 University of Minnesota, Twin Cities

Transcription

1 Hosted by the Initiative for Renewable Energy and the Environment 27 January 2012 University of Minnesota, Twin Cities

2 Dick Hemmingsen, Managing Director, Innitiative for Renewable Energy & the Environment Mayor Chris Coleman St. Paul, Minnesota Commissioner Paul Aasen, Minnesota Pollution Control Agency U.S. Senator Al Franken

3 Bill Heaney, MN Energy Jobs Association Jay Behnken, Trane Madonna Rykken, Honeywell Building Solutions Commissioner Rhonda Sivarajah, Anoka County Andrew Dykstra, Anoka County

4 Retrofitting of Public Buildings

5 Agenda Overview of Performance Contracting (PC) Why use Performance Contracting... The Benefits Some Myths Busted Case Study Anoka County Questions (if time permits)

6 Existing MN Legislation Procurement method for state, municipal and k-12 Payback requirements varies by sector Provides funding for capital projects Savings offset project costs No new taxes No upfront money required Performance and savings are guaranteed Improves operating efficiency/ Enhances working environment Flexible and unique for each customer

7 Benefits of PC Traditional Bid / Spec Low bid awarded based on specifications Project costs funded by capital budget Piecemeal approach based on available dollars Up-front fee for evaluation/studies Performance & savings are not guaranteed Multiple contracts with multiple vendors Contractors have no accountability to lifecycle costs Owner assumes risk Performance-Based Awarded based on performance & lifecycle costs Payments for projects are offset by guaranteed savings freeing up capital for other needs Comprehensive approach No up-front fee required Long-term performance & savings are guaranteed One contract, single-point accountability Performance-based contractor is tied to guaranteeing savings over term of contract Performance contractor takes risk

8 How it Works Performance Contracting is a way to fund improvements with no additional cost to taxpayers. Excess Savings Savings $ Existing facility, energy, operations & maintenance costs Savings Fund Improvements Existing facility, energy, operations & maintenance costs Existing facility, energy, operations & maintenance costs Before During After

9 The Myths Loss of project control Unsure of guaranteed savings measurement process Project costs more through performance contracting I don t have a choice of the product manufacturer We have our own skilled personnel Only applies to greater Minnesota areas

10 Potential Opportunities Lighting Water Waste Water Street Lighting Parking Landfill Meters Sites HVAC Ice Arenas Swimming Pools Plumbing Fixtures Building Envelope Issues... & more

11 City of Rochester Challenges Aging facilities & infrastructure Limited capital Increasing energy & operational costs Project Details $5.6M 12 Year Agreement Utility Savings:$502K/year Operational Savings:$102K/year Rebates - $300K Solutions Lighting, Temperature Controls, Water Upgrades Building Envelope issues Traffic Signal Upgrades Steam Trap Repair Boiler Replacements Building Automation Systems Ice Arena Dehumidification, energy recovery & ceilings Variable speed drives, high efficiency motors & pumps Fire alarm & security upgrades Results Addressed long overdue capital improvements Improved reliability of mechanical systems Improved comfort, efficiency and taxpayer image Environmental benefits reduced GHG emissions

12 Anoka County Government Facilities Challenges Aging facilities & infrastructure Budget shortfalls/limited capital Increasing energy & operational costs Uncomfortable working environment Project Details $12.5M of facility upgrades Annual energy/operational savings of $873, buildings Over 1.4 million square feet 7 phases of work Solutions Lighting and fixture upgrades Occupancy sensors Exterior photocells Energy efficient motors and pumps w/ VFD s Water saving retrofits on fixtures Energy management system Central heating & cooling plant upgrades Mechanical system improvements Temperature control system upgrades On-site generator to manage peak demand Training of staff Measurement and verification Results Addressed long overdue capital improvements Improved reliability of mechanical systems Improved comfort, efficiency and taxpayer image Environmental benefits

13 Questions Madonna Rykken Business Development Manager Honeywell Building Solutions Jay Behnken Comprehensive Solutions Manager Trane Minneapolis/St. Paul

