Tag Archives: ESCO

GSA Challenges ESCOs to Retrofit to Net Zero

Video January 24, 2012 Scott Leave a comment

BuildingEEPerformance Energy service companies (ESCOs) have provided billions of dollars worth of energy savings through building retrofits — and inspired even the most reluctant clients to seek out energy efficiency. Yet certain building owners can achieve far greater energy and cost savings through the adoption of deep energy retrofits. – Illustration by Lisa Haney

Roy Torbert Rocky Mountain Institute Analyst (Buildings)

ESCOs have often maintained that they would deliver deeper energy savings — if only clients would demand them. Well guess what? The General Services Administration (GSA), the largest owner of commercial real estate in the U.S., is poised to use energy savings performance contracts (ESPCs) for deep savings in selected buildings. These ESPCs require little to no up-front capital from the government, as the energy savings will cover costs of the efficiency improvements. Federal projects typically save 15-25 percent of baseline energy use. GSA, like many other federal clients, is now required to meet dramatic energy savings goals specified by the Energy and Security Act of 2007 and President Obama’s Executive Order 13514. According to GSA Administrator Martha Johnson, “The president challenged government to lead by example in environmental, energy and economic performance. Now GSA is challenging the private sector to partner with us to go above and beyond what has been done before in federal building renovations.”

The new GSA Net Zero Renovation Challenge calls upon the 16 ESCOs pre-qualified for federal buildings to develop innovative, broadly applicable and aggressively energy-saving retrofit plans. Each project will not only aim for deeper savings, but also create a plan to reach net zero energy in the building, to assist GSA in developing long-term solutions for its entire portfolio.

The recently released report from the GSA Net Zero Renovation Challenge Charrette, hosted by Rocky Mountain Institute, details how GSA will work with ESCOs to improve the process of attaining deep savings using 30-35 GSA-owned office buildings. Check out the report to learn how both federal agencies and the major ESCOs will modify their approach to catalyze profitable retrofits with unprecedented savings in federal buildings.

USGBC: Paid-From-Savings Guide to Green Existing Buidlings

December 29, 2011 Scott Leave a comment

Paid from Savings Guide

The best candidates for the paid-from-savings approach are buildings with inefficient or outdated building systems in which upgrades will generate significant cost savings. To achieve LEED for Existing Buildings: O&M certification, these systems must also meet energy-efficiency and performance-period requirements designated in the rating system. LEED for Existing Buildings: O&M certified buildings also implement O&M best practices and sustainable policies.

Executive Summary PDF

The paid-from-savings approach is a financing strategy to green existing buildings. It leverages the savings generated from building system upgrades to pay for a comprehensive greening project within a defined pay-back period. Paid-from-savings projects can use a variety of financing methods including:

• Self-financing,

• tax-exempt lease-purchase agreements for qualifying entities,

• power purchase agreements for renewable energy projects,

• performance contracts for larger projects,

• equipment finance agreements, and

•commercial loans or bond financing for qualifying entities.

In many cases, successful projects employ a combination of these options, along with supplemental funding, such as revolving loan funds, utility rebates, and renewable energy grants, as well as funds from the organization’s capital and operating budgets.

They include such items as:

• replacing the boiler,

• replacing the chiller,

• upgrading lighting systems,

• installing a building automation system (BAS), and

• replacing water fixtures.

Owners can achieve their desired return on investment (ROI) and lessen the overall project pay-back period by “bundling” the longer pay-back measures with the quicker pay-back measures to create a project with a shorter overall pay-back period and a higher ROI.

Under a performance contract, an energy services company (ESCO) acts as the project developer and assumes the technical and performance risk associated with the project, including guaranteeing the cost savings generated from the system upgrades for a specified period of time. If the savings guarantee is not met, the ESCO pays the owner the difference. The guarantee is unique to performance contracting and not typical of other paid-from-savings approaches.

To determine the savings that can be guaranteed, the ESCO will conduct an investment-grade energy audit, which provides the basis for calculating the guarantee and creating the project development plan. The audit also serves as the foundation for developing the measurement and verification (M&V) plan, which outlines the specific methods and calculations to ensure the expected savings are realized.

Share this post:

Energy Efficiency, Financing, PACE, Technology, USGBC LEED

Pike Research: 10 Building Efficiency Trends to Watch in 2011

December 29, 2011 Scott Leave a comment

Despite the general weakness in new construction due to the global recession, one building-related field has continued to grow: retrofits tied to improving the efficiency of facilities. A number of factors have been driving this growth. In the new construction that has been taking place, these same drivers have been influencing the design of the buildings.

From Building Efficiency: Ten Trends to Watch in 2011 and Beyond

A multitude of factors will continue to influence the direction of building efficiency efforts around the world in terms of what is implemented and to what degree. Pike Research has selected ten trends among these that are certain to have a major impact on the building efficiency sector in the coming year and beyond.

Ten Building Efficiency Trends to Watch

Energy codes will keep raising the bar and enforcement is catching up.
Mandatory disclosure rules will incentivize building owners to invest in energy efficiency.
The pace of building certification will increase, led by LEED.
Building energy management systems are in high demand.
The U.S. ESCO market will see moderate growth and ESCOs in Asia Pacific’s developing markets will advance rapidly.
Lighting: Not yet “The Year of the LED”.
The connection between efficient buildings and the smart grid will continue to grow.
Increasing number of financing options around the world.
PACE is a financing option struggling to overcome a roadblock of its own.
Systemic conditions, policy choices, and practical considerations will continue to present barriers to achieving energy efficiency, but investments in training, information access, and technology will gradually overcome many of them.

Pike Research has published executive summaries for related studies: