Energy Savings Performance Contract Research Articles

"Federal and State Clean Energy Incentives: New Opportunities for the Implementation of Ground Source Heat Pumps Under Energy Savings Performance Contracts"

"Federal and State Clean Energy Incentives: New Opportunities for the Implementation of Ground Source Heat Pumps Under Energy Savings Performance Contracts"

Modernizing the energy infrastructure at federal facilities: Should utilities play a bigger role?

Since the Energy Policy Act of 1992, federal facilities have increasingly used performance contracting to finance energy and water efficiency measures. Utility Energy Performance Contracts (UESCs) have received less attention despite having similar goals and processes as Energy Savings Performance Contracts (ESPCs). This paper provides a comparison between the two performance contracting models and highlights the tradeoffs that should be considered. Higher costs observed in ESPCs are driven by higher overhead and the costs of savings guarantees. These cost drivers cascade into longer financing terms and higher interest rates. These results suggest that federal agencies should explore UESCs as a potentially more cost-effective way to achieve energy savings improvements.

Design of balanced energy savings performance contracts

Energy savings performance contracts between the energy users and the energy service companies (ESCO) are used to finance energy efficiency investments by using the future energy savings that will result from these investments. We present an analytical model to characterise the energy savings performance contracts and discuss how the risks of estimating the energy savings affect the energy user and the service provider. This characterisation allows determination of the contract parameters for a balanced contract with the information about the energy savings that are expected from the planned energy-efficiency investments. Since it is difficult to get the statistical information about the energy savings before investing in an energy-efficiency project, we develop a distribution-free contract that sets the guaranteed energy savings level based on the mean and the standard deviation of the energy savings and the profit-sharing ratio between the ESCO and the energy user. We show that a simple distribution-free balanced contract performs satisfactorily when the distribution of the energy savings is not known and its mean and the standard deviation are estimated with error. Our analytical results show that the energy savings contracts with the right parameters can mitigate the risks related to realisation of the anticipated energy savings.

The Role of Real Time Data in Monitoring and Verification

Monitoring and verification (M&V) performance can be greatly enhanced with the use of granular, detailed, real time energy monitoring. M&V, an important tool in energy savings performance contracts (ESPCs), is the process of measuring energy consumed before and after an energy efficiency upgrade, with the purpose of quantifying the actual energy saved. It is of utmost importance that data from M&V be accurate, and defendable. The growth and increased accessibility of real time energy monitoring (RTEM) has a significant role to play in enhancing M&V strategies. A comprehensive RTEM platform involves installing sensors at the end-use of specific equipment, whether at individual breakers in an electrical panel or at a motor control center breaker and recording consumption in real time. These data are then used to develop metrics to display and quantify the real effects of comprehensive energy upgrades. Utilizing RTEM to verify energy savings can be the most defendable, accurate M&V tool for energy service providers.

Key challenges in executing energy-savings performance contracts in public buildings: Taiwan experience

With the trend toward energy conservation and carbon reduction in public procurement, Energy-Saving Performance Contracting (ESPC) has been getting a lot of attention for lowering the financial burden on the public sector to improve the energy performance of buildings. In Taiwan, there have been 115 ESPC projects worth NT$1.8 billion awarded in the public and private sectors from 2006 to 2014. The practical experience accumulated shows that there still exist deficiencies in the ESPC system, and there are also lessons to be learned. This paper discusses five key challenges of executing energy-saving performance contracts in public building projects. These findings can be helpful for countries and organizations that are applying or intend to apply ESPC to realize more efficient and effective procurement systems and achieve better project performance.

Uncertainty quantification for Energy Savings Performance Contracting: Application to an office building

Building energy models are widely used to estimate or predict the average energy consumption of a building. However, they only provide approximate figures with significant uncertainties. Particular uses such as energy performance guarantee require more reliable results in order to set suitable contracts. For this purpose, uncertainty quantification can be used to support modeling phase and results interpretation. The aim of this paper is to present a comprehensive methodology applied to an office building.First, sensitivity analysis allows users to identify and prioritize the most influential inputs of their model. Non-influential inputs can then be fixed to their nominal values, without impacting the results. The remaining set of parameters makes it possible to assess quantitative measures such as Sobol’ indices which give useful information on the model variance. Different methods are suitable for such calculations but generally rely on specific sample design. Meta-model reduction based on Polynomial Chaos Expansion can be used as a post-processing method and appears to be the best compromise between accuracy and computation time for our case study. This approach also involves the use of probability density function and cumulative distribution to calculate confidence intervals and probability to exceed a threshold value. At last, the importance of using adjustment variables to take into account time-varying parameters is also discussed.

