Jan 27, 2012 - Boiler Replacements. â« Building Automation Systems ... $12.5M of facility upgrades. â¡ Annual ... webs
Hosted by the Initiative for Renewable Energy and the Environment 27 January 2012 • University of Minnesota, Twin Cities
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
Bill Heaney, MN Energy Jobs Association Jay Behnken, Trane Madonna Rykken, Honeywell Building Solutions Commissioner Rhonda Sivarajah, Anoka County Andrew Dykstra, Anoka County
Retrofitting of Public Buildings
Agenda ■ Overview of Performance Contracting (PC) ■ Why use Performance Contracting . . . The Benefits ■ Some Myths…Busted ■ Case Study – Anoka County ■ Questions (if time permits)
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
Benefits of PC Traditional Bid / Spec
Performance-Based
Low bid awarded based on specifications
Awarded based on performance & lifecycle costs
Project costs funded by capital budget
Payments for projects are offset by guaranteed savings freeing up capital for other needs
Piecemeal approach based on available dollars
Comprehensive approach
Up-front fee for evaluation/studies
No up-front fee required
Performance & savings are not guaranteed
Long-term performance & savings are guaranteed
Multiple contracts with multiple vendors
One contract, single-point accountability
Contractors have no accountability to lifecycle costs
Performance-based contractor is tied to guaranteeing savings over term of contract
Owner assumes risk
Performance contractor takes risk
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
Before
Savings Fund Improvements
Existing facility, energy, operations & maintenance costs During
Existing facility, energy, operations & maintenance costs
After
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
Potential Opportunities
Lighting
Water
Waste Water
Street Lighting
Parking Landfill Meters Sites
HVAC
Ice Arenas
Swimming Pools
Plumbing Fixtures
Building Envelope Issues
. . . & more
City of Rochester Challenges
$5.6M
12 Year Agreement
Utility Savings:$502K/year
Operational Savings:$102K/year
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
Rebates - $300K
•Results
■ Aging facilities & infrastructure ■ Limited capital ■ Increasing energy & operational costs
Project Details
■ Addressed long overdue capital improvements ■ Improved reliability of mechanical systems ■ Improved comfort, efficiency and taxpayer image ■ Environmental benefits – reduced GHG emissions
Anoka County – Government Facilities Challenges
Solutions
■ Aging facilities & infrastructure
■ 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
■ Budget shortfalls/limited capital ■ Increasing energy & operational costs ■ Uncomfortable working environment
Project Details ■ $12.5M of facility upgrades ■ Annual energy/operational savings of $873,000 ■ 30+ buildings ■ Over 1.4 million square feet ■ 7 phases of work
Results ■ Addressed long overdue capital improvements ■ Improved reliability of mechanical systems ■ Improved comfort, efficiency and taxpayer image ■ Environmental benefits
Questions
Madonna Rykken | 612.865.1492 Business Development Manager Honeywell Building Solutions
[email protected] Jay Behnken | 651-468-2715 Comprehensive Solutions Manager Trane Minneapolis/St. Paul
[email protected]
Anoka County MEPC Meeting April 7, 2011
Andrew Dykstra
Director of Facilities Management and Construction (763) 323-5385
Anoka County Facilities
Total of 2,500,000 square feet of buildings. Anoka County Library Facilities Anoka County Parks and Recreation Facilities
Anoka County Facilities
Why Anoka County Did a Project?
Aging Infrastructure/Deferred Maintenance
Increasing Energy and Operating Costs
Occupancy Comfort Issues
Lack of Funding $$$ Aging HVAC Obsolete Control Systems
Physical Asset Deterioration
Increasing IAQ Requirements
Degrading Building Envelope
Inefficient Infrastructure
Types of Projects
Lighting Retrofit Energy Management System Upgrades Energy Efficient Motors/Variable Speed Drives Central Heating and Cooling Plant Replacements Dual Duct Ventilation System Conversion Back-up Generators Temperature Control System Repairs Water Conservation Insulation Replacement Power Factor Correction Miscellaneous Improvements
Financial Results
$12.5 million in projects – 7 phases – Over 10 years Energy and Operational Cost Reduction Exceed $873,000 annually (for all 7 phases). Annual Energy & Operational Savings by Year
How the State’s Guaranteed Energy Savings Program and Public Building Enhanced Energy Efficiency Program Can Help.