14 Anoka County MEPC Meeting April 7, 2011 Andrew Dykstra Director of Facilities Management and Construction (763)

15 Anoka County Facilities Total of 2,500,000 square feet of buildings. Anoka County Parks and Recreation Facilities Anoka County Library Facilities Anoka County Facilities

16 Why Anoka County Did a Project? Aging Infrastructure/Deferred Maintenance Increasing Energy and Operating Costs Occupancy Comfort Issues Lack of Funding $$$ Aging HVAC Obsolete Control Systems Degrading Building Envelope Physical Asset Deterioration Increasing IAQ Requirements Inefficient Infrastructure

17 Types of Projects Lighting Retrofit Energy Management System Upgrades Energy Efficient Motors/Variable Speed Drives Central Heating and Cooling Plant Replacements Dual Duct Ventilation System Conversion Back-up Generators Temperature Control System Repairs Water Conservation Insulation Replacement Power Factor Correction Miscellaneous Improvements

18 Financial Results $12.5 million in projects 7 phases Over 10 years Energy and Operational Cost Reduction Exceed $873,000 annually (for all 7 phases). Annual Energy & Operational Savings by Year

19 How the State s Guaranteed Energy Savings Program and Public Building Enhanced Energy Efficiency Program Can Help. Janet Streff Manager, State Energy Office Minnesota Department of Commerce

20 Encouraging Energy Efficiency and Public Building Retrofits in the State of Minnesota

21 Minnesota Department of Commerce Division of Energy Resources State Energy Office Providing energy information for over 35 years Energy conservation, efficiency, & renewables Through technology, analysis, grants, programs, & public outreach Data, reports, publications, presentations, website, call center, training, public events 21

22 Getting Started Tools Access B3 Benchmarking Website Building Construction Data Square footage, operational equipment, occupancy and usage Energy Consumption Data Electrical and natural gas kw, kwh, therms 22

23 Benchmarking your buildings gives you the information you need to get started MN has benchmarked 6,400 of its public buildings 23

24 Set Energy Code Target Range Dramatic difference in return on investment for retrofit $$ % Over Code Number of Buildings Best Candidate Buildings for Investing Energy Efficiency Dollars Annual KBtu/sq. ft. 24

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27 Mechanical Systems Heating Systems Ventilation Systems Air Conditioning Electrical Systems Energy Management Systems Lighting Retrofits Building Envelope Water Conservation Renewable Energies 27

28 MN Public Sector Programs Public Buildings Enhanced Energy Efficiency Program ( Retrocommissioning through extended studies Smaller capital projects Guaranteed Energy Savings Program Revamping state performance contracting program via Dayton s Executive Order RFQ for energy service companies 1/30/12 28

29 Legislative Background State Energy Improvement Financing Program Minn. Stat 16B B.322 enacted in 2008 to address two fundamental constraints to reducing energy consumption in state buildings: Access to expert technical assessment to identify measures to reduce energy consumption Access to financing to implement recommended measures Economic feasibility is determined by ability to pay back financing out of savings realized by energy improvement project 29

30 Through People and Organizations Program: Center for Energy and Environment (CEE) Program Administrator Provider: PBEEEP Qualified Contractor(s) Complete projects State Department of Commerce, Div of Energy Resources Local Government: City, County, School District Project Building Owner 30

31 Enhances public building energy efficiency through retro- CX and retrofits Reduces energy use Reduces operating costs Reduces greenhouse gas emissions Creates/retains jobs Promotes renewable, alternative energy sources 31

32 Guaranteed energy savings program reinvigorated through Executive Order DER staff provide technical, financial and contractual assistance to local units of government seeking building retrofit programmatic support. DER is part of the Energy Service Coalition MN Chapter 32

33 National, nonprofit, organization of public & private sector members, working in partnership with the U.S. Department of Energy Working together at state & local level to increase energy efficiency and renew building infrastructure through the use of Energy Savings Performance Contracts MN Dept. of Commerce Energy Service Companies MNSCU Product Manufacturers Local Unions Utility Companies Renewable Energy Cos Installing Contractors 33