Case Study: 75% Energy Savings at a Wastewater Treatment Plant

ABSTRACTThis article is a case study for an energy savings performance contract (ESPC) at the wastewater treatment plant for the City of Riverbank in California. The existing plant has an average of 1.67 million gallons per day (MGD) flow and consists of the headworks, four treatment ponds, and seven percolation ponds. Prior to the project, the treatment ponds used surface aerators to provide oxygen for the biologic process. The plant was primarily operated manually with limited dissolved oxygen control. The utility bills showed excessive energy use—annual usage was 5,673 kWh/MG/yr. Schneider Electric and the City of River-bank entered into a construction contract to retrofit the treatment ponds with blowers and fine-bubble diffusers for more efficient oxygen transfer. Additionally, a control system was installed to maintain a dissolved oxygen set point. This scope of work is estimated to save 75% of the electricity consumption at the wastewater treatment plant and will save the city 65% of their electric...

Photovoltaic energy competitiveness and risk assessment for the South African residential sector

AbstractThe establishment of new photovoltaic (PV) markets in emerging economies represents a business development opportunity for expansion outside traditional energy markets. Appropriate assessment of PV market competitiveness is thus necessary in order to inform policy and regulatory development, and in order to manage risks related to investment. This paper presents an evaluation of PV energy competitiveness using a case study of the emerging residential PV market in South Africa. Competitiveness is defined in light of the risks associated with the financial performance of domestic grid‐connected rooftop PV considering the current market status together with three proposed business models, namely net‐metering, net‐billing and an energy savings performance contract framework. Financial performance is evaluated in terms of a socket parity evaluation together with a discounted net cash flow analysis. Investment risk assessment was facilitated using a Monte Carlo simulation. The results indicate the highest potential profitability for the energy savings performance contract model, which includes PV system ownership by an energy services company. It is also shown that appropriate application of risk modelling has the potential to inform decisions by investors and policy makers alike that result in improved policy and business solutions that are able to support increased residential PV energy market competitiveness without the need for explicit subsidy frameworks. Copyright © 2016 John Wiley & Sons, Ltd.

Estimating customer electricity and fuel savings from projects installed by the US ESCO industry

The US energy service company (ESCO) industry has a well-established track record of delivering substantial energy and dollar savings in the public and institutional facilities sector, typically through the use of energy savings performance contracts (ESPC). The ESCO industry has the opportunity to play an important role in achieving demand-side energy efficiency under the US Environmental Protection Agency’s (EPA) proposed Clean Power Plan. The EPA considered demand-side energy efficiency as a compliance strategy for proposed greenhouse gas (GHG) emissions standards under section 111 (d) of the Clean Air Act. To date, there has been little or no research in the public domain to estimate electricity or fuel savings for the entire US ESCO industry. Estimating these savings levels is a foundational step in order to determine total avoided GHG emissions from demand-side energy efficiency measures installed by US ESCOs. We find that on average, 66 % of total energy savings are in the form of electricity, but that in more comprehensive projects, almost 50 % of savings are produced from fuel resources. Overall, we estimate that active US ESCO industry projects generated about 34 TWh of electricity savings in 2012. About 15 TWh of these electricity savings were for municipal, local, and state government facilities; universities/colleges; K-12 schools; and healthcare (MUSH) facilities customers who did not rely on utility customer-funded energy efficiency programs. We extend the electricity analysis to estimate total energy savings and find that the US ESCO industry saved ∼224 million MMBtu in 2012 or ∼1 % of the total US commercial building energy consumption.

Escalation Rates in Energy Savings Performance Contracts

Energy savings performance contracts (ESPCs) are very sensitive to the escalation rates applied to their flow of energy savings. For ESPC deals where annual savings must exceed annual payments (as in the federal sector), these escalation rates dictate the upper limit of the project scope that can be accommodated. The risk of overestimating escalation rates within an ESPC is obvious—actual savings could fall well short of payments made on the project. However, a less understood risk lies in the underestimation of escalation rates; not only can this limit the project's scope, it can also serve to substantially raise interest costs on the project (since actual dollar savings are underapplied toward annual payments, drawing out the project's term). Assuming the downsides to over- and under-escalating are equal, the goal in these projects should not be to lowball the expected actual escalation rate, as often occurs, but to make it accurate. The National Institute for Standards and Technology (NIST) developed and manages an energy escalation rates calculator, EERC, that employs the energy price paths forecasted by DOE's Energy Information Administration (EIA). Because EIA has somewhat underestimated future energy prices in the recent past (since 2000), EERC can be seen as not only a reliable third-party estimate of escalation rates, but also a likely “safe” one (from the risk of overescalation). Its use is recommended, even beyond the federal audience for which it was developed.

