The Future of Energy Financing

NACo Green Government 2011 Fall Webinar Series

December 1st, 2011

NACo is pleased to present this webinar in cooperation with Siemens & Johnson Controls.

NACo Staff Contacts: Jared Lang Program Manager, Green Government Initiative (202) 942-4224 jlang@naco.org

Cindy Wasser

Program Assistant (202) 942-4274 cwasser@naco.org

Preparing Your County for Electric Vehicles September 15, 2011 Green Purchasing 2.0: No Compromising on Cost & Performance October 13th, 2011 The Future of Financing County Energy Projects December 1st, 2011

NACo Fall Green Government Webinar Series

Why are we here today? Highlight new opportunities for financing in 2012, in the residential and commercial sectors Highlight new opportunities for financing in 2012, in your own facilities Discuss new solutions to challenges in years past Share an example from Will County, Illinois

Core Values Energy project implementation does not necessarily require new outside funding. Not all innovative energy improvements work well or help counties save money. It’s up to us to find the strategies that work better, cost less, and perform better.

Housekeeping Items: This webinar will be recorded and made available online to NACo members to view later. In the next few days you will receive an email notice with the link to the recording with your webinar evaluation survey. Thank you in advance for completing the webinar evaluation survey. Your feedback is important to us.

Agenda 2:00 Welcome/House-keeping

2:05 Financing Strategies for Residential Sectors Mark Zimring, Energy Efficiency and Renewable Energy Research, Lawrence Berkeley National Lab

2:15 Financing for Commercial Sectors Mark Johnson, Director of State and Local Government Relations, Johnson Controls

2:25 Future of Performance Contracting in County Facilities Chuck Hall, Senior Sales Manager, Public Sector, Siemens

2:35 County Example: Reapplying Revenue to Fuel Future Projects Dean Olson, Director, Resource Recovery & Energy Division Will County, IL

2:50 Q&A

3:15 Conclusion

Question and Answer Session Instructions Type your question into the chat window, and

the moderator will read the question on your behalf.

Thank you for participating in NACo’s webinar.

For more information about NACo membership, contact

Andrew Goldschmidt at agoldschmidt@naco.org

or

Ilene Manster at imanster@naco.org

Thank you for attending today’s webinar.

To learn more about upcoming NACo webinars, please visit www.naco.org/webinars

Residential Energy Efficiency Financing—What’s Next?

Mark Zimring Lawrence Berkeley National Laboratory

National Association of Counties (NACO)

December 1, 2011

Residential EE Finance: What Problem Are You Solving?

• Today, most people pay for improvements with cash. Just 10% of upgrades are financed through programs & ~30-40% overall

• There are already products in the marketplace. Some are expensive, but most are easy to use and contractors often buy down the interest

• You have to want EE to want financing for it. Many people just aren’t interested in the hassle, or aren’t willing to invest $8-15k

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Opportunities for Increasing Capital Access

30-40% of loan applicants are rejected in major programs

today.

• Credit Enhancements. Share in the cost of lender losses in the event of loan default

• Alternative Underwriting Criteria. Utility bill repayment history as an alternative indicator of creditworthiness

• Innovative Financing Tools • But, underwriting criteria exist for a reason. Ensure that

those that get access to financing are willing and able to repay it.

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Innovative Financing Tools

• On-Bill Financing. On bill repayment may reduce loan default. Meter-attachment may further reduce non-payment

• Deferred Loans. Some households do not have the capacity to make principal and interest payments

• Paycheck-Deducted Loans. Repayment through regular, automatic deductions from an employee’s paycheck

• Property Assessed Clean Energy (PACE). Significant regulatory hurdles remain.

4

Aggregation Tools?

• Access to secondary markets being viewed as ‘holy grail’. Billions of $ necessary to upgrade the housing stock. But, EE demand not access to mkts the KEY barrier today

• Local, socially-interested, lenders offering more attractive financing. Lower rates, longer terms, more lenient underwriting. Is this enough to ‘prove performance’?

• How much will we have to pay to ‘bribe’ currently-disinterested investors?