34 Significantly reduce energy use Improve facilities environment Reduce deferred maintenance Avoid expenditure of capital Reduce operations and maintenance Improve productivity Reduce waste Fund projects through energy savings Savings Energy Comfort Productivity Liability Repairs 34

35 SEE Action Network State and local effort facilitated by the federal government that helps states, utilities, and other local stakeholders take energy efficiency to scale and achieve all costeffective energy efficiency by Existing Commercial Buildings WG goals include enlisting 10 state and 30 local governments to adopt one or more solutions (benchmarking, green leasing, RCx) 35

36 Launched by President in December 2011 Partners commit to an energy savings pledge, a showcase building, and to share their progress MN participants include State of MN, Best Buy, 3M, Cummins and more? 1.6 Billion sq. ft. committed, $2B financing through allies 300+ manufacturing facilities 36

37 GreenStep Cities 30+ MN cities signed up for voluntary challenge, assistance program Building efficiency one of 28 best practices City policies/programs useful to other cities 37

38 State programs and GreenStep Buildings & Lighting Best Practices Actions: 1. B3 Benchmarking 2. GESP 3. PBEEEP

39 Division of Energy Resources Contacts PBEEEP: Abby Finis GESP: Peter Berger GESP: Eric Rehm

40 Please use roving microphones for questions and comments For those joining us online, please submit questions via chat

41 Deputy Secretary, U.S. Department of Energy

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43 Retrofitting Private Buildings Mayor Jim Hovland of Edina Former State Senator John Doll Kate Worley, Co-Executive Director, Minnesota Waste Wise

44 EDINA EMERALD ENERGY PROGRAM (PACE) Mayor Jim Hovland City of Edina January 27, 2012

45 EDINA PACE PROGRAM DOCUMENTS Program Report and Administrative Guidelines Application and Petition for Special Assessment Bond Purchase Agreement Bond Resolution List of Eligible Improvements Summary of Financing Process Flow Chart of Financing Process

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49 Property Assessed Clean Energy Financing Senator Franken - GreenStep Cities Event January 27, 2011 John Doll Former State Senator, District 40

50 nearly 35% of U.S. energy use and carbon emissions come from our buildings

51 Benefits of Deep Energy Retrofits in Commercial Buildings Significant Energy Consumption Savings Net Increase in Cash Flow Healthier Environments for Tenants and Employees Improved Productivity Levels Higher Occupancy Rates/Higher Rents Improved Marketability of the Property Increased Property Values Energy Efficiency Credits

52 Why PACE? PACE provides a pathway to overcome inherent barriers to investing into critical deep energy retrofits in the private sector: short term investment horizons, split incentives, capital competition, high upfront costs, tight credit or low levels of liquidity. It provides a perpetual funding mechanism for EE and RE projects that can overcome the above concerns. And because energy savings make the projects cash-flow positive, and because total asset value is increased, companies improve their financial position without having to tie up any of their equity or debt capacity.

53 What is PACE? Property Assessed Clean Energy financing is a local government program that uses a 100+ year old provision of the property tax code to create a land secured financing district that allows property owners to pay for improvements that are in the public interest. In this case, improving building energy efficiency and installing renewable energy upgrades.

54 PACE Basics Provides capital to fund energy retrofit Contractor paid for retrofit Pays special assessment on property tax bill Energy savings pay for capital improvements

55 PACE Basics Owner arranged PACE financing model Property Owner Apply for and receive approval for Special Assessment Guaranteed Energy Saving Performance Contract Local Government Pay Special Assessment Through Property Tax Arrange Financing ESCO Pay collected Assessment to lender Construction Payments Commercial