ESCO 에너지절약 성과보증의 M&V 적용사례 분석

ESCO 업계는 2013년 ESCO 규정의 개정으로 에너지절약성과 보증계약에 대한 역량을 강화하여야 한다. 이러한 시점에서 에너지절약성과에 대한 측정 검증(M&V)이 중요한 과제로 부각되고 있다. 이에 따라, 선진국의 M&V 적용사례 파악이 필요하다. 에너지사용자와 ESCO 기업 간의 에너지절약성과 보증계약 체결에 의한 에너지절약설치로 발생되는 에너지절감량을 측정 평가하는 방안을 제공하는 것이 무엇보다 중요하다고 할 수 있다. 2013년부터 성과보증계약 방식 위주의 ESCO 사업이 추진되기 시작하였다. 따라서 이러한 이유로 IPMVP에서 권고하고 미국이나 일본에서 적용하고 있는 M&V 사례 를 활용하여 우리나라의 ESCO 여건에 적합한 M&V 적용방안의 마련이 필요한 것으로 판단된다. ESCO industry should guarantee the energy saving performance in response to changes of regulations ESCO. In this point, the application of the M&V is important task on energy saving performance. Therefore, we need to examine the contents of practice for the M&V in developed countries. Between energy user and ESCO, it is important to provide and measure the energy saving performance by guarantee of energy savings performance contracts. After 2013 ESCO business began focusing on guaranteed savings contracts. For this reason, we need to take M&V cases recommended from IPMVP and applied in United States and Japan. Therefore, we should be ready about M&V application for the real conditions of ESCO.

Reductions in Energy and Water Use in a Government Laboratory through An Energy Savings Performance Contract (ESPC)

ABSTRACT The USDA's Agricultural Research Service Center for Medical, Agricultural, and Veterinary Entomology is constantly looking for ways to reduce its energy and water use while still delivering world-class research in a comfortable and safe facility. Over the years, the federal facility has achieved reductions by teaming up with its local utility provider. More recently, it participated in an energy savings performance contract (ESPC) with an energy services company to radically reduce its total energy use from 28,974 MBtu/yr to 23,413 MBtu/yr, and its water use from 426.4 Kgal/yr to 182.0 Kgal/yr while maintaining occupant safety and comfort. The unique features of an ESPC allow any federal facility to accomplish energy savings projects without up-front capital outlays. Both in-house small projects and large projects can be accomplished through the ESPC process using private financing, with implementation costs and debt service paid for out of energy savings.

How to Make Improvements When the Cupboard is Bare: Energy Savings Performance Contracting

How to Make Improvements When the Cupboard is Bare: Energy Savings Performance Contracting

Solutions Development for Renewable and CHP Projects For the Federal Government

ABSTRACT Many federal energy-savings performance contract (ESPC) projects have more opportunities than the traditional demand-side energy conservation measures (ECMs). Federal organizations can incorporate more advanced technologies, like renewable energy sources, into their project bundles when the energy services company (ESCO) takes advantage of creative financing, incentives and rebates available. This article will cover the following aspects of solutions development for renewable and combined heating and power (CHP) projects for the federal government. Included will be a discussion of more advanced ECMs available to a particular location. Solutions development process overview Samples of conventional ECM projects Samples of advanced ECM technologies CHP projects Renewable projects

Energy Savings Performance Contracting with New Construction = Energy Security at White Oak

ABSTRACT The objective of this article is to describe how energy savings performance contracting (ESPC) can be applied to federal new construction projects to promote energy efficiency and sustainable design while simultaneously enhancing energy security and reliability. A case study—the Federal Research Center at White Oak (FRCWO)—will be used to highlight the benefits of this approach to federal agencies. Challenges abound in the federal new construction arena. Requirements for things such as blast protection, progressive collapse, LEED certification, and high levels of energy performance are frequently under-resourced in facilities programming. As a result, these various requirements compete for the dollars required to address the functional performance of a building. The functional needs evolve as well, putting additional pressure on the new construction budget. Base realignment and closure (BRAC) legislation enacted in 2005 exacerbated funding challenges within the Department of Defense, particularly...

