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LETTER FROM THE EDITOR
16 University of North Dakota's Natural Gas Steam Plant
45 1-On-1 with Award-Winning Hill Air Force Base
35 Top K-12 Facility Management Trends
ASK AN EXPERT
38 Metro Nashville Public Schools Implements Plan to Reduce Energy Use &
12 3 Years In: Ohio State Comprehensive Energy Agreement
ENERGY SERVICES TODAY
Publisher Energy Services Media, LLC Editor-in-Chief Julie Chesna
FROM THE EDITOR
nergy Services Media launched as the industry’s first integrated media partner in November 2019. The inaugural issue of Energy Services Today provided a voice for the energy services industry. The content was inspired by individuals and organizations that are leaders in the industry. Their experience, knowledge, and passion is the source for our reporting and storytelling. We are pleased to bring you the Spring 2020 Issue, which tackles Public-Private Partnerships. Featured are some of the most relevant, leading Higher Education P3 utility stories. We start with an update on the Ohio State Energy Comprehensive Agreement, dive deep into the University of North Dakota Natural Gas Steam Plant P3 project, and highlight the most recent, University of Iowa Utility P3 project. These institutions are setting a standard that many have begun to follow. Energy Services Today will help you prepare to ride the tidal wave of P3 higher education utility activity. These stories portray the who, what, when, where, why and how of each project. The articles also feature the unsung heroes that made each project become a reality. Inside, you’ll also find highlights from the K-12, Federal, and Local/State Government markets featuring impactful Energy Savings Performance Contracting projects. We hope you enjoy the read. Julie Chesna Founder & Editor-in-Chief
Writers Doug Smith Joshua Burnett Editor Heather Haffener Graphic Designers Rick Skippon Laura Araque Charity Mainville Photographers Jay Evans Miles Thompson Samantha May Contributing Photographers UND Photographers: Mike Hess, Jackie Lorentz & Shawna Schill DOE Photographer: Donica Payne Design & Printing Partner: Printco Graphics Omaha, Nebraska © 2020 Energy Services Media, LLC All rights reserved. General Inquiries firstname.lastname@example.org Advertising email@example.com www.energyservicesmedia.com
The opinions and statements made in advertising copy are those of the advertiser and do not necessarily constitute endorsement by the publisher. All submissions become the property of the publisher. All right reserved. No part of this document may be produced in print or digital form without express written consent by the editor. 4
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2020 INDUSTRY EVENTS SCHEDULE DATE
June 2 – 3
American Council for an Energy-Efficient Economy (ACEEE) Energy Efficiency Finance Forum
June 8 – 10
U.S. Department of Energy (DOE) Better Buildings Summit
June 14 – 17
National Association of State Facilities Administrators (NASFA) 2020 National Conference & Expo
June 17 – 18
National Association of Energy Service Companies (NAESCO) Technology & Financing Conference
June 24 – 25
Association of Energy Engineers (AEE) West Energy Conference Expo
White Plains, NY
July 11 – 14
National Association of College and University Business Officers (NACUBO) 50th Annual Meeting
August 1 – 3
Association of Physical Plant Administrators: (APPA, Leadership in Educational Facilities) 2020 Annual Meeting & Exhibition
August 6 – 7
P3C Event The P3 Airport Summit
August 11 – 13
U.S. Department of Energy (DOE) Energy Exchange
San Diego, CA Atlanta, GA
P3C Event The P3 Water Summit
San Diego, CA
October 2 – 5
Association of School Business Officials (ASBO) 2020 Annual Conference & Expo
October 4 – 7
National Association for Lighting Management Companies (NALMCO) 67th Annual Convention and Trade Show
October 8 – 9
P3C Event The P3 Higher Education Summit
September 17 - 18
October 26 – 28 November 16 – 18
Phoenix, AZ San Diego, CA
Energy Services Coalition (ESC) 9th Annual Market Transformation Conference
National Association of Energy Service Companies (NAESCO) Renovate, Retrofit, Reduce (R3) Conference and Show
December 1 – 2
P3C Event The P3 Government Conference
December 6 – 9
American Council for an Energy-Efficient Economy (ACEEE) Behavior, Energy, and Climate Change
Washington, DC ENERGY SERVICES TODAY
FROM INDUSTRY LEADERS BY ENERGY SERVICES MEDIA
rganizations in the public sector compete for limited funding, often making infrastructure upgrades and new facilities challenging to achieve. Without these resources, many organizations turn to high-interest loans or current budgets to deploy projects which modernize infrastructure and achieve greater efficiencies. Public-Private Partnerships (P3 or PPP) help create budget certainty by providing sustainable results guaranteed to the project. The P3 model delivers quality, energy-efficient buildings. By working with a partner, the risk of design, construction, finance, operations and maintenance are transferred from the public sector to the private sector in exchange for guaranteed fixed monthly payment terms. Historically the U.S. has utilized the P3 model to procure large-scale economic infrastructures such as toll roads, highways, bridges, and airports. It has only been within the last ten years that P3s have started to gain momentum as a financing method for social infrastructure; schools, universities, hospitals, community housings, prisons, etc. There are several variations of P3s, offering a range of unique solutions to the end consumer. The P3 model can be applied to existing facilities, new construction, or both. The PPP Knowledge Lab describes the key pieces of a contract as: A central characteristic of a PPP contract is that it bundles together multiple project phases or functions. Nonetheless, the functions for which the private party is responsible vary and depend on the type of asset and service involved. Typical functions include: • Design—involves developing the project from initial 6
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concept and output requirements to construction-ready design specifications. • Build, or Rehabilitate—when PPPs are used for new infrastructure assets, they typically require the private party to construct the asset and install all equipment. Where PPPs involve existing assets, the private party may be responsible for rehabilitating or extending the asset. • Finance—when a PPP includes building or rehabilitating the asset, the private party is typically also required to finance all or part of the necessary capital expenditure. • Maintain—PPPs assign responsibility to the private party for maintaining an infrastructure asset to a specified standard over the life of the contract. This is a fundamental feature of PPP contracts. • Operate—the operating responsibilities of the private party to a PPP can vary widely, depending on the nature of the underlying asset and associated service. (PPP Knowledge Lab, 2020) Examples given include technical operation of an asset and providing support services to the public party. PPP Contract Types and Terminology. (n.d.). Retrieved from https:// pppknowledgelab.org/guide/sections/6-ppp-contract-types-and-terminology.
Industry leaders Samara Barend, Founder and Chair of The Performance Based Building Coalition, Senior Vice President & North America Strategic Development Director for P3s at AECOM and John Fleming, Vice President & General Manager P3s at Johnson Controls share their knowledge of the market.
ESM: What is a public-private partnership? Barend: A public-private partnership is a mechanism that enables the private sector to invest in public infrastructure over the long-term in a performance-based manner. It is an approach that brings accountability to how we deliver public infrastructure. And it does so by incentivizing on-time delivery, budget certainty, and life cycle savings over the course of the assets. ESM: Have you seen changes recently with the P3 market in the U.S.? Barend: Yes, in the U.S., we have seen a tremendous increase in the number of social infrastructure projects that are moving forward. For buildings and facilities, more energy performance type contracts are on the horizon. More building owners are looking at how they can make their buildings more efficient, but also how they can build new buildings delivered on time and on budget. Looking at the energy performance of the overall building, owners view P3s as a way to meet sustainability goals more efficiently. The P3 market in the U.S. started with transportation, whereas in Canada, it began with buildings. The buildings approach to public-private partnerships is now just taking off. ESM: What are challenges with a P3 model, and how are they overcome?
Barend: The biggest challenge is simply educating the public sector and helping them understand how the actual structure works. It is much different than traditional delivery. It takes a lot more discipline upfront—in terms of developing a procurement process—and thinking through how you are allocating risks and laying out a project delivery process.
Barend is a champion on the issue, pushing Congress to make legislative changes and in educating Governors and Mayors on how to advance such a delivery approach. She has over a decade of experience focused solely on public-private partnerships, bringing perspectives from government and the private sector. She currently serves as Senior Vice President and North America Strategic Development Director for Public-Private Partnerships. In this role, she provides leadership in AECOM’s P3 work across all business lines, including energy, water, transportation, and buildings and facilities.
From that standpoint, it is changing the paradigm in how we deliver infrastructure in this country.
FOUNDER, PERFORMANCE BASED BUILDING COALITION (PBBC), SENIOR VICE PRESIDENT & NORTH AMERICA P3 DEVELOPMENT DIRECTOR, AECOM
ESM: What are common misconceptions about a P3? Barend: The most common misconception is that it is privately owned. The second biggest misconception is that you need to generate revenue - owners think it has to be like toll roads. And the third biggest misconception is that it costs more because the private sector funds it. ENERGY SERVICES TODAY
ESM: When a public institution is interested in pursuing a P3, what is one of the first steps they take? Barend: The first step is to hire advisors if they do not have that talent in house. They need to make sure they get the right expertise on their side: financial, technical, and legal. Then they need to do an assessment of whether or not the project is viable. They can perform a screening analysis, put together a business case as to why the project is viable, and determine whether the project is a good fit for a P3. ESM: Are there projects that are not viable as a P3? Barend: There are several buildings brought to the Performance Based Building Coalition, where we say, "They just are not viable for P3." This is due to their size—they are too small. For example, a $20 million project: oftentimes, we have owners bring us a recreational building or a firehouse valued at $20 million. That is not the appropriate size for a P3 for the amount of work and rigor. You need a complex project where the construction cost is big enough—more than $100 million. We suggest municipalities bundle smaller projects into one larger project. That way, they can get economies of scale, and it is much more efficient.
VICE PRESIDENT & GENERAL MANAGER PERFORMANCE BASED INFRASTRUCTURE (P3), JOHNSON CONTROLS 8
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ESM: What is the Performance Based Building Coalition? Barend: It is a nonprofit organization created in 2012 with the mission of catalyzing these private investments in public buildings. The organization is comprised of other associations, infrastructure funders, developers, contractors, engineering firms, architects, banks, and a diverse group of contractors. It includes all individuals and firms that would have a stake in the P3 industry, especially from a building standpoint. We have been very focused on developing workshops at the state and municipal levels and helping cities and counties understand P3s. For example, we have gone to the city of Los Angeles and worked with them and hosted multiple workshops for them. We dove deep to help them understand how to move forward with the Los Angeles Civic Center Project. We offer our insights and expertise to any city or state that we can help. If we think they have a viable project, we will work with them, talk to them over the phone, and then we will bring in all of our resources and put together a pro-bono workshop for them. We are also working at the federal level. We have developed legislation that would create $5 billion of private activity bonds for buildings, schools, and courthouses. We currently have legislation pending. For more information about the mission of the Performance Based Building Coalition, visit P3Buildings.org.
John Fleming has over 30 years of experience with Johnson Controls working in a variety of leadership positions throughout North America. Reporting directly to the Corporate Headquarters in Milwaukee, he currently leads P3 business within the Performance Infrastructure Group. Through his leadership, Johnson Controls has been on thirty-eight winning consortium teams in the North American P3 marketplace. In his role, Fleming provides the strategic leadership and leverages the value of Johnson Controls building solutions and technologies to meet the specific needs of a project. Fleming has extensive background in construction, building systems technologies and Facility Operations. He is active in the promotion of alternate procurement strategies and continues to speak in public forums on building operations, energy management and the P3 for Existing Buildings’ model.
ESM: How are P3 projects awarded? Fleming: A project is won by looking at the total costs of construction, finance and operations. The winning team is typically chosen based on the net present value of these three costs. For example, we have won several projects even though our construction costs were high because we made certain decisions that brought the financial risk and operational costs down, landing a strong net present value as a result. ESM: What typically happens at the end of the agreement term? Fleming: When entering a P3, there’s a certain level of uncertainty of what will happen at the end of the agreement, simply because the owner has options. Upon the conclusion of a contract, building management and operation goes back into the hands of the owner. There are a couple of different ways in which that transfer is done: •
FCI is measured by a third party or another designee; the building is then given a rating. If the FCI does not meet the pre-determined rating, the private party is then obligated to bring the building back to a specific FCI rating. See below for more information on FCI. ESM: What role does technology play in a P3? Fleming: While technology can be more expensive upfront, it’s a vital component of a P3 model. Without it, the efficiencies and operations would suffer long term. P3s don’t typically identify the technology that’s required; however, there will be requirements for meeting specific building operation standards. For example, there may be an operational requirement that states rooms need to have audio and visual capabilities and be heated or cooled between 70˚F and 73˚F at all times. Technology plays an incredibly significant part in Johnson Controls approach because if the rooms do not meet the operation standards, we will not get paid. We use technology for predictive diagnostics, which help us understand how efficiently the building is operating and where it needs to be corrected.
Hand-back Provision: At the term of the contract, the private party completes an assessment of the equipment's useful life. The private party is responsible for ‘handing-back’ the assets in acceptable condition and, ultimately, financially responsible if the asset breaks before the assessed useful life.
When asked how a P3 and traditional construction model compare, Fleming provided the following examples:
Facility Condition Index (FCI) Requirement: The buildings
Continued on the next page…
Facility Condition Index (FCI) or Facility Condition Needs Index (FCNI) is a tool used to benchmark the relative condition and physical health of a facility or group of facilities. The FCI was created by Applied Management Engineering (AME) and was first published in 1991 by the National Association of College and University Business Officers (NACUBO). The measure is typically derived from a Facility Condition Assessment (FCA) conducted by a third-party. The FCI is the ratio of the cost of deficiencies to the current replacement value (NACUBO, 2016). Typically the FCI scale is 0% - 100% (0.0 - 1.0). The higher the FCI index rating, the more capital requirements needed. Usually, the condition scale is as follows, but generalizations of weather a facility condition is ‘good’ or ‘bad’ are highly subjective.
FACILITY CONDITION INDEX (FCI) “Good” Condition
0 - 5% (0.0 - 0.05)
5 - 10% (0.05 - 0.10)
10 - 30% (0.10 - 0.30)
NACUBO (2016). Fa, facilities management. College and University Business Administration. 1-65.
ENERGY SERVICES TODAY
TRADITIONAL CONSTRUCTION VS. P3 RISK SCENARIO
The contractor would default to the decision of the public party, impacting costs and completion timeline. There may be a set deadline in place, but there is no incentive to hit it. Unforeseen issues arise during the construction phase of the project. There are costs associated, and now the project is at risk of missing its completion date.
For example, at the peak of the project, the weekly construction costs hit $1 million. When an issue arises, in a traditional model, the response is: “Everybody, tools down. We have got to decide. Is it going to be A or B? What are we going to do?” They do not want to proceed with ‘A,’ only to then be redirected to ‘B’ so they take two weeks to come back and decide. That’s a $2 million loss. The construction contractor would likely get a change order to implement the required project modifications. In the meantime, the public party is paying for this, regardless of project delays, quality issues or performance.
Post-construction, during operation, the building becomes non-operational.
Post-construction, energy efficient equipment is not hitting the consumption measures that were originally discussed.
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Any scheduled activity within the space would be canceled. The public party would follow a traditional procurement process—create a scope of work, bid out services and contract out the work—leading to a long process that impacts the budget and, ultimately, the community in which the building serves.
The public party would complete the process of hiring a contractor, engineer or rehire the original contractor to fix the problem. Depending on the age of the equipment, there is risk that the warranty no longer applies.
EXAMPLES PROVIDED BY JOHN FLEMING, VICE PRESIDENT & GENERAL MANAGER P3S, JOHNSON CONTROLS
A P3 is a fixed-price construction contract. The private party understands what that impact is, building process procedures are in place to make sure things get escalated in hours, rather than days or weeks, to be resolved quickly. A critical factor in the ability to hit deadlines is due to the private party’s flexibility to make decisions quickly. Compared to the public party, there are fewer hoops to jump through. If something comes up that was unforeseen, the public party is able to adapt and make the best decision quickly. A Substantial Completion date is a predetermined date that is agreed upon by both parties involved. This date signifies that the construction is sufficiently complete and the financing switches from construction-funding to long-term financings. Up until the substantial completion date, the public party hasn’t paid anything even though they technically own 95% of the entire asset. With the P3 model, the title does not change. Thus, the owner still owns the building without making any payments. The private party is responsible for meeting the substantial completion date and any costs that arise from missing the date. If construction is completed on the substantial completion date, the client is obligated to pay the private party. However, it is conditional upon the building being available. If it is not available, the liquidated damages are incredibly high. The private party can’t afford to miss a completion date, so schedules are set in a matter that puts them in a position to succeed. The project is completed ahead of schedule for that very reason.
In a P3, operational risk is managed through the Availability Model. If the whole building or parts of the building are not available during its operation, the private party is financially responsible. Payment would be deducted from the private party until the building is up and running. This is an incentive for the private party to be proactive about monitoring the operation of the building. Systems and technologies can be installed that help predict efficiencies, and if inefficiencies are on the horizon, they will be corrected before it impacts operation.
The private party's design team models the energy consumption measures and standards; therefore, the private party is obligated to maintain and meet those standards throughout the term of the contract.
ENERGY SERVICES TODAY
OHIO STATE COMPREHENSIVE ENERGY AGREEMENT
BY DOUG SMITH
entral Ohio is the home to the state’s capital, Columbus, which is the nation’s 14th most populated city. Ohio’s state legislature has been grappling with energy policies for decades. In more recent years, the legislature approved a comprehensive energy reduction program, which allows public entities to finance energy efficiency upgrades outside of their normal debt service. To this end, the state offers an energy loan for efficiency projects. In practice, a city, library, or other municipality has the option to tap into this loan fund to enhance their lighting, HVAC, and controls by using the energy savings to pay off the low-interest loan over a multi-year period.
Ohio State University campus (Photo provided by Ohio State)
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The state legislature allows public entities to utilize another option for energy reduction: public-private partnerships (P3). Public-private partnerships have been used to make transformative changes in urban areas by building parking garages and refreshing roadways, among others. Since the 2008 recession, a growing number of public entities have been turning to partnerships to bridge the gap between strained public funding and the increasing need for services and improvements. Ohio’s former U.S. Senator George Voinovich was a supporter of these partnerships ever since he was mayor of Cleveland in the 1980s. The then-mayor was one of the first in the nation to implement the P3 model for a variety of public services including water, sanitation, energy, transport, telecommunications, healthcare, and education. Voinovich outlined four vital factors to successful P3 relationships: asking for help, securing resources, establishing trust, and communicating effectively. When Ohio voters subsequently elected Voinovich governor in the 1990s, he amplified the P3 model throughout the state. As the P3 model became more popular over the following decade, the state legislature established energy efficiency portfolio standards for the electric utilities in Ohio. This confluence of policy-based events sparked a P3 opportunity, unlike any other.
THE OHIO STATE MODEL The Ohio State University main campus is nestled directly north of downtown Columbus. With more than 60,000 students and approximately 46,000 staff, this university is consistently in the top three largest schools in the nation. If Ohio State were its own city, it would easily rank in the top ten largest cities in Ohio. With all those people, it is no surprise that the Ohio State Board of Trustees were eager to analyze energy consumption and develop a P3 plan. When the board began exploring P3 opportunities in 2014, the concept was not foreign to them. In 2013 the board approved a $483 million P3 deal to let QIC Global Infrastructure manage their parking facilities in exchange for an upfront investment. With the successful launch of that P3 and approval from state legislation for an energy P3 deal, the board decided to move forward with an RFP. In early 2017 several companies came to the table and submitted proposals. The winning proposal was ENGIE North America and Axium Infrastructure. Shortly after the project was awarded, The Ohio State Energy Partners, LLC was formed. This group is comprised of representatives from ENGIE and Axium that own, manage, and execute the agreement. Ohio State set the precedent, and many often refer to a higher education P3 utility management model as “The Ohio State Model”.
YEAR THREE Roughly three years after the P3 implementation, Energy Services Media (ESM) interviewed Scott Potter, Senior Director of Comprehensive Energy Management at Ohio State. Potter’s office—under the office of business and finance— oversees the ENGIE Axium energy concession agreement, energy commodity procurement, energy partnerships, and energy policy for the university. ESM: What are milestones that Ohio State and the partners are looking to achieve in 2020? Potter: Probably the biggest (milestone) for 2020, which may be the biggest for the entire concession agreement, pending regulatory approval, is we expect to start construction on our new combined heat and power plant. This is something that Ohio State has been considering for more than a dozen years, but it was not until we had the P3 deal that we found a way to manage that upfront cost. It is a very large project that was approved by the board for construction last summer. The total project, which is two projects put together, is more than $270 million. That construction is expected to start late spring, early summer. Starting construction will be a significant milestone. Within the last two years, we have achieved several of the energy conservation measures that were a part of the agreement. We wanted the company to help get our campus to our new efficiency goals, but those projects took a year to complete. This will be the first year since the concession was executed that we have a full year to look at the meter and say, “Look, we changed these 100,000 lights, and we upgraded these 14 buildings, and here’s a year's worth of meter data to prove the benefit.” ESM: What have been the challenges of the concession agreement, and how did you work through them? Potter: I think the biggest challenge has been and continues to be integrating a public mentality with a private mentality. Two of the P’s (of a P3) are very different. To get the partnership—the third P—to work, you have to figure out how to coordinate the public entity with the private entity. The private entity is accustomed to doing things at the speed of business. A public entity, like Ohio State, is a shared governance body that does things much slower and more methodically. The shortest-term plan that Ohio State looks at is a fiveyear plan. A single capital project may be three or four years in development before it ever gets approval to go ENERGY SERVICES TODAY
forward for design. Both sides have had to learn how to integrate two mentalities and take the best of both sides without undermining the mission and integrity of either. We are a public institution, so we have to do things publicly, but I think we are managing it well. ESM: Looking back at the contract process, was there anything that was overlooked that Ohio State has revisited within the last year? Potter: Definitely. Fortunately, we expected there would be, even though we spent years on the project and the contract is 2,600 pages long, we knew we would miss something. The current contract is the third amended contract, and we are very pleased with it. There has not been anything major, but one example is, we realized early on that we did not build in a mechanism for the company to charge us—or for us to charge them—for something that was previously unthought of. We built in this beautiful mechanism for the regular fees and capital investments, but we did not think about the one-off unknowns. In one of the amendments, we put in a mechanism that said we could mutually agree to a payment structure for non-utility items, such as certification and application filing fees. ESM: How do you handle performance pitfalls or unmet KPIs?
We also built-in the notion of forgiveness. Everybody misses the mark by a little at some point. So, if there is a minor unplanned outage today, and it is the only one that happens this year on chilled water, it is going to get checked in their box as having an unplanned outage. But there is no penalty. However, if a particular event becomes repetitive or is catastrophic, the penalties escalate quickly. We tried to build in a reasonable scale of forgiveness but make ‘the hammer’ on the back end big enough that the company will take it very seriously. We can tell you, to date, the company is positively hypersensitive about their KPIs. ESM: Out of those 13 KPIs, is there a KPI that is the most challenging? Potter: Definitely. It was not the one we thought it would be. We all thought it would be the availability of electrical power, but it turned out to be the availability of chilled water. We have learned you can make the chilled water plant very reliable, but if somebody in a building—who is not tied to the KPI—turns on a giant cold water spigot and leaves it on, it has the potential to momentarily draw down the pressure of the distribution system. This triggers an alarm and causes an outage. Ultimately though, the KPIs are not as important as the partnership. So, we want to be reliable, but we are not
Ohio State University campus (Photo provided by Ohio State)
Potter: If you look at our KPIs, we did a few things. One, we limited them. The KPIs are only on the most important measures. When we first started the process and looked at performance standards, our first draft list was over 250 performance standards. Ultimately when the contract was done, we boiled that down to 13 KPIs. It was really for the things that would affect the operations, mission, and the continuity of the university.
Two, we set performance standards up in a way to make missing KPIs potentially very severe, but we also built-in scalability. We have an extremely high-reliability requirement for our power on campus. We require five nines of reliability—99.999% available. That means that if a single building is out for 20 minutes in the course of one year, they may miss that mark.
ENERGY SERVICES TODAY
‘We are experts in education and research. By finding the expert in utility operations, we have strong confidence that we will be able to achieve our efficiency goals better, cheaper, and faster.’
interested in penalty charges. If we have to levy penalty charges, things are not going well. If the operator performs very poorly on the KPIs, we have the ability to remove the operator but keep the concession agreement and the P3 deal intact.
Potter: Go slow.
This is not a market opportunity that will disappear if you take your time to get to it. We are talking about utility systems that will always exist and will always need to be operated. The opportunity will always be there. Go slow and be methodical.
ESM: What is the biggest lesson learned? Potter: Many universities will shy away from considering something like this because of its complexity. But within the complexity is the opportunity. If you go slow and methodically, you can do it. Something the company has taught me is that your first answer to any disagreement or question cannot be, “Let’s go to the contract.” I think the university picked its partner well. In hindsight, I think the partnership aspect of the deal is even more important than we really understood at the time. The company has helped us understand that the contract is there to support the partnership, not the other way around. Both their CEO and my team try never to say, “Well the contract tells you we get ‘XYZ’.” Let us talk about the issue first, and if we need to fall back to the contract, we can. ESM: What advice would you have for other Higher Education institutions who are interested in pursuing a project like this?
Partner with the appropriate outside consultants, get the right legal and financial consultants. It is important, from my perspective, that they be from outside because only those kinds of entities can keep you from comfort blindness, and they can help you see. Ohio State Energy Partners was able to attract a $1.165 billion investment through their P3 with ENGIE/Axium. No matter how big your project, the goal should be to lean on the experts to provide solutions to your energy needs. As Ohio State’s Potter said, “We had to admit that we were not experts at utility operations. We are experts in education and research. By finding the expert in utility operations, we have strong confidence that we will be able to achieve our efficiency goals better, cheaper, and faster.” More information can be found in Ohio State’s 2019 Comprehensive Energy Management Annual Report, available March 2020. The report details the first two years of the partnership, with data from 2018 and 2019.
Senior Director, Comprehensive Energy Management, Ohio State University As Senior Director of Comprehensive Energy Management, Scott has primary responsibility for the oversight of the Ohio State University Energy Partnership agreement. He serves as the university liaison to Ohio State Energy Partners. Scott’s office works to ensure that the enterprise-wide energy profile is as efficient and affordable as possible, while also sustainably meeting the university’s operational needs. This includes oversight of Ohio State energy procurement strategies and transactions. Scott has more than 28 years of public and private sector utility experience. Prior to joining Ohio State, Scott was the director of utilities at the Public Utilities Commission of Ohio. Scott is a graduate of The Ohio State University and the University of Southern California. He currently serves as the President and Trustee for the Ohio Energy Project, a non-profit organization dedicated to energy and leadership education for Ohio’s K-12 students and teachers. ENERGY SERVICES TODAY
HIGHER EDUCATION // FEATURE
Best-in-class UND steam plant, opening operations in spring of 2020. (Photo by Mike Hess, UND)
UNIVERSITY OF NORTH DAKOTA’S
NATURAL GAS WRITTEN BY ENERGY SERVICES MEDIA IN COLLABORATION WITH JOHNSON CONTROLS & UNIVERSITY OF NORTH DAKOTA
ighty miles south of Canada, hugging the border of Minnesota and North Dakota, sits the city of Grand Forks. This welcoming city in North Dakota is known for its tight-knit and friendly community, home to 55,000 people. It is a hub for a variety of industries, including engineering, aerospace, energy, agriculture and healthcare. At the center of this thriving city is the University of North Dakota (UND). Established in 1883, UND is the state’s oldest university. Its sprawling campus includes 240 buildings across 550 acres serving 13,000 students. As the first university in the country to offer a degree in unmanned aircraft systems, it is best known for the John D. Odegard School of Aerospace Sciences (UND Aerospace), which houses a majority of its fleet at the nearby Grand Forks International Airport. Powering the bustling and growing campus is a coal-burning steam plant, which dates back to 1909. 16
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Over the past decade, UND has advanced in sustainable and energy-efficient infrastructure efforts. Activities have included retrofitting lights, installing heat recovery systems and managing technology for peak and off-peak use. For every step forward the university took, the root cause of inefficiencies became clear. In 2016, the university calculated the steam plant’s Facility Condition Needs Index (FCNI), which compares the total facility deficiencies to the total replacement costs. The lower the score, the better the facility’s condition. Typically, a score over 0.10 classifies as a poor rating. The steam plant’s score was 0.55. It was a glaring issue that needed attention. Five of the seven boilers were past design life and the other two needed immediate repairs. In 2018, the plant’s FCNI score increased to 0.72, requiring nearly $50 million for repairs.
HIGHER EDUCATION // FEATURE
Michael Pieper, Associate Vice President for Facilities, University of North Dakota.
SOLUTION: PUBLIC-PRIVATE PARTNERSHIP As the steam plant's FCNI score inched its way higher, UND's facilities management team explored options for funding an entirely new plant. Through this exploration, the team realized the opportunity that laid in North Dakota’s state law allowing a private operator to build, operate and transfer a facility—a public-private partnership (P3). Pieper, along with his peers, immediately began preparations for proposing a P3 to build a new natural-gas-powered steam plant. UND had two things working in its favor: data and knowledgeable people. In 2018, UND announced its partnership with Johnson Controls. Energy Services Media (ESM) recently sat down with Pieper to gain an inside look into the unique P3 model. ESM: After learning the state law allows a private operator agreement, what were the next steps?
Pieper: We needed to identify a source to accomplish the ultimate goal of building a new plant that wasn’t going to take away funding from our academic mission and existing projects.
UND named Michael (Mike) Pieper, Associate Vice President for Facilities in November 2016. Pieper grew up on a family-owned dairy farm in Minnesota. Having been raised by parents who worked as mathematicians, he had a high aptitude for the subject and a keen eye for solving problems. When faced with challenges on the farm, his approach to solving problems started at the root cause, developing long-term solutions to prevent problems from reoccurring. This same approach served him well throughout his entire career. He received his bachelor’s degree in General Management and his master’s degree in School Business Management from the University of Wisconsin-Whitewater. From 2007 to 2014, he served as the Vice President of Finance and Operations for Western Technical College in La Crosse, Wisconsin, where he served as a member of the college’s senior leadership team.
Above: Original UND steam plant dating back to 1909. (Photo by Shawna Schill, UND) Below: UND’s new steam plant is 12,000 GSF smaller than original. (Photo by Mike Hess, UND)
In 2014, Pieper joined Winona State University’s Facility Services department as Assistant Vice President. At Winona, he championed the university’s master facility planning, reorganized the facility department, oversaw the installation of two federally funded sub-grade pedestrian railroad crossings and managed the relocation of the College of Education (Education Village). When Mike stepped into his new role at UND, it was clear that the first problem that needed to be addressed was the steam plant. ENERGY SERVICES TODAY
HIGHER EDUCATION // FEATURE
The P3 model checked all of the boxes that met the president’s goals and timeline. The plant would no longer be a business continuity risk that we would have to manage, and after an in-depth review, we moved forward with procuring a provider. One thing we had in our favor was a lot of due diligence over a five year period. We had very knowledgeable people
Representatives from UND and Johnson Controls International, along with Grand Forks Mayor Michael Brown and State Sen. Ray Holmberg, throw the ceremonial dirt on a new steam plant project that will replace the century-old plant now located in the heart of campus. (Photo by Jackie Lorentz, UND)
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on site. They knew what we needed to do, but not necessarily quite how to get it accomplished. We’re fortunate to be able to go back and look at the data that we’ve gathered over the past five years and say, “Is this possible?” We completed validation of information internally, which we then used to solicit a partner. Because we had the knowledge we were able to say, “This is what we know; this is what we have.”
HIGHER EDUCATION // FEATURE
Johnson Controls UND Project Team at the ground-breaking ceremony (Left to Right): • Jake Terzo, Business Development Manager; • Jenn Abbott, Business Development Director, P3; • Justin Gibb, Area Operations Leader; • Lon Bannister; Solutions Development Leader • Edward Allen, Energy Solutions Development Engineer; • Lyle Schumann, Director of Business Development North America; • Chuck McGinnis, Vice President of Sales, Performance Infrastructure; • Mark Reinbold, Vice President and General Manager, Performance Infrastructure; • Bradford Estadt, Project Executive, Performance Infrastructure; • Sean Maher, Business Development Director; • Doug Maust, Market Team Engineering Manager; • Steve Williams, Project Development; • Steve Page (subcontractor), Project Manager at SC Page & Assoc. (Photo by Jackie Lorentz, UND)
Then we followed the standard procurement practices for a request for proposal (RFP), which was posted for three weeks. We moved pretty rapidly because it was a facility-driven decision. The pre-development phase followed. We then hit a due diligence period where we went to the partner and shared the information we had. We felt very comfortable that we could hit our goals and benchmarks. We encouraged them to take the time, on their dime, to evaluate the information and come back to us with a path forward. That took roughly two to three months. We both agreed that the solution was there and we could hit our target. We created a pre-development agreement where we shared the cost to dig deeper. I call it audit grade research, meaning we want to come out of that pre-development agreement with all the information we need to populate a multi-year long-term agreement.
The bid was awarded in October of 2018. Construction started in April of 2019 and Johnson Controls is now in the process of commissioning the plant. The contract states that the operation needs to change over at the end of the summer of 2020, but we think it will happen sooner. We moved rather quickly. We are ahead of schedule and the budgets are holding well, so we are delighted with the outcome. ESM: Who were the top candidates during the RFP process? Pieper: Enwave, Burns & McDonnell and Johnson Controls. When we created the RFP, we asked for a couple of specific things. We wanted a firm to be the lead for the project. Many people wanted to build it, some wanted to design it, but we wanted to hire somebody to take the lead. We were very upfront when informing interested firms what we were looking for in a lead firm. We made it clear that this project only gets done if it is legal and receives political acceptance. We needed to be politically sensitive and actively engage stakeholders. ESM: What led to Johnson Controls winning the project? Pieper: Johnson Controls really took being the lead to heart. They brought the communication and the political relations people to the table. In addition, they saw the value of bringing the legal expertise upfront in the interview process. ESM: Why was a P3 the right fit for UND?
We anticipated that the pre-development stage would not take long. However, we had to consider the needs of external university and government partners. That process took about six months.
Pieper: One of our priorities was “certainty.” We understand the inputs, costs and revenues we have to extract from the steam plant to keep it operational. We also know that, like any other capital project, investments are going to be required over time. We wanted to avoid the startstop mentality of a traditional construction project, continually questioning if we had the budget or approval to fund the project.
From there, we were off and rolling and entered into a development agreement. We were proactive and started to pre-order materials.
We embedded over the full life of the project a requirement for maintenance and scheduled capital investments. This made us feel comfortable that we would ENERGY SERVICES TODAY
HIGHER EDUCATION // FEATURE
be getting back a valuable asset at the end of the contract. This further allows us options at the end of the agreement to extend the contract or return the plant to university operations. It was important to us that the asset was going to be in good shape for the long run. We wanted Johnson Controls to be able to take the risk of making sure it’s properly staffed and operates with maximum efficiency. ESM: What is the cost structure? Pieper: We issued debt to fund the project. Johnson Controls is committed to paying for that debt. Johnson Controls recoups the money to pay for the debt through selling steam to the university. We have a contracted rate in place. Inflationary factors were built into the agreement. But in general, that’s how the money’s going to flow. The initial priority was the steam plant project. As the conversation unfolded, it became clear that substantial energy savings opportunities existed throughout campus.
Above: UND High Performance Center before LED retrofit. (Photo by Johnson Controls) Below: UND High Performance Center after LED retrofit. (Photo by Johnson Controls)
Since we were anticipating entering into a 40-year contract, we saw this as an opportunity to look at the campus holistically. We wanted to capture savings where we could and reduce the amount of deferred maintenance. The length of the contract provides additional opportunities that we typically wouldn’t see under a traditional performance contract. The energy savings projects throughout campus were included as part of the steam plant project, which provided cost-saving efficiencies to help improve the financial profile. A portion of the revenue generated by the sale of steam will offset the debt. These revenues will also pay for the operations, capital improvements and life cycle management of the plant. ESM: Why did UND decide to opt out of a large upfront concession payment? Pieper: One of the attractive things about a P3 is that it provides a lot of capital upfront. Some institutions may be a little bit more leveraged than others, even in terms of things like tuition rates. UND is one of the best institutions in higher education in terms of being very under leveraged and our tuition is way below the market. Our quality of education far exceeds many in our regional market who are charging double.
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HIGHER EDUCATION // FEATURE
It was not a necessity to raise a bunch of capital. We had
little to no debt. Without debt being a key driver, I think
A key piece of operations to the new steam plant is N+1 redundancy. This is a resiliency measure, which allows the steam plant to support the campus even in the face of an outage or extreme weather conditions. Components (N) have at least one (+1) independent backup component. Two examples of UND’s steam plant N+1 redundancy components are the deaerators and boilers; each has an independent back up.
the investment model just wasn’t attractive. Pieper closes the interview with a sense of reassurance. Pieper: In the past, we’ve suffered through some devastating floods and some huge business continuity issues. If we lose our steam plant in the middle of winter, we’re sending students home. We’re going to have a great amount of damage done internally within our buildings. To have that partner be there to troubleshoot is very comforting to the university and me. I feel a little bit more comfortable having Johnson Controls available if I notice we’re getting a little low on diesel fuel. They will be there to pull some levers and make sure we have the backup that we need. At the end of the day, I sleep a lot better knowing that my phone’s not the first to ring.
UND’s steam plant has two deaerators installed. Each deaerator is capable of supplying all of the deaerated water for the entire load.
FUTURE P3S ON CAMPUS The university is discussing the utilization of P3 model for other projects and initiatives on campus. They have seen benefit in utilizing a P3 model for the steam plant project and other projects completed on and off-campus. For colleges and universities with strong revenue projects a P3 model provides an opportunity to reduce operating costs and deferred maintenance costs. As of February 2020, Johnson Controls is in the commissioning phase and is on track to be operational spring of 2020.
Five 60,000 LB per hour custom boiler systems support the UND steam plant operation. The load for the entire campus can be met with 4 of the boilers. ENERGY SERVICES TODAY
HIGHER EDUCATION // FEATURE
THE COMPETITIVE ADVANTAGE:
UNIVERSITY OF NORTH DAKOTA FACILITIES LEADERSHIP TEAM
DRIVING LOCAL INVOLVEMENT
J Joshua Wynne
Associate VP Facilities
VP Finance & Operations
Les Bjore Director of Planning & Design
ohnson Controls involvement with the University of North Dakota (UND), as well as with stakeholders of the local and state levels, was a crucial element of its winning bid. When the university created the RFP, leaders made it clear that they wanted the final firm to take the lead on all aspects of the project. The challenge was to build a team with national and local expertise to deliver the project. Local partnerships formed an integral part of Johnson Controls approach, and this continued into the construction phase. The company committed at an early stage to rely heavily on local contractors, and they followed through in exceptional fashion: 80 percent of the work was performed by companies in North Dakota, many of which were local to Grand Forks. Johnson Controls built a team of local design professionals that had previously worked on projects both on and off campus; Affiliated Engineers Inc (AEI), Fosdick & Hilmer, AE2S, JLG Architects, and Obermiller Nelson Engineering (ONE). Each firm had specific roles in design. Johnson Controls was the general contractor with PCL Construction and FM Sylvan as major subcontractors. Odney, a communications and marketing firm that has been operating and expanding in North Dakota for more than thirty years, was a crucial partner. Odney helped foster critical partnerships with elected officials, from the governor and state legislature to the mayor and key leaders of Grand Forks.
Director of Operations & Maintenance
Director of Facilities Business Services
Not pictured: Brian Larson, Director of Construction Management
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Johnson Controls held a strategic approach from the very beginning. The initial stages focused on ensuring that vital stakeholders understood what could be accomplished through the steam plant project, and the project benefits for UND, the state government, and other higher education institutions in general. The compelling mix of national P3 experience, commitment to local engagement, and a strong communication strategy lead Johnson Controls to be the desired partner for the University of North Dakotaâ&#x20AC;&#x2122;s P3 project.
HIGHER EDUCATION // FEATURE
UNIVERSITY OF NORTH DAKOTA P3 UTILITY SCOPE OF WORK
PROJECT ROLE Johnson Controls led the consortium as the developer for the project establishing a team of experts to design, build, finance, operate and maintain the new steam plant feeding all campus facilities. Under this arrangement, Johnson Controls provided all guarantees required by the project and transferred the risk of design, construction and future O&M, Life Cycle and Energy performance. Johnson Controls exercised flow down responsibility agreement to mitigate risk on work which was not being self-performed such as design and construction efforts. Typical in DBFOM contract arrangements, risk is taken by those who are best capable of managing the scope of work.
TOTAL PROJECT VALUE
Grand Forks, ND
Initial Cost: $90M Projected Savings: > $1M in energy costs annually
LENGTH OF CONTRACT
Steam Plant Replacement and Campus Energy Improvements
40 year concession term; 2 year build, 38 year O&M term
Design//Build Finance//Operate Maintain
SCOPE SIZE - Steam Plant Capacity of 300,000 pph at 110 PSI with full N+1 capacity of equipment serving 6 million sq. ft. - Peak demand is estimated at 204,010 MBH at 887 Btu/pound, with average monthly demand at 67,000 pph. - ECMs service 3 million sq. ft. plus exterior lighting and facilitate the reduction of 1250 tons of chiller capacity in six buildings.
PARTNERS Design: AEI (Affiliated Engineers Inc.), Fosdick & Hilmer, AE2S, JLG Architects, ONE (Obermiller Nelson Engineering) Builder: Johnson Controls PI Project Site Operations, LLC Major Subcontractors: PCL Construction, FM Sylvan Finance: Lease purchase agreement Project Company Legal: Gowling WLG Communications Consultant: Odney Public Affairs Financial Arrangement and Underwriting: Stifel Nicolaus Trustee: Bank of North Dakota
PROJECT IMPACT 40 TON CO2 EMISSIONS SAVED LANDFILL REDUCTION: 3,200 METRIC TONS OF ASH GUARANTEED PLANT EFFICIENCY AND UPTIME
FINANCING University of North Dakota, a state institution is a tax exempt entity. Some of the campus steam is supplied to nonpublic entities. The majority of the financing was tax exempt with the remainder being taxable. This provided the most cost and tax efficient solution for UND. The University is designating the steam facility construction and energy conservation improvement portions of the Project as a “Green Project” and the bond Certificates as “Green Certificates.”
Stifel Nicolaus – Financial Arranger and Underwriter Bank of North Dakota – Trustee Lessee – The University of North Dakota Lessor – Johnson Controls SPE, Johnson Controls PI Project Site Operations, LLC Financed Amount - $93,030,000
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UNIVERSITY OF IOWA
UTILITY P3 Photo by Miles Thompson
BY DOUG SMITH
ith a dynamic mixture of architectural styles ranging from the Old Capitol Building, built in 1842, to modern-day award-winning structures such as the Visual Arts Building, the University of Iowa (UI) has always been thoughtful about energy usage in all of its buildings. The university’s utilities play a pivotal role in providing electricity, heating, and cooling to the fast-paced 1,700-acre campus. Not only do the utilities support more than 373 major buildings, including patient, research, and lab facilities, it also provides critical services to the UI Hospitals and Clinics. The UI utilities include the main coal-burning steam powerplant, built in 1929, a chilled water plant, providing air conditioning and temperature control, a water plant which purifies and distributes 900 million gallons of water annually, and the Oakdale Utility Power Plant, a tri-generation plant providing electricity, heat, and cooling for facilities such 24
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The university’s utilities play a pivotal role in providing electricity, heating, and cooling to the fast-paced 1,700-acre campus.
Rod Lehnertz Senior Vice President of Finance and Operations,
Photo by Miles Thompson
OPPORTUNITY THROUGH A P3
“We were open to the idea that a P3 could provide some additional funding for us to help bridge the gap, but also excel in those areas of student success and research.” as the Hygienic Lab, Data Center, and the Environmental Management Facility. UI partners with MidAmerican Energy, who provides electrical power to the campus. This partner supplies renewable energy and is steeped in sustainable practices. One of those practices is offering a rebate program. If the university completes a project that exceeds the Iowa Energy Code and shows payback on the material, there is an opportunity to receive rebates through MidAmerican Energy. UI has collected millions of dollars through this program, which have been re-invested into new energy projects. UI’s sustainability values are seen throughout campus. Most recently, in 2018, the Catlett Hall achieved gold-level LEED certification. Before that, in 2013, the 1999-built College of Public Health became a LEED-certified platinum building. There has been a continued concerted effort to engage designers and consultants who lead by example in the energy efficiency and sustainability space.
In response to a 2018 letter from Governor Kim Reynolds calling for Iowa universities to “create predictability” in tuition, UI leaders began to seriously explore a P3 energy project. When looking at a P3, the university’s objective was to engage with a private company that would be responsible for the operations of the campus utilities. They wanted the company—as the plant operator—to continue to explore new sources of renewable fuels, creating sustainable, lower-cost fuel options. Following the decision to explore a P3 utility project began a rigorous 10-month competitive bidding process, which involved university shared governance members and academic leadership. The process led to the selection of ENGIE and Meridiam. Under the P3, UI will maintain ownership of its utility system while entering into a professional services agreement with ENGIE and Meridiam, who will perform all operations with respect to steam, cooling, water, and electricity. This agreement will provide UI with an upfront payment that the university will place into an endowment. The annual proceeds realized from the endowment will be invested in the core missions of the university.
INTERVIEW To learn more about this project Energy Services Media (ESM) interviewed Rod Lehnertz, the University of Iowa Senior Vice President of Finance and Operations. ESM: What sparked interest in a utility system P3? Lehnertz: The story relates to how higher education is financed. In the last ten years, the University of Iowa has seen a decrease in state funding support by more than $50 million annually. Higher education funding from states has been a national issue. We serve more students, have more programs, and have more course work for students than we did ten years ago. The Governor of Iowa, Kim Reynolds, wrote a letter in 2018 to the Board of Regents, encouraging universities to consider new and innovative ways to make up the gap. Upon receipt of that letter, we took it seriously, and we knew what Ohio State had done. We were open to the idea that a P3 could provide some additional funding for us to help bridge the gap, but also excel in those areas of student success and research. We have been very proud of our utility and energy management department. Our system we have on campus has been something that we have worked hard to refine. We explore biofuels and other measures that make us notable throughout the nation. ENERGY SERVICES TODAY
We aimed to enhance our current operation while generating new sources of funds that we could apply to student success.
PROJECT STATS Upfront Payment to UI .............. $1.165 billion Total Contract Term ........................50 Years Total Funds to Endowment ........ $999 Million Annual Fixed Fee to Partner ....... $35 Million, after 5 years the annual rate increases at a rate of 1.5% *Fixed Fee excludes: Utility expenses, plus costs for employees, maintenance and upgrades, and fuel
ESM: Can you give me a snapshot of the project? Lehnertz: Over the last year or more, we have been putting together a series of studies and working with Jones Day and Wells Fargoâ&#x20AC;&#x201D;both familiar with the Ohio State project and the P3 environment. Working with those experts allowed us to generate early plans of explorations. We collaborate closely in the Big Ten, so we were able to reach out to Ohio State. They were welcoming of our questions, and we learned a lot from them. We began to build a process of evaluating what we could do to develop this program and what kind of financial models would work for the university. We needed a good partner to help us eliminate risk. We also wanted to emphasize sustainability. We have been very proud of what we have done on our campus, and we intended to extend that. Over the next six months, we put together a model, and we began the process of attracting partners from around the world.
University of Iowa Steam Powerplant, Photo by Miles Thompson
Our team of partners, along with our consultants, evaluated the RFQs, and we came to a process of finalists. The finalists put together their proposals for us, which we finished this fall. We came to a unanimous campus selection of ENGIE-Meridiam. ESM: What is the scope of work?
FINALIST BIDS The University of Iowa and Board of Regents considered four finalist bids before choosing the ENGIE-Meridiam collaboration, which officials called the clear top choice.
Offering a $1.165 billion upfront payment
Offering a $950 million payment
Plenary, Sacyr, Kiewit
Offering a $882.8 million payment
Harrison Street, Ever-Green Energy, City Water
Offering a $881.7 million payment
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Lehnertz: It is a full-system adoption by ENGIE, some specific and detailed operations of the plant may remain with the UI. We worked together on evaluating the best fit for UI in several areas, including fuel procurement. Unlike many university campuses, we have a water production facility where we treat water on our campus. It is potable water and provides water research opportunites. That is unique to UI, so that took a different arm of expertise. The scope extends beyond the utility systemâ&#x20AC;&#x201D;to our competitive aquatic center competition pool water. With that in mind, we have 120 employees in utilities and energy management. ENGIE has offered positions to all utility system employees. Any utility employees who choose not to move to ENGIE will retain a university position. ESM: What separated ENGIE-Meridiam from the other bidders? Lehnertz: They caught our attention with their model for removing all interests in coal and their social and
environmental attention to investment in utilities. Those were inspiring to us as we reviewed them, but they also spent just as much time talking about how they had treated employees at Ohio State and other places. We visited Ohio State to see if all of those things were true. Our employees came back, saying, “We would love to work for the company.” I think the ENGIE team that is coming onto our campus will reassure many of those who have some concerns about the new program. ESM: What were some of the financial criteria that determined a P3 was the best option? Lehnertz: We knew we had to set some thresholds for a successful bid. Our current utility system is approximately a $100 million operation on the campus, paid for by the customers of the campus. We reassured and committed that the university shall not suffer from this deal. We secured in our financial modeling that utility costs will go up only as they have historically, with natural cost escalations over time, and not because of the P3 deal. We took a very conservative approach to the financial modeling. We knew if we could receive bids of a certain threshold, we would feel that risks had been mitigated from a financial perspective.
We have established a 501(c)(3) and an associated board that will manage the funds from this investment. We will work with financial advisors to make sure that the returns are good, and we will determine the payout to the university on an annual basis. We picked a partner that gave us confidence against potential non-performance issues, but there are protections in the contract if UI needs to reassume operations. We understand that the length of the contract is important to the vendor to establish the benefits making it viable for them. To that end, we will use a university-wide shared governance process to vet the funding of initiatives that will improve our institution. Lehnertz ends the interview emphasizing the importance of strong leadership. Lehnertz: The University of Iowa President, Bruce Harreld, brought a much-needed entrepreneurial approach to university operations and the P3 agreement. He helped drive UI in the right direction. He was successfully aggressive in partnering with the right organizations to advance this P3, with the purpose to benefit the students
ESM: Do you have any concerns about the P3?
and the institution.
Lehnertz: The length of the contract, 50 years, does present a challenge due to the inevitable unknowns in energy and financial markets. This was a risk that was well considered in UI’s modeling and review of the initiative.
As of February 2020, ENGIE is onboarding UI employees, and a new organization, University of Iowa Energy Collaborative, has formed to own, manage, and execute the P3 agreement.
UNIVERSITY OF IOWA P3 LEADERSHIP TEAM
Bruce Harreld President
Carroll Reasoner Vice President and General Counsel
Senior Vice President, Finance and Operations
University Chief Financial Officer and Treasurer ENERGY SERVICES TODAY
LEADING CHANGE I
n April 2006, the University of California-Davis (UC Davis) became the first institution of higher learning in the nation to form an academic research center exclusively dedicated to energy efficiency. After a decade’s commitment to accelerating the development and commercialization of energy efficient solutions and training future leaders in energy efficiency, in 2017 the UC Davis Energy Efficiency Center became an Institute. While rooted in energy efficiency, the mission of the UC Davis Energy and Efficiency Institute (EEI) has broadened since its inception to focus on sustainable energy systems. The EEI is also home to the new UC Davis Energy Graduate Group, which offers M.S. and Ph.D. degrees in energy systems. According to their purpose statement, they “focus on addressing critical energy challenges and improved energy use through research, education, and engagement.” The EEI accelerates innovation and solves critical energy-related problems through partnerships with a variety of stakeholders, including innovators, investors, manufacturers, installers, consumers, and policy-makers. This collaborative environment is part of the Institute’s very DNA, as it was formed with a challenge grant from the California Energy Fund (CalCEF) and financial support from eight
leadership sponsors: Chevron Corporation, Edison International, Goldman Sachs, Microsoft, Pacific Gas and Electric Company, Sacramento Municipal Utility District, Sempra Energy, and Walmart. The collaborative spirit continues today in the individuals that drive the Institute forward. Since its inception, the EEI has supported the growth of its four affiliated research centers: the California Lighting Technology Center, the Western Cooling Efficiency Center, the Center for Water–Energy Efficiency, and the Plug-in Hybrid & Electric Vehicle Research Center. It has also established robust global impact efforts, educational programs, and research initiatives. Comprised of nearly 50 faculty and dozens of students, the Institute serves as a hub for UC Davis’ energy-related efforts, leveraging its substantial strengths in lighting, HVAC systems, building controls, water, agriculture and food production, renewable energy siting, biofuels, sustainable transportation, fuel cells, batteries and energy storage, behavioral economics, life sciences, health and well-being, and human and community development. The Institute has been involved with many exciting projects to date. A few of these efforts are highlighted here.
“The collaborative spirit continues today in the individuals that drive the Institute forward.” 28
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WEST VILLAGE NEIGHBORHOOD Opened in 2011, UC Davis West Village is the largest planned â&#x20AC;&#x153;zero net energyâ&#x20AC;? community in the United States. The EEI (then EEC) developed a comprehensive energy strategy for West Village that included efficiency measures and on-site power generation to minimize energy demand, such as solar-reflective roofing, radiant barrier roof sheathing, extra insulation, energy-efficient lighting fixtures, and a densely distributed 4-megawatt photovoltaic system. The West Village Neighborhood is the result of a public-private partnership between UC Davis and a private developer. It currently includes 663 apartments, 42,500 square feet of commercial space, a recreation center and study facilities, and the Sacramento City College Davis Center. Located in the commercial space is the UC Davis Energy and Transportation Research Hub, where EEI is located. Currently under construction is a new housing project that will include approximately 1,250 student housing units, a community center and study rooms.
Above: Attendees collaborating at the 2019 Global Energy Managers Workshop. (Photo provided by UC Davis) Below: 2019 Global Managers Workshop (Photo provided by UC Davis)
GLOBAL ENERGY MANAGERS WORKSHOP Because the Institute is dedicated to bringing products, services, and other energy-efficient technologies into widespread use, outreach is an integral mission for its staff. The EEI hosts and participates in numerous energy-related events each year, from large international conferences to small, focused workshops. In 2019, UC Davis hosted the first annual Global Energy Managers Workshop. This was an opportunity to gather facility managers, students, and faculty from around the world to share best practices in campus energy management, education, and community engagement. Some of the sessions focused on the process or evolution of energy efficiency, with topics like Building an Energy Team, Designing Efficient
Buildings, Utility Metering, and Data Analytics. Several keystone sessions examined the DNA of successful projects, including the CSU Long Beach Clean Energy Masterplan, various Stanford Energy Systems innovations, and Capital Projects LEED Certification Summary. The workshop was a tremendous success, and the second annual event will be held this fall from October 5th to 7th. Registration opens this summer, providing an opportunity to engage in a collaborative environment to share and learn from both peers and industry leaders. The target audience for the event is energy managers of large campuses, including those at schools and universities, hospitals, corporations, military complexes, and municipalities. ENERGY SERVICES TODAY
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ABSTRACT Upgrading existing commercial structures is a big business today. It is estimated that 90 percent of the construction activity taking place within the US is classified as a renovation or a retrofit project. Updating the existing lighting system by replacing conventional lighting technologies—fluorescent, high-intensity discharge, halogen, or incandescent—with LED immediately reduces a significant amount of energy needed to illuminate the interior and exterior of a building. According to the most recent Commercial Buildings Energy Consumption Survey (CBECS), 17% of electricity consumed by commercial buildings in the US is for lighting, making it the largest end user of electricity. In addition to dramatic improvements in energy efficiency and lamp life, these new lighting systems can also provide better quality light, improving the look, feel, and functionality of the space. A lighting retrofit has three distinct phases: the lighting audit, the design of the new lighting system, and its installation. Unfortunately, the traditional lighting retrofit process is error prone, often requiring vendors and contractors to rely on incomplete or inconsistent information about an existing system to design replacements resulting in mistakes and costly delays during installation. Another shortcoming in the process is the designer’s limited knowledge of the vast (and expanding) sea of LED products in the market. Typically, the team designing the retrofit system is aware of only a handful of brands and their associated product portfolios. Their lighting designs often feature only those familiar brands producing solutions that may be lackluster and more expensive.
A lighting retrofit has three distinct phases: the lighting audit, the design of the new lighting system, and its installation.
mySupplier is a global technology company that has revolutionized the lighting retrofit process by combining the best technologies currently available with their years of experience in the industry and an encyclopedic knowledge of the price points and performance of much of the current LED market offerings. The result of these efforts is an innovative lighting retrofit process that decreases audit errors, improves design accuracy, streamlines implementation, completes the full scope of service faster and, ultimately, provides customers with a better lighting system at a lower cost of ownership that achieves a greater ROI. Lighting contractors and Energy Service Companies (ESCOs) can realize significant benefits—increased revenue, increased efficiency, increased profitability and achieve greater service scale—by selecting a partner that offers resources tailored to improve the lighting retrofit process.
Let’s take a closer look at how mySupplier has digitized every phase in the lighting retrofit and the value associated with these changes.