56 Bonds issued under this subdivision are not a debt or obligation of the issuer or any local government that issued them, nor is the payment of the bonds enforceable out of Key Provisions of MN PACE MN Statute 216C.436 authorizes local governments to issue and sell revenue bonds under the program through special assessment on property tax. Allows multi-jurisdictional PACE programs through an authorized implementing entity. Senior Lien Status (Tax Lien) of Financing not to exceed 10% of assessed value Transferability of lien Financing is land/property secured. A change in ownership of the property does not accelerate or otherwise alter the original payment period. Opt-in program - All properties within energy financing district are eligible and, if owners qualify under established underwriting rules and guidelines, may participate in PACE program. Best Practices and strong underwriting guidelines significantly reduce the risk of default. Requires an energy audit or renewable energy system feasibility study Program sustainability ensured through quality assurance and controls

57 Benefits of PACE To Property Owners No upfront cash needed Improved Cash Flow Less investment risk Off-balance sheet financing Savings to Investment Ratio > 1 Improved property values/marketability Minimizes the split incentive barrier Property tax liens can pass through to tenants Removes Holding Period Bias Special assessments can transfer To Lenders Very Low Default Rates Better Loan-to-Value Ratio Improved property value Improved marketability of asset Guaranteed revenue stream - Positive cash flow improves property owner s financial position, thus their ability to repay the financing ESCO participation provides additional layer of performance security

58 Commercial PACE PACE Financing for Commercial Buildings to Reach $2.5 Billion Annually by 2015 Pike Research, June 2010 According to a new report from Pike Research, PACE programs will continue to proliferate in the United States, and by 2015 investment in PACE financing for commercial buildings will total $2.5 billion annually, under a baseline forecast scenario. This level of investment would result in the creation of 50,000 new jobs, and would mitigate almost 8 million metric tons of carbon dioxide (CO2) emissions, equivalent to taking 1.7 million cars off the road for a year. PACE programs are gaining momentum around the country, and they represent a very promising mechanism for overcoming many of the barriers to energy efficiency retrofits for commercial buildings, says Pike Research managing director Clint Wheelock. The majority of buildings would benefit from energy retrofits, with neutral to positive cash flow in addition to the other environmental and social benefits.

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60 For more information - Contact: John Doll at or 2johndoll@gmail.com Building a sustainable future based on clean energy

61 Getting Started

62 Know Utility Rebates Program Lighting Efficiency Heating and Cooling Efficiency Motor Efficiency Efficiency Controls Custom Efficiency Recommissioning Refrigeration Recommissioning Rebate Rebates for installing efficient lighting in existing and new buildings. Energy efficient boilers & burners, furnaces, steam traps, chillers, economizers, PTAC s. Prescriptive & custom. Prescriptive and custom rebates for motors and VFD s that meet or exceed NEMA premium efficiency standards. Automated building systems controls for lighting, HVAC and others. Projects that involve energy savings but are not included in other programs. Building system tune-up improve efficiency of existing operating systems and controls. Commercial refrigeration system tune-up improve efficiency of existing refrigeration systems.

63 Xcel Energy T12 Bonus Rebate 50% Bonus Rebate for T12 Lighting through March 31, 2012 If you still have T12 lights, now is the time to act. Financial incentives are their highest. Pick up a lighting rebate form today

64 The Private Sector Continuum Catalog private commercial buildings How many, how big, who owns, etc. Identify private sector targets Prioritize (value, sq. ft., business type, etc.) Develop outreach plan Who makes contact, when, how, etc. Conduct energy audits Identify mid-cost vs. ESCO projects Identify upgrade options & take to City Hall

65 Where to Turn for Help

66 Useful Resources in Minnesota Green Step Cities Energy Smart Your energy utility Minnesota Division of Energy Resources Center for Energy and the Environment (CEE) Minnesota Technical Assistance Program (MnTAP) or Retired Engineers Technical Assistance Program (RETAP) Clean Energy Resource Teams (CERTs) Your city economic development department Your county or regional economic development programs

67 Contact Info Kate Worley (651)

68 Please use roving microphones for questions and comments For those joining us online, please submit questions via chat

69 Thank You for Joining Us! Hosted by the Initiative for Renewable Energy and the Environment 27 January 2012 University of Minnesota, Twin Cities