MWEA Infrastructure Project Funding

(1)

Peter V. Cavagnaro, P.E.

Project Development Engineer,

Johnson Controls

MWEA

Infrastructure Project Funding

Monetizing Savings

“How to Make Your Savings Work for You”

Daniel R. Mack

Energy Solutions,

Johnson Controls

(2)

Agenda



ESPC (Energy Savings Performance Contract)



Funding Sources for ESPC



Typical Improvements



Examples – Waste Water



Selecting and ESCO Partner



ESPC – Process



Summary

(3)

A

Design/Build

partnership

between an owner and an

Energy Services Company (ESCO) to:



Identify Cost Saving Steams to Fund Capital Projects



Implement Comprehensive/Complex Efficiency Projects



Provide Guarantees on Savings, Costs & Performance (Transfers Risk from Owner to ESCO)



Includes Engineering, Installation, Project Management, Training, Service & Support (Turnkey)



Flexible Funding Options

“A mechanism for procuring and implementing

capital improvement projects today, through the guaranteed energy &

Energy Saving Performance Contracting

(4)



Purpose

o

Obtain Long-Term Energy and Cost Savings

o

Leverage Existing Operating dollars to Fund Capital Projects



Alternate Procurement Mechanism that Provides Guarantees

and Financing Options



Growing Momentum in Public Sector Utilities



Promotes Development of Alternate Sources of Energy



Used by the State of Michigan and the Federal Government

Energy Saving Performance Contracting

Key Points

(5)

Utility Bill

Before

Before Performance Contract

 Owner’s utility budget can be reduced by replacing old inefficient equipment

Energy Saving Performance Contracting

(6)

Utility Bill

Payment for Efficiency Upgrades Customer Savings

Before During

Immediately begin to enjoy the savings

During Performance Contract

 Energy Services Company develops and installs energy efficient equipment

 Savings monitored & verified

 Owner pays back investment with portion of utility savings

Energy Saving Performance Contracting

Your Operating Costs During Payback Period

(7)

Utility Bill

Payment for Efficiency Upgrades Customer Savings

Before During After

Enjoy the full savings

After Performance Contract

 Owner keeps all the savings after initial investment is paid off

Energy Saving Performance Contracting

Your Operating Costs After Payback Period

(8)

8

Traditional ESPC Funding Options



ACT 99 Installment Purchase Agreement



Qualified Energy Conservation Bonds (QECB’s)



Traditional Bonds



Incentives

 Utility Rebates

 Renewable Energy Credits

 Grant Funds - State, Federal (USDA, DOE)

Energy Saving Performance Contracting

Funding Options

“Preserves Capital for Other Priorities. Leveraging ESPC Allows You to Get more Done Within Existing Operational Budget”

(9)



LEED / Energy Star



Renewable Energy



Predictive Preventive Maintenance



IT Infrastructure



Heating Systems



Ventilation Systems



Air Conditioning Systems



Temperature Controls



Energy Management Systems



Lighting Controls & Improvements



Windows - Doors- Seals

Energy Saving Performance Contracting

Typical Facility Improvements

(10)



Create a Waste Water Baseline



Aeration System Optimization

(Blowers, Diffusers, Controls)



Digester Gas to Energy



Digester Upgrades

o

Mixing, Feed Pump, Covers, Storage



Pumping Improvements

o

VFD’s/Control Strategies

o

High Efficiency



SCADA Upgrades

Energy Saving Performance Contracting

Typical Waste Water Treatment Efficiency Improvements



Dewatering Optimization



Power Monitoring



Biological Phosphorous Removal



Renewable Energy



Overall Plant Energy and Process Optimization

(11)

“Meeting Permit is Paramount”

“Safety of Personnel is Essential”

“Redundancy and Reliability Critical”

“Public Perception is Important”

Energy Saving Performance Contracting

Waste Water System Absolutes

(12)

Water Loss & Efficiency Strategies

:

 AWWA Water Audit

 Automated Leak Detection

 Meter Upgrades/Replacements

 Large Meter Testing & Repair

 Large Meter Right Sizing & Typing

 AMR/AMI Selection and Implementation

 AMR/AMI Backhaul

 Billing System Upgrades

 SCADA Upgrades

12

Energy Saving Performance Contracting

Typical Water System Efficiency Improvements

(13)

