Using ESPC to Implement Street Lighting Projects

Donald Gilligan, President National Association of Energy Services Companies (NAESCO)

• The Problem • ESPC Can Help • What is ESPC? • Implementing an ESPC Project • Resources

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THE PROBLEM

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• Local facilities need improvements – 26 million street lights in US – Most are old technology

• Local governments lack budgets for capital improvements

• States need new jobs – Recovery very slow – Construction industry in depression

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ESPC CAN HELP

How does ESPC work? ESPC is a proven approach ESPC measures Public supports ESPC

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• Converts money spent on wasted energy into capital improvements in public facilities

• Turnkey service – Audit + engineering + construction + financing + commissioning

+ O&M + long-term M&V

• Delivers all EE, RE and DG/CHP technologies • Third-party financing

– Competitive market delivers low rates – Currently ≤ 4%

How Does ESPC Work?

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How Does ESPC Work?

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ESPC is a Proven Approach

• $45B in projects since 1990 • $50B savings – guaranteed and verified • 375,000 person-years of employment • $30 billion of infrastructure improvements • 450 million tons of no cost CO2 savings

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ESCO Industry Growing

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• Lighting • HVAC • EMS • Motors and VSDs • Building Envelope

Measures • Water Conservation

• Renewables – solar, wind and biomass

• Distributed Generation or CHP

• Demand Response • Water Metering • Street and Traffic Lighting • Building Sustainability

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Typical ESPC Measures

Public Supports ESPC • Washington -- $500M program bond issue

– EE in schools – Long history of EE programs – Voted down by substantial margin

• Georgia -- $500M ESPC program – EE in state buildings – Modest history of EE programs – Approved by substantial margin

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Implementing espc projects

Determining Project Scope Selecting a Good ESCO RFQ/RFP Process Financing a Project Accounting Treatment of ESPC Projects

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Determining Project Scope • ESPC projects often comprehensive

+ Buildings + Water and wastewater plants + Street and traffic lighting

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Selecting a Good ESCO •NAESCO Accreditation •Independent Accreditation Committee

– National Laboratory – ESPC Project Owner’s Representative – Energy Expert Legal Counsel

•Rigorous Process – All project documentation – 50 Projects

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RFP/RFQ • ESPC is an alternate procurement method • Best value, not low bid • Selection based on qualifications

– Experience in similar projects – Proposed project team

• Indicative pricing is only one metric

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Financing a Project •ESPC blends available financing

– Grants – federal or state – Utility rebates – Subsidized loan funds – Bonds – Private financing

•ESCO helps educate the customer

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Accounting Treatment • Proposed new accounting rules

– Conform US to international standards – No more operating leases

• State laws usually determine debt treatment – ESPC can be exempt from limits – Need to segregate savings

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RESOURCES

National Association of Energy Service Companies (NAESCO) Energy Services Coalition (ESC) National Association of State Energy Officials (NASEO) US Department of Energy (US DOE)

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NAESCO • Members are ESCOs and

suppliers

• Members implement about 90% of US ESCO projects

• Rigorous accreditation procedure

• http://www.naesco.org/accreditation/companies.aspx

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ESC • National organization with

state chapters

• Members from ESCO industry and state/local public agencies

• Full set of best practices resources on website

• http://energyservicescoalition.org/espc/tools/index.html

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NASEO • Regional coordinators

across US

• ESPC expertise

• Advice from government agency peers

• http://www.naseo.org/members/regions/index.html

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US DOE • Support for ESPC • Major ARRA program • Sustainable approach • $ Billions of federal projects • Extensive resources on

website • http://www1.eere.energy.gov/wip/so

lutioncenter/buildings/performance_contracting.html

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Questions?

Donald Gilligan NAESCO

978-740-8820 dgilligan@naesco.org

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