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Commissioning of Federal Energy Savings Performance
Contracts (ESPC)
May 20, 2003
Doug Dahle
National Renewable Energy Lab
Overview
• Federal ESPC Program Overview
• Commitment to Integrate Commissioning
• ESPC Project Implementation Process
• Working Draft for Super ESPC Contracts
• Commissioning Provider Input
• Potential for Commissioning Agent Role
Federal ESPC Program OverviewPrinciples
ESPC is a contracting method whereby the ESPC is a contracting method whereby the contractor (Energy Service Co.- ESCO) contractor (Energy Service Co.- ESCO) incurs the cost of implementing energy incurs the cost of implementing energy savings measures and is paid from a share savings measures and is paid from a share of any energy and energy-related savings of any energy and energy-related savings directly resulting from implementation of directly resulting from implementation of such measures during the term of the such measures during the term of the contract.contract.
ESPC PrinciplesReallocating Agency Utility & Reallocating Agency Utility &
O&M BudgetO&M Budget
$$
Reduce Energy & Related O&M CostsReduce Energy & Related O&M Costs ESCO Payments for Achieved SavingsESCO Payments for Achieved Savings Achieve cost savings for the governmentAchieve cost savings for the government
Utility Utility BillBill
Utility Utility BillBill
Utility Utility BillBill
ContractorContractorPaymentPayment
Govt.Govt.ShareShare
Govt. Govt. ShareShare EnergyEnergy
Cost Cost SavingsSavings
Before ESPCBefore ESPCContractContract
During ESPCDuring ESPCContractContract
After ESPC After ESPC ContractContract
ESPC Principles• No Federal Capital Appropriations Required• 25 year Contract Authority• Retrofits of Existing Federal Buildings• Agency Infrastructure Improvements• ESPCs deliver 2 Principle benefits• 1- Energy & Related O&M Cost Savings
– Guaranteed Savings – M&V (legal requirement)
• 2- Facility Operations Improvements– Confirmed by Commissioning (contract requirement)– ESCO Conducts Commissioning & Agency Oversight
DOE FEMPESPC Program Highlights
• Federal ESPCs (’86-’96) – $300M– Transaction Cycle - 2+ years to award
• Estimated Federal Energy Investment - $2-3B – Critical Need to reduce Transaction Cycle
• Procurement Vehicle for Streamlined ESPCs • DOE Master Contracts called “Super ESPCs”
– Usable by all Federal Agencies– Streamlines Agency ESPC Procurements
• DOE ESPCs (’98 – ’02) - $400M
DOE FEMPESPC Program Keypoints
• DOE Super ESPCs– Competitive Procurement for 6 DOE Regions– Incorporates Standard Provisions for ESPCs– Awards to Multiple ESCOs - $750M/region
• All Energy Efficiency & Renewable Technologies
– Allows Agency to Select from DOE ESCOs– Site Specific Terms & Conditions– Transaction Cycle – 10-12 months (avg.)
DOE Super ESPC RegionsDOE Super ESPC Regions
Denver RODenver RODenver RO
CENTRALCENTRAL
Seattle
RO
Seattle Seattle
RORO
WESTERNWESTERN
Philadelphia RO
Philadelphia Philadelphia
RORO
MID-ATLANTIC
MID-ATLANTIC
Boston ROBoston ROBoston RO
NORTHEASTNORTHEAST
SOUTHEASTSOUTHEAST
Atlanta
RO
Atlanta Atlanta
RORO
Chicago ROChicago ROChicago RO
MIDWESTMIDWEST
DOE FEMPESPC Program Goals
• Annual ESCO Investment - $120M
• Continuous Improvement of Public/Private Partnerships
• Focus on Federal/ESCO Business Practices– M&V Plans & Reporting Consistency– O&M during 15+ year term– Commissioning at Project Acceptance
Commitment to Integrate Commissioning