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Looking to 2012 and Beyond

• Shift from comprehensive-only focus. Increasing attention towards basic improvements and reactive strategies to drive demand

• Where will the $ come from? Utility customer-funded program budgets for residential EE will average $770 million over the next decade

• What role for local governments? o Trusted messengers o Program partners for local financial institutions (e.g. CDFIs,

credit unions) o Policy implementers (e.g. time of sale or renovation energy

codes) o Coordinators of social service delivery (e.g. housing rehab +

EE)

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Questions?

Download LBNL Energy Efficiency Publications Here: http://eetd.lbl.gov/ea/emp/ee-pubs.html

Mark Zimring 510-495-2088 mzimring@lbl.gov

© Johnson Controls, Inc. 2011

Financing for Commercial Sectors

December 2011

Mark Johnson, Director of State and Local Government Relations, Johnson Controls

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Affordably & quickly identify commercial building retrofit needs paid by utility savings

Background: Mark Johnson, while at the U.S. Department of Energy, Washington, DC, worked on a ‘show and tell’ energy loss and project utility savings paid from energy savings:

-ASHRAE energy audit

-EPA Energy Star Portfolio Manager

-Infrared thermography

-Retrofit recommendations

-Utility cost savings projections

-Paid by utility savings [ESPC]

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Sample ASHRAE level II building energy audits with infrared thermography done in days:

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Clearly & easily see energy loss:

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Projected utility savings options:

Lighting savings opportunity:

Lighting retrofits deliver value through…

Energy savings

Reduced carbon footprint

Maintenance savings (labor, asset & procurement)

Workplace improvement (lighting quality, productivity & safety)

Reduced waste stream

Many Local, State And Federal Incentives

EPACT federal tax deduction

Local utility rebates

Electricity88.0%

Labor8.0%

Lamps3.0% Recycling

1.0%

Life Cycle Cost of Lighting

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

Commercial Healthcare Industrial Residential

Lighting % of Electrical

6

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Concerns: T-12 obsolescence & PCB ballasts

Upgrades paid by utility savings including all lighting plus windows, HVAC, controls: even electric vehicle fleets with charging stations!

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Utility savings paying for all upgrades & retrofits

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PACE for commercial buildings

Success stories: Agilent strengthens it’s bottom line At a Glance

$19.5 million — Real estate savings that Agilent Technologies has achieved as a result of working with Johnson Controls since February 2006.

$4.9 million — Operational expense savings generated in a seven-month time frame as a result of numerous supply chain and facilities management improvements and efficiencies.

2.6 million — The square-foot reduction in Agilent’s global real estate portfolio as a result of more efficient and productive real estate management, and taking advantage of consolidation opportunities.

We truly appreciate the remarkable speed in which Johnson Controls reacted to our request for savings and the spirit demonstrated by the entire Johnson Controls account team in rising to the challenge. Neil Rees, Vice President, Workplace Services, Agilent Technologies, Inc.

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Co-hosted forums by NACo, USDOE, EPA, JCI/Siemens to explain compliance and how to correct with no-upfront-money

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Questions | Next steps | Schedule Mark.S.Johnson@jci.com

The Future of Performance Contracting

in County Facilities

SIEMENS Chuck Hall

The Future of Performance Contracting

in County Facilities

Discussion Points…

History of Performance Contracting -Where it all started… Ohio HB 264 -Where it started trending… Energy and Operations

Future of Performance Contracting -Using PC as a “Procurement Tool” -Sustainability applications

Performance contracting is…

…a methodology of financing a capital improvement project out of a public entity's operating budget.

…is a public entity’s mechanism for exciting, new facility and green technology infrastructure modernization and upgrades.

…is a tool for sustainability and asset improvement that establishes a relationship that is based on mutual accountability.

The Future of Performance Contracting

in County Facilities

The Future of Performance Contracting

in County Facilities

Traditional Contracting

Owner A&E GC

Subs Subs Subs

Performance Contracting

ESCO Benefits… -No “low bid” solutions -Direct “scope” negotiations -”One Throat to Choke”

-Administrative services -Capital improvements -Co-generation systems -Compliance & regulatory requirements -Computers & computer networks -Electrical systems -Energy consulting & URM services -Energy control/management systems -Energy recovery systems -Fire alarm/life safety systems -Ground-source heat pumps -HVAC equipment -Insulation -Inventory control & reduction -Lighting equipment and retrofits