Opportunity

 1,000,000 cfd DG Flared

 Siloxanes in Digester Gas

 Comfort Issues

Solution

 Gas Conditioning – All Gas on Site

 (3) 1 MW Engine Generators

 Heat Recovery Steam Generator

 Engine Jacket water heat recovery, preheating boiler feedwater

Benefits

 Reduced Reliance on The Grid



ESPC Examples - Waste Water

(14)

Opportunity

 Surface aerators

 Exceeded the useful life

 Spare parts difficult to obtain

 Manual adjustment to control DO

Solution

 Diffused aeration

 High efficiency diffusers

 Automatic control

Benefits

 Reduced energy  Added capacity  Increased revenue  $6.54 Worth of Improvements

From Mechanical Aeration

To Fine Pore Diffused Aeration

ESPC Examples – Waste Water

City of Rome, NY WWTP

(15)

Opportunity

 Aging Infrastructure

 City Wide Effort to Comply with State Legislation

 Recognition that energy savings could be used as an alternative source of project funding

Solution

 Aeration improvements

 Waste heat recovery

 Codigestion & Anaerobic Digester Improvements

Benefits

 Total Annual Benefits $2.8 million

 $35 Worth of Improvements

ESPC Examples - Waste Water

(16)

Opportunity

 Greatly reduced flows

 Aging pumping, incinerator, facilities, aeration  High energy & chemical cost

Solution

 New rightsized turbo blower, aeration controls  Incineration upgrades

 Extensive Pumping upgrades including VFD’s  SCADA Upgrades including Power Monitoring  Biological Phosphorous Removal (Bio-P)

 Solar PV

 Extensive Lighting & HVAC Improvements

Benefits

 17% Reduction in Utility Costs  More Reliable Operations

 $8M Worth of Improvements

ESPC Examples – Waste Water

City of Warren, MI WWTP

(17)

Opportunity

 Older Centrifuge Dewatering System at Risk

 1935 Vintage HVAC System

 Aging Pumping Stations

Solution

 Demo Abandoned Belt Filter Press and Failing Centrifuge’s to make way for (3) new Screw Presses and Associated Support Equip.

 Extensive Pumping upgrades (Plant and Pump Stations - Pumps, VFD’s, Valves, Piping)

 Extensive HVAC Improvements

Benefits

 Reduction in Utility & Operational Costs

 More Reliable Operations, Specifically Dewatering

 $10.4M Worth of Improvements

ESPC Examples – Waste Water

(18)

Does Performance Contracting Make Sense



Identify Potential Infrastructure Needs



Energy & Operational Costs (Are they sufficient to fund a project)

ESCO’s Role



Partner With Owner to Identify the Need



Build Team of Experts to Design/Implement Optimal Technical &

Financial Solution



Develop & Build Final Solution



Financially Guarantee Results Through M&V

Energy Saving Performance Contracting

Selecting an Energy Services Partner

(19)

How To Find An ESCO



National Association of Energy Service Companies (www.naesco.org)



State Energy Office



Peer Experience

ESCO Selection



Qualifications (ESCO, Team Members & Partners)



Michigan Water & Wastewater Experience



Financial Strength



NAESCO Accreditation



Energy Saving Performance Contracting

Selecting an Energy Services Partner

(20)

Energy Saving Performance Contracting

Process 20 High Level Preliminary Analysis Detailed Analysis Plans & Specs Request for Qualification Project Implementation Maintenance, Measurement and Verification Detailed Analysis Conceptual Design Approvals & Contract ESCO Selection and Development Agreement

(21)

“Overcomes Lack of Resources”

“Single Point of Responsibility”

“Real, Verifiable Savings”

“Access to Expertise…Extension of Existing Staff”

“Limits Costly Change Orders”

“Self Funded - Not Restricted by Capital Budget”

“Multiple Improvements Implemented Quickly”

Energy Saving Performance Contracting

Benefits

(22)



National Association of Energy Services Companies

(NAESCO)

- http://www.naesco.org/resources/esco.htm



IPMVP Protocol

- http://www.nrel.gov/docs/fy02osti/31505.pdf



USEPA Energy Star Program

- www.energystar.gov/index.cfm?c=guidelines.guidelines_index



Water Environment Federation, Energy Conservation

in Water and Wastewater Treatment Facilities



Consortium for Energy Efficiency

- http://www.cee1.org/ind/mot-sys/ww/resources.php3

Reference Material

(23)