• ESCO Industry Support for Commissioning• DOE forms Fed/ESCO Working Group• Objectives
– Mainstream ESPC Commissioning– Jointly develop consistent practices/tools– NREL Contracts for Cx Expertise to support
working group activity• Farnsworth Group – March ‘03
Commitment to Integrate Commissioning
• Tasks for Farnsworth Group• 1) Participate in WG Telecons & Meetings• 2) Develop Guidelines/Templates/Tools• 3) Conduct Workshop for Govt & ESCOs
– 3/24 workshop identified needs for ESPCs
• 4) Develop Information Brochure for Agencies– Benefits of Commissioning and Agents
• 5) Pilot Project – Farnsworth as Cx Agent– Project Intent thru Lesson Learned 1 year after
acceptance – (process feedback)
ESPC Project Implementation Process
• Four Phases• 1) Project Planning
– Agency Selects ESCO
• 2) Initial Project Development– ESCO Submits Initial Proposal (at risk)
• 3) Negotiate & Award Delivery Order– ESCO Investment Grade Audit & Proposal
• 4) Implementing Delivery Order– Design/Construction/Acceptance– Multi-year Performance Period
Phase 1: Project PlanningPhase 1: Project Planning
ConsiderIAA
ConsiderIAA
Explore Opportunities, Assemble Acquisition Team and PlanExplore Opportunities, Assemble Acquisition Team and PlanExplore Opportunities, Assemble Acquisition Team and Plan
COR approval for
ESCO to submit
initial proposal
COR approval for
ESCO to submit
initial proposal
COR &agency review
process andexplore
opportunities
COR &agency review
process andexplore
opportunities
Assemble acquisition team
Assemble acquisition team
Informal communications &
mutual interest in pursuing a project
Informal communications &
mutual interest in pursuing a project
ES
CO
Join
t E
ffo
rtA
ge
nc
y
Working Draft Super ESPC Cx Process – Phase 1
• DOE Introduce Cx Process
• Cx Activity and Submittals to be provided by ESCO
• Agency responsible for Cx process and deliverables oversight and review
Phase 2: Initial Project DevelopmentPhase 2: Initial Project DevelopmentSelect an ESCO and Begin DO RFP Select an ESCO and Begin DO RFP Select an ESCO and Begin DO RFP
Verify IDIQ ordering capacity
Verify IDIQ ordering capacity
Explore Cong. Notification process
Explore Cong. Notification process
NOIindicates agency commitment &
ESCO’s expenses recoverable
NOIindicates agency commitment &
ESCO’s expenses recoverable
Review ofinitial
proposal
Review ofinitial
proposal
Prelim.site
survey
Prelim.site
survey
Complete DO RFP & NOI & obtain DOE CO review
Complete DO RFP & NOI & obtain DOE CO review
Initial proposalkickoff meeting
Initial proposalkickoff meeting
Ag
en
cy
Join
t E
ffo
rtE
SC
O
Initialproposal
Initialproposal
Start to developDO RFP
Start to developDO RFP
Issue DO RFP &
Notice of Intent to Award
Issue DO RFP &
Notice of Intent to Award
Share draftof DO RFP
for comment
Share draftof DO RFP
for comment
Working Draft Super ESPC Cx Process – Phase 2
• DOE & ESCO begin Project Intent discussion
• ESCO addresses design constraints
• Agency issue of Notice of Intent provides commitment for ESCO to begin Cx activity
Phase 3: Negotiating and Awarding the Phase 3: Negotiating and Awarding the Final Delivery OrderFinal Delivery Order
Negotiate and Issue Final Delivery OrderNegotiate and Issue Final Delivery OrderNegotiate and Issue Final Delivery Order
Notify Congress if cancellation
ceiling >$10M
Notify Congress if cancellation
ceiling >$10M
DESkickoff meeting
DESkickoff meeting
Proposaleval.
Proposaleval.
