Transcript Performance Solutions: General Market

Procurement and
Financing Options for
Facility Improvements
May 10, 2011
Siemens Industry, Inc.
Building Technologies1
The Funding Challenge
Building Operating Management (BOM) Magazine
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The Funding Challenge
Building Operating Management (BOM) Magazine
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What is Performance Contracting
A legislative vehicle that allows
public entities to improve their
facilities, by using their energy and
operational budgets to fund a
project, with guaranteed results.
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Local Government Performance
Contracting
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(Illinois Compiled Statutes ; 50 ILCS 515)
Local Government Energy Conservation Act
City/county must issue a Request for Proposal (RFP)
Selection is based on “greatest value to the City”, not lowest bid
Maximum term is 20 years
Majority vote by city/county board is required
Architect/engineer review is required prior to signing contract
City may use future capital expenditure dollars as savings to assist
with project funding
Savings must meet or exceed all costs associated with the program
Savings must be guaranteed
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A Practical Way to Address Funding Concerns
Generat e
Savings
Improvement s
Modernization
Optimization
Energy Management
Success
Guaran t ee
Energy Usage
Operation
Energy Supply
Finance
Throughout your building’s life, you face
efficiency and environmental challenges
 Aging infrastructure
 Inefficient equipment and lighting
 Increased energy use
 Rising/volatile energy prices
 Organization initiatives and mandates to
reduce GHG emissions
Performance Contracting with guaranteed
results:
– Make facility & infrastructure
improvements
– Reduce energy use and associated
expenses
– Your energy savings finance your
improvements
– Have a positive environmental impact
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Performance Contracting Overview
Key Elements:
Performance Contracting Economics
 Savings are
guaranteed
Savings
Savings
Payment
 Savings pay for
improvements
 Money going to utility
redirected back to you
Utility
Bill
Utility
Bill
Before Performance
Contract
During Performance
Contract
Utility
Bill
After Performance
Contract
 Harvest savings now
 Leverage low hanging
fruit to fund other
projects
 Turnkey solution
 Focus on your core
business
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Performance Contracting Overview
Performance Contracting Economics
Key Elements:
 More efficient and
accurate meter reading
and billing
 Savings pay for
improvements
 Unaccounted for usage
redirected back to you
 Harvest revenue now
 Less rate increases to
customers
 Turnkey solution
 Focus on your core
business
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Getting Started
Preliminary Audit
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ESCO’s will provide a
comprehensive investment
grade audit (IGA) with project
recommendations, costs and
savings
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County will review each
proposal and select the
comprehensive energy plan
that provides the most
innovation and project
savings
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Upon selection the County
can work with the ESCO on
prioritizing the Energy
Conservation Measures
(ECMs).
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Performance Contracting - Financial Approach
Financing
 Tailored around project economics
 Competitive process or work with current financial provider
 Tax-exempt rates
Guarantee provisions
 Offer a guaranteed fixed project cost
 No change order policy for a given scope
 Energy savings guarantee
 Key Budget neutrality
 Savings must equal cost
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What is the Cost
Measurement and Verification (M&T) – Annual Contract
• Different M&V options can be used
• Measure specific vs. utility bill
• Proven savings calculations where appropriate
• Simplest and most cost effective approach
• The Municipality manages and controls their buildings
Debt Service – Loan Service
• Extensive experience in providing financing
• Tailored around project economics
• Competitive process or work with current financial provider
• Tax-exempt rates
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Local Government Performance
Contracting
Helping our Nation’s Communities become Vibrant, Growing and
Green
Becky Werra, LEED AP
Account Executive
312-215-2137
[email protected]
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