HUD Phoenix Energy Workshop September 16-17, 2008

1. Energy Performance Contracting
(EPC)
Leverage your Facilities
in your organization’s journey toward sustainability
Donald Barrette
West Region Project Development
Siemens Building Technologies
(602) 677-9027
donald.barrette@siemens.com
1

2. Today’s Facility Issues
Restricted budgets/Continuing Resolution
Increasing energy prices/Reduced Funding
Demand for greater energy responsibility
Potential Solution: Create a High
Performance Building with an Energy
Performance Contract

3. Energy Performance Contracting:
Definition
An Energy Performance Contract Is:
A financial tool for implementing energy
efficiency and facility improvements, where
the cost savings generated by the
improvements service the debt from project
development and construction.
Energy Service Company (ESCO) implements
the program using a design-build approach,
and guarantees the financial and operational
performance of the measures installed.
ESCO carries the performance risk and
construction cost risk of the program.

4. Typical Project Components
Lighting: Retrofits & controls
Cooling: Chillers, towers & pumps
Heating: Boilers, steam traps & pumps
Ventilation: Variable speed, CO2
Controls: Energy management
Building envelope: Windows & insulation
Water: Efficient fixtures

5. Financial Benefits to Customers
Capital improvements to facilities
Utilize utility funding
High-efficiency equipment
Lower Utility Costs 20-50%
Lower O&M costs
Guaranteed energy savings
Fixed price contracts
Financing available
Payments from savings
Single-source responsibility

6. Non-Financial Benefits
Improved occupant comfort
Upgraded buildings & systems
Use of new technologies
Positive environmental impacts
Guaranteed performance
Single-source responsibility
Reduced environmental footprint

7. The Potential Customers?
Public sector – public school districts; public colleges
and universities; federal, state and local governments;
national labs
Public & Indian Housing
Private sector – hospitals; private colleges and
universities; office buildings; casinos and hotels;
condos; business campuses; manufacturing
complexes
Customer profile
– Have long-term view of facilities
– Need capital for investment
– Opportunities for energy, water, operational efficiency improvements

8. Green Energy Performance
Contracting - Some details
Install the same Energy Efficiency in traditional PC,
but add Water Efficiency, Renewable Energy, Waste
Management, Green Policies and Procedures, etc.
Obtain Energy Star rating or LEED-EB certification
Entire project paid for through savings in existing
operations and maintenance budgets
Guaranteed Results
Sound too good to be true? It’s not, in fact it’s very
feasible with well established contracting mechanism
= Energy Performance Contracting
8

9. Performance Contracting:
Getting Started
Define performance contracting procurement
process in Customer’s organization
Define objectives of energy program
Select an Energy Services Partner
Customer and Energy Services Partner
determine energy program terms for Letter of
Intent
– Technical terms: Preliminary scope for energy program
– Financial terms: Cash flow, financing term, detailed
engineering fee
Prepare LOI for execution by Customer

10. What is a HUD Energy Performance
Contract?
A HUD incentive that allows a PHA to
capture the cost value of utility consumption
reduction through implementation of
conservation measures

11. Free Improvements
• Nothing in life is free –
HUD pays, NOT the PHA
HUD’s Hidden Grant Program
New Money
PHA avails itself to a HUD financial incentive

12. The Four HUD Incentives
1. Frozen Rolling Base
2. Add-On Subsidy
3. Resident Paid Utilities
4. Rate Reduction

13. Frozen Rolling Base
Freezes the 3-year rolling base utility allowance at
the level of consumption before installation of the
energy improvements.
This incentive applies when payments by the PHA
to an ESCO or third party financier are dependent
on the amount of energy cost savings realized.
The PHA retains 100 percent of the cost savings
during the contract period, and at least 75 percent
of these yearly profits are used to pay off the loan
until it is fully amortized.

14. Add-On Subsidy
A PHA can request an additional subsidy as an
quot;add-onquot; to its total operating subsidy eligibility.
This additional subsidy would be applied to
amortizing payments for a loan contracted to
finance energy-conservation improvements with a
repayment period not to exceed 12 years (20
years with a waiver).
The add-on subsidy is often used to do
straightforward retrofits such as lighting,
refrigerators and other bulk purchases.

15. Resident Paid Utilities
PHAs undertaking energy conservation
measures may include resident-paid utilities
under the consumption reduction incentive
The PHA may exclude from its calculation of
rental income the increased rental income due
to the difference between the baseline
allowances and the revised allowances of the
projects involved, for the duration of the contract
period.

16. Rate Reduction
If a PHA takes action beyond normal public
participation in rate-making proceedings…then
the PHA is permitted to retain 50 percent of the
annual savings realized from these actions…
The rate incentive may be combined with the
frozen base and additional subsidy incentives.
When used together, the baseline utility costs
and savings under the performance contract
shall be calculated as the baseline consumption
times the prevailing utility rate for the budget
year for which lower rates were negotiated...

17. Case Study
Sky City Community School
Energy Conservation Measures Included:
Lighting replacement
Building Automation
Chiller Replacement
VAV’s in all rooms
High efficiency boilers
Motors and Pumps
Exterior Windows – Double pane low-e
Re-roofed building – added ridged insulation
Energy Savings after first year 76%
17

18. Case Study
Cuyahoga Metropolitan Housing
Authority
Energy Conservation Measures Included:
$33.6 Million Energy Performance Contract in
Cleveland, Ohio
Green Roofing System
Natural Gas consumption reduced by over 1
million CCF per year
Utility cost reduced by over $3.7 million annually
No initial cost to the Housing Authority or HUD
18

19. Questions & Answers
Donald Barrette
West Region Project Development
Siemens Building Technologies
(602) 677-9027
donald.barrette@siemens.com