DetailedEnergySurvey
DetailedEnergySurvey
Issue DOIssue DO
DOE CO review of DO award
DOE CO review of DO award
Confirm that ESCO meets
pre-award requirements
Confirm that ESCO meets
pre-award requirements
Prelim.negotiations
Prelim.negotiations
Ag
en
cy
Join
t E
ffo
rtE
SC
O
DES/finalproposal
DES/finalproposal
Finalnegotiations &
revisions to DO RFP & final
proposal
Finalnegotiations &
revisions to DO RFP & final
proposal
Working Draft Super ESPC Cx Process – Phase 3
• After Agency Notice of Intent• Form CxP Team (ESCO CX Agent)• ESCO Convenes a Project Intent Workshop• ESCO Drafts Project Intent Document• Use PI Document to guide development of the final
proposal and to increase certainty of acceptance• Refine Project Intent Document based upon
negotiations to match the Final Proposal• ESCO Outline of Cx Plan
Phase 4: Implementing the Delivery Phase 4: Implementing the Delivery OrderOrder
Review and Approval of Design & Construction PackageReview and Approval of Design & Construction PackageReview and Approval of Design & Construction Package
Post-awardconferencePost-awardconference
Payment & performance
bonds
Payment & performance
bonds
Provideproof of
insurance
Provideproof of
insurance
Ag
en
cy
Join
t E
ffo
rtE
SC
O
Reviews and approvals(before construction may begin)
Reviews and approvals(before construction may begin)
Complete/submit designs &equipment selections and
design & construction package, including commissioning plan
Complete/submit designs &equipment selections and
design & construction package, including commissioning plan
Working Draft Super ESPC Cx Process – Phase 4
• After Delivery Order Award• Refines Project Intent Document based on design
of Energy Conservation Measures (ECMs) • ESCO develops the Cx Plan and submits with
Design & Installation Plans meeting Project Intent– Utilize Design Checklists– ESCO tracks energy and maintenance benefits, and
expected indirect benefits (productivity, satisfaction, and others)
• Agency verifies design using checklists
Phase 4: Implementing the Delivery Phase 4: Implementing the Delivery OrderOrder
Installation, Construction Period & Project AcceptanceInstallation, Construction Period & Project AcceptanceInstallation, Construction Period & Project Acceptance
Verify installation;documentation delivered;
req’d training provided
Verify installation;documentation delivered;
req’d training provided
Notice toproceed withinstallation
Notice toproceed withinstallation
InspectionsInspections
Construction/installation
Construction/installation
Punch lists, resolution efforts, reinspections,
clarifications, etc.
Punch lists, resolution efforts, reinspections,
clarifications, etc.
Resolves punch list items,submits req’d documentation,
provides req’d training
Resolves punch list items,submits req’d documentation,
provides req’d training
Acceptanceof installed
ECMs
Acceptanceof installed
ECMsAg
en
cy
Join
t E
ffo
rtE
SC
O
Working Draft Super ESPC Cx Process – Phase 4
• After Notice to Proceed with Installation• Agency/ESCO Review the the commissioning process
activities, why and benefits, during pre-construction meeting• ESCO Integrates Cx activities during construction and
turnover into project specifications (construction checklists, meetings, performance testing, etc.)
• Agency review selected equipment, materials, and other submittals for compliance with the project intent
• Agency witness selected performance testing
Phase 4: Implementing the Delivery Phase 4: Implementing the Delivery OrderOrder
Performance PeriodPerformance PeriodPerformance Period
Eval. of ESCOperformance
to DOE
Eval. of ESCOperformance
to DOE
Joint M&V efforts
(if any, per DO)
Joint M&V efforts
(if any, per DO)
Transfer title to agency, when
applicable
Transfer title to agency, when
applicable
Reconciliation ofenergy savingsperformance (if necessary)
Reconciliation ofenergy savingsperformance (if necessary)
Close outdelivery
order
Close outdelivery
order
Ag
en
cy
Join
t E
ffo
rtE
SC
O
InvoicesInvoices
PaymentsPaymentsReview and
approve M&V reports
Review andapprove
M&V reports
AnnualM&V
reports
AnnualM&V
reports
Working Draft Super ESPC Cx Process – Phase 4
• Prior to Acceptance• ESCO completes punch list items• ESCO submits O&M Manuals and conducts training• ESCO Submits As-Builts and Post Installation M&V
report confirming annual cost savings potential • Agency conditionally accepts ECMs (payments begin) • ESCO conducts seasonal testing as required• ESCO submits final Cx Report• Agency reviews final Cx Report
Commissioning Provider Input
• Welcome Voluntary Input from Cx Provider Industry
• Review & Comments on Guidelines, Tools, Templates and Cx for ESPC Information Brochure developed for Agencies and ESCOs (thru 12/03)
• Contact by e-mail– Steve Dunnivant, Cx Working Chair
• [email protected] energy@com
– Doug Dahle• [email protected]
Potential for Cx Agent Role• ESCOs commitment to Integrating Cx
– Using Cx Expertise as subcontractors or company team members
– DOE ESCOs listed at http://www.eere.energy.gov/femp/financing/espc/super_espc_escos.html
• Consider acquiring GSA Energy Management Service Schedule Contract – Provides easier access for Federal Agency procurement of
Cx services– http://www.gsa.gov/Portal/content/pubs_content.jsp?
contentOID=115442&contentType=1008