The Future of Performance Contracting

in County Facilities -Mechanical contracts & services -Methane (landfill) gas production -Renewable technologies -Repairs & maintenance -Security systems -Service agreements -Solar tower generators -Traffic signals & management -Voice, data & video communications -Waste disposal & management -Water conservation & treatment -Water meters (Automated) -Wind turbines -Windows & doors

For further information:

Chuck Hall Cell: (847) 922-2793 chuck.hall@siemens.com

12/1/2011 1

PRAIRIE VIEW RDF

12/1/2011 2

Prairie View RDF

Located at JAAP (approx. 40 miles Southwest of Chicago), 223 acres on 455 Acre Parcel

Will County Owner, Waste Management, Operator

Maximum 23 Year Life

WM/Will County Methane to Energy Plant

Landfill Contract Signed w/WM in 1997 w/Gas to Energy Plant Clause

• County Retains Gas Rights &WM Installs Gas Collection System

• WM owns Methane to Energy Plant &Tax Credits 12/1/2011 3

CONTRACT PHASE DOE Grant Applied 6/09 County Board Approves DOE

EECBG Strategy 11/09 ; $1 Million DOE Funds to Methane

to Energy Plant Schiff Harden Hired to Negotiate

Gas to Energy Contract February 2010 County Board

Authorizes Contract Execution

12/1/2011 4

12/1/2011 5

METHANE TO ENERGY PLANT DETAILS

Waste Management Required To Meet Milestone Timeframes

Initially (3) 1.6 MW CAT 3520 Engines, 12.8 MW When Fully Built

Construction Begins Fall 2010; Waste Management Completed Construction Summer 2011, ComEd(Utility) December 2011

WM/Will County Methane to Energy Plant Commissioning December 2011 Operational Winter 2011/2012 Electricity to Power 3,000 Initially,

8,000 Homes When Fully Built; Capture GHG, Revenue for County 20+ years

Revenue Estimated @ $441,000 Annually (1st year – Based Upon Gas Generated)

12/1/2011 6

WM/Will County Methane to Energy Plant

County is paid for gas, WM Sells

Electricity, Excess Gas Flared Until New Engine(s) Are Permitted

Gas Payments, Revenue Sharing Public/Private Parnership

12/1/2011 7

WM/Will County Methane to Energy Plant Leachate Recirculation Allowed by

County Creates 30% more gas quicker,

Decomposition of Waste, Potential Benefits in Post-Closure Care,

Additional Airspace = Revenue Estimated Cost of Plant: over $8

Million

12/1/2011 8

WM/Will County Methane to Energy Plant Lessons Learned & Positive

Reflections: Select an Experienced Contractor

(i.e. Waste Management) . WM Manages Gas System & Plant

Look at Both Sides When Negotiating Contract

Allow for Flexibility in Contract if Markets Fluctuate (i.e. After 4th Engine is Placed)

12/1/2011 9

WM/Will County Methane to Energy Plant Lesson Learned (cont) Need a Tool to Force Utility(s) to

Be More Responsive to Renewable Energy Projects

Build in Time for Additional Permits; Approvals

Be Flexible, Recruit Allies w/New Funding When Budget Time Comes

12/1/2011 10

WM/Will County Methane to Energy Plant Positive Long Term Project for Will

County & Waste Management: Produce Green Power, Make Revenue (and no cost to County)

Dept of Energy Funds Spurred Plant to Be Built Faster

PR: National Newspapers & Magazines, National Association of Counties , CBS (Video Produced)

12/1/2011 11

BENEFITS $$ •$7+ Million Leveraged, $1 million investment from DOE Grant = $20 - $30 million of revenue over 30 year period •County now has another revenue source to consider funding green projects for 20 -30 years. •Landfill revenue in 2012 will help continue Environmental Education, Grant Related Projects, which started under the EECBG

12/1/2011 12

BENEFITS (cont) Possible Future Projects from Landfill Revenue:

• Seed $$ For Grants for Renewable Energy • Energy Efficiency Projects for County, local entities • Energy & Conservation Plan Work to Begin in December 2011 •May Use Plan to Prioritize Projects 12/1/2011 13

WM/Will County Methane to Energy Plant Contact Information: Dean Olson, Director Will County Land Use Dept,

Resource Recovery & Energy Division

dolson@willcountygreen.com (815) 774-7891

12/1/2011 14