Lessons from Developing Methods to Study the Relationship of Energy and Water Savings to Housing Conditions and Resident Health

Energy- and water-saving have been promoted as ways of saving money while there has been controversy about the effects (if any) of such measures on resident health. In public housing in the US, energy saving has taken the form of Energy Savings Performance Contracts (ESPC) that pay for renovations out of future savings. In an attempt to test feasibility and pilot research methods we conducted a study of the relationship between gas and water use, exterior heat sensor locations, and basement ventilation with indices developed from resident-reported living conditions and health symptoms in a single housing development. The data sources that we had available to us were not ideal. In particular, we were unable to obtain water use data that coincided in time with our health survey data. Also, we did not have enough surveys in buildings with high water or gas use and had to pool those buildings with other buildings for analysis. Nevertheless, we found several associations between our measures of energy use and resident reports of health symptoms. The associations that we found were generally in the direction that energy and water savings were associated with fewer symptoms and fewer environmental problems. There is a need for studies that obtain better input data but that generally follow the approach we developed.

Solutions Development for Renewable and CHP Projects for the Federal Government

Many federal energy-savings performance contract (ESPC) projectshave more opportunities than the traditional demand-side energy con-servation measures (ECMs). Federal organizations can incorporate moreadvanced technologies, like renewable energy sources, into their projectbundles when the energy services company (ESCO) takes advantageof creative financing, incentives and rebates available. This article willcover the following aspects of solutions development for renewable andcombined heating and power (CHP) projects for the federal government.Included will be a discussion of more advanced ECMs available to aparticular location.1. Solutions development process overview2. Samples of conventional ECM projects3. Samples of advanced ECM technologies4. CHP projects5. Renewable projects

Use of Quantitative Uncertainty Analysis to Support M&V Decisions in ESPCs

Measurement and Verification (M&V) is a critical element of an Energy Savings Performance Contract (ESPC) - without M&V, there is no way to confirm that the projected savings in an ESPC are in fact being realized. For any given energy conservation measure in an ESPC, there are usually several M&V choices, which will vary in terms of measurement uncertainty, cost, and technical feasibility. Typically, M&V decisions are made almost solely based on engineering judgment and experience, with little, if any, quantitative uncertainty analysis (QUA). This paper describes the results of a pilot project initiated by the Department of Energy s Federal Energy Management Program to explore the use of Monte-Carlo simulation to assess savings uncertainty and thereby augment the M&V decision-making process in ESPCs. The intent was to use QUA selectively in combination with heuristic knowledge, in order to obtain quantitative estimates of the savings uncertainty without the burden of a comprehensive bottoms-up QUA. This approach was used to analyze the savings uncertainty in an ESPC for a large federal agency. The QUA was seamlessly integrated into the ESPC development process and the incremental effort was relatively small with user-friendly tools that are commercially available. As the case study illustrates, in some cases the QUA simply confirms intuitive or qualitative information, while in other cases, it provides insight that suggests revisiting the M&V plan. The case study also showed that M&V decisions should be informed by the portfolio risk diversification. By providing quantitative uncertainty information, QUA can effectively augment the M&V decision-making process as well as the overall ESPC financial analysis.

The Proper Application of Quantitative Uncertainty Analysis in ESPCs

ABSTRACT This document is a “counter-point” presentation to the article titled “Use of Quantitative Uncertainly Analysis to Support M&V Decisions in ESPCs.” As the author states in his opening comments, measurement and verification (M&V) is a critical element in an energy savings performance contract (ESPC). M&V is required to document the savings that have been achieved in an ESPC. Unfortunately, unless there is 100 percent measurement of the energy conservation measure(s) (ECMs), there will be uncertainty and risk that the sample measurements do not measure true savings. The author of the above-mentioned article has presented a simulation technique which can calculate the uncertainty and expected range of savings based on actual measurements of a sample. While this calculation is acceptable, the procedure should be used in an appropriate fashion. My article discusses performance contracting (PC) and what I consider the proper application of QUA.

Unique Issues Associated with Financing Federal Government Receivables

Amounts to become due from the federal government under federal contracts can be very attractive receivables for purposes of structured finance. Examples include the securitization of (taxable) federal government real estate leases, equipment leases, and energy-savings performance contracts, all of which continue to expand with the federal government9s ongoing efforts to downsize and commercialize its assets and obligations. Federal contracts, however, contain provisions and are subject to certain federal laws and regulations that give the federal government unique rights and defenses that are not typically found in commercial contracts. These provisions, laws, and regulations present unique issues that require careful consideration when analyzing the related risks and rewards of financing a receivable due from the federal government. This article provides an overview of the significant issues that arise when financing a receivable due from the federal government under a federal government contract.