Janet Streff Manager, State Energy Office Minnesota Department of Commerce
Encouraging Energy Efficiency and Public Building Retrofits in the State of Minnesota
• Minnesota Department of
Commerce • Division of Energy Resources
•
• State Energy Office Providing energy information for over 35 years… • Energy conservation, efficiency, & • •
renewables Through technology, analysis, grants, programs, & public outreach Data, reports, publications, presentations, website, call center, training, public events
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• Getting Started
– Tools
• Access B3 Benchmarking Website
• Building Construction Data – • Square footage, operational equipment, occupancy and usage
• Energy Consumption Data – • Electrical and natural gas – kW, kWh, therms 22
• Benchmarking your buildings
gives you the information you need to get started
• MN has benchmarked 6,400 of its public buildings
23
Set Energy Code Target Range
50% Over Code
120 Number of Buildings
Dramatic difference in return on investment for retrofit $$
100
Best Candidate Buildings for Investing Energy Efficiency Dollars
80 60 40 20 0 10
40
70
100
130
160
190
220
250
280
Annual KBtu/sq. ft. 24
25
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•Mechanical Systems •Heating Systems •Ventilation Systems •Air Conditioning •Electrical Systems •Energy Management Systems •Lighting Retrofits •Building Envelope •Water Conservation •Renewable Energies 27
• MN Public Sector Programs • Public Buildings Enhanced Energy
Efficiency Program (www.PBEEEP.org) • Retrocommissioning through extended studies Smaller capital projects
•
• Guaranteed Energy Savings Program • Revamping state performance contracting •
program via Dayton’s Executive Order 11-12 RFQ for energy service companies 1/30/12 28
•
Legislative Background – State Energy Improvement Financing Program
•
Minn. Stat §16B.321 – 16B.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
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
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
•
Guaranteed energy savings program reinvigorated through Executive Order 11-12
•
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
•
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
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Savings Comfort
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
Productivity
Energy Liability
Repairs
34
• 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 2020. Existing Commercial Buildings WG goals include enlisting 10 state and 30 local governments to adopt one or more solutions (benchmarking, green leasing, RCx) http://www1.eere.energy.gov/seeaction
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•
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
• 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 • http://greenstep.pca.state.mn.us
37
State programs and GreenStep Buildings & Lighting Best Practices Actions: 1. B3 Benchmarking 2. GESP 3. PBEEEP
www.MnGreenStep.org
Division of Energy Resources Contacts
PBEEEP:
Abby Finis
[email protected]
GESP: GESP:
Peter Berger Eric Rehm
[email protected] [email protected]
Please use roving microphones for questions and comments For those joining us online, please submit questions via chat
Deputy Secretary, U.S. Department of Energy
Retrofitting Private Buildings
Mayor Jim Hovland of Edina Former State Senator John Doll Kate Worley, Co-Executive Director, Minnesota Waste Wise
EDINA EMERALD ENERGY PROGRAM (PACE)
Mayor Jim Hovland City of Edina January 27, 2012
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
Property Assessed Clean Energy Financing
Senator Franken - GreenStep Cities Event January 27, 2011
John Doll Former State Senator, District 40
nearly
35% of U.S. energy use
and carbon emissions come from our buildings
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
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.
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.
PACE Basics
Provides capital to fund energy retrofit Pays special assessment on property tax bill
Contractor paid for retrofit Energy savings pay for capital improvements
PACE Basics Owner –arranged PACE financing model Property Owner Guaranteed Energy Saving Performance Contract
Apply for and receive approval for Special Assessment
Local Government
ESCO Pay Special Assessment Through Property Tax
Arrange Financing
Pay collected Assessment to lender
Construction Payments Commercial
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 •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
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
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.”
For more information Contact: John Doll at 612.366.6822 or
[email protected]
Building a sustainable future based on clean energy
Getting Started
Know Utility Rebates Program
Rebate
Lighting Efficiency
Rebates for installing efficient lighting in existing and new buildings.
Heating and Cooling Efficiency
Energy efficient boilers & burners, furnaces, steam traps, chillers, economizers, PTAC’s. Prescriptive & custom.
Motor Efficiency
Prescriptive and custom rebates for motors and VFD’s that meet or exceed NEMA premium efficiency standards.
Efficiency Controls
Automated building systems controls for lighting, HVAC and others.
Custom Efficiency
Projects that involve energy savings but are not included in other programs.
Recommissioning
Building system tune-up—improve efficiency of existing operating systems and controls.
Refrigeration Recommissioning
Commercial refrigeration system tune-up—improve efficiency of existing refrigeration systems.
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
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
Where to Turn for Help
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
Contact Info
www.mnenergysmart.com Kate Worley (651) 292-4662
[email protected]
Please use roving microphones for questions and comments For those joining us online, please submit questions via chat
Thank You for Joining Us! Hosted by the Initiative for Renewable Energy and the Environment 27 January 2012 • University of Minnesota, Twin Cities