QUALITY-CONTROLLED LIGHTING AUDITS The purpose of a lighting audit is to capture as much information as possible about the existing lighting system and the building. The information gathered during the audit is then used by the design team to develop the layout of the new lighting system. The greater the level of accurate detail noted in the audit, the better informed the ultimate design will be. Traditionally, audits were conducted by an auditor walking through the space recording miscellaneous details in a notebook or basic spreadsheet program. The resulting notes were often disorganized and mistake prone. Spelling errors, ENERGY SERVICES TODAY
cryptic short-hand memos, and inconsistent details from one interior space to the next all made it more difficult for designers to determine precisely what type of system they were replacing. It was common for auditors to miss approximately 10% of the lighting fixtures on the job, because an auditor got lost or couldn’t get access to certain areas. Follow-up visits were often required to clear up misunderstandings or missed areas during the audit phase of the project. mySupplier employs, state-of-the-art software specifically developed to identify and acquire the fixture attributes that are most important to a successful specification. Using a tablet, auditors will be prompted to fill in details about fixture mounting styles, dimming performance, color temperature, wiring, control types, and emergency back-up, among other things. Certain qualities can be made required fields based on audit requirements. The software provides cleaner and more comprehensive audits. It alerts auditors to
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missing information, while they are on-site, which reduces errors and follow-up visits and closes the gaps that plague the traditional audit process. Beyond fixture attributes, this lighting audit tool allows auditors to take photos of the existing space and write notes directly onto the image. Now audits can easily capture existing conditions, space types, electrical layouts, and customer needs that will inform the optimal lighting design. With this digital tool, mySupplier audits contain an unprecedented level of detail that is communicated with unparalleled clarity. The improved accuracy and documentation of the mySupplier audits reduce errors and increases the efficiency and speed with which the lighting audit can be completed. This quality-controlled audit process delivers real value to customers. “We were able to audit 50 percent more projects utilizing the mySupplier team, without adding to our staff,” said the CEO at a leading national lighting contractor.
“ VERIFIED & PERFORMANCEENGINEERED DESIGN With LED technology flooding into the market, finding quality products that function as advertised is a critical step in specifying a lighting system that will perform as expected—a step that many companies don’t provide. mySupplier independently verifies the performance of the fixtures they consider for inclusion in their designs. This is one of the ways that they distinguish their design process from others. mySupplier also use seasoned design professionals to run sophisticated lighting analysis that optimize the lighting design of a project and create a generic specification for the replacement system. Designers then compare the performance and qualities of hundreds of pre-approved fixtures to find the optimal solution in terms of price and performance. The extra steps taken by mySupplier in terms of the experience they hire, the sophisticated lighting analysis they perform, the products they vet, and, ultimately, the products they select enables them to deliver lighting retrofit solutions that offer better pricing, better performance, and better value than any competitors in the industry. Designers at mySupplier are experienced professionals who have specified lighting systems for a variety of facility types. They are aware of the unique issues and code-mandated
3D and video simulations can also be performed when requested.
functionalities that these systems must address, and this level of expertise is reflected in the quality of the solutions they produce. Lighting analysis begins with assessing the existing design. By evaluating the lighting layout and photometric performance of the original system, designers can identify opportunities for improvement in terms of light output, energy efficiency, and even lighting distribution. 3D and video simulations can also be performed when requested. Best practices in lighting retrofits recommend that a product-and vendor-agnostic model will lead to the best outcomes. These are the types of models that mySupplier creates. While these designs specify generic fixture type, color temperature, functionality, wiring, etc., the specific fixtures are not identified. After the model is generated, mySupplier teams cross-reference available (and vetted) lighting fixtures to quickly find the optimal solution in terms of performance and price. Once the optimal solution has been identified, the recommended system needs to be effectively reflected in a proposal. With support teams around the world, mySupplier can turn proposals around much faster than industry standard. This can offer a strategic advantage to customers vying to win a client and project.
“With support teams around the world, mySupplier can turn proposals around much faster than industry standard.”
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CLOUD-BASED MATERIALS & PROJECT MANAGEMENT Cloud-based project tracking and project management is an important point of differentiation for mySupplier clients. The cloud-based process turns projects around faster and offers clients greater transparency and access to progress being made throughout the project. The cloud-based process begins when the initial audit report and audit photos are uploaded. Interested parties can view line-by-line reports, audit details and images in real-time and on-demand. There are no outdated drafts or time delays for anyone with access to the cloud. This level of access creates real benefits in the design and implementation phase. During installation, project managers can have real-time information on logistics, scheduling, and task completion. Clients can see the status of materials delivery to each site and the installation status down to the fixture level, which is updated daily. Dashboards will track audit status, project schedules, installation schedules and inspection and compliance reviews.
mySupplier is a women-owned company, supporting national contractors, ESCO’s and National Accounts in implementing lighting retrofit projects. We have a very flexible engagement model, partnering with customers to provide the right lighting solution based on the project requirement to include: · Investment-Grade Lighting Audits · Design Services & Rebate Management · Performance Engineering · Product Vetting and Sourcing · Logistics Management · Turnkey Partnerships Our team of lighting experts have experience in multiple verticals including MUSH markets, C&I, Multi-Family, Senior-Living, National Accounts, and Federal space. All of these services are designed to support our customer's business, develop a partnership where we are seen as an integrated part of their team providing valuable resources to close more business opportunities or even take on a project that would have overextended their current resources. Our corporate office is based in Alpharetta, GA with remote USA offices throughout the country as well as our international team in Canada, South America, and India.
mySupplier has revolutionized the lighting retrofit process by delivering tremendous results by increasing the quality, longevity, and overall experience for their customers and their clients. Customers were also able to achieve unprecedented growth and win larger-scale projects than ever before. This is because mySupplier’s a la-carte services model is designed to provide support in any way shape or form required by the customer. If a customer specializes in installation, but needs help turning around high-performance designs at competitive price points, mySupplier offers the expertise and assistance they seek. If a customer needs help with every stage of the retrofit, from audit to design through installation, mySupplier can offer that as well. mySupplier has revolutionized a problematic process and can offer professional support in precisely any area a customer needs it. 34
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Contact mySupplier’s leadership team to learn more.
RESULTS: BETTER LIGHTING SOLUTIONS & PARTNER SCALABILITY
TOP K-12 FACILITY MANAGEMENT TRENDS
ccording to the National Center for Education Statistics, there were 132,853 K-12 schools in the U.S. as of the 2015-16 school year. In the Fall of 2019, those schools had 56.6 million students in attendance. Student’s needs are changing, and education trends continue to evolve at a rapid pace. It is now more important than ever to be aware of these changing trends and benchmark where your District is today and where it needs to be tomorrow. Performing an evaluation of your school’s design, layout, and technology capabilities will allow you to gain a better understanding of the possibilities available as you plan for the future needs of your District. Below are the top facility management trends that support the comfort, safety, and efficiency of a K-12 School.
BY SITELOGIQ SAFETY & SECURITY 1. Add Security Vestibules Schools have begun to include a security vestibule positioned outside the school building’s front door. The vestibule and other entrances to the school are locked as the school day begins. A school staff member stays inside the central vestibule, controlling who gains entry to the school throughout the day. 2. Enhance Outdoor Design The facility design of play areas, as well as walkways, ramps, parking lots, and carpool zones is essential to student and staff safety and accessibility. School parking lots are packed with traffic, particularly during the drop off and pick up hours. These high-volume areas can result in unsafe conditions, leading to potential injuries or property damage. Transportation or traffic plans for your facilities can help to reduce congestion and create a much safer environment. Areas to address include parking lot design and traffic flow; bussing zones, signage and pavement markings, parent drop-off and pick-up locations.
3. Increase Sight Lines Opening the design of a school building allows teachers and staff to monitor and supervise the students more easily because fewer corridors and corners are blocking their sightlines. Students are less likely to bully or commit a crime if they are in sight. Open designs are achieved by developing an overall creative and simple building layout incorporating wider corridors and staircases, reducing the number of entrances, and increasing the amount of light to inside areas of the building.
CLASSROOM SETTING 1. Incorporate Flexible Learning Spaces Schools should have a student-centered design that can accommodate the way they learn best. Designs can support critical thinking skills, problem-solving, and active learning through things like outdoor classrooms and flexible learning spaces. One study found that 73 percent of all student progress could be traced back to a classroom design that was linked to flexibility and student ownership. Flexible learning ENERGY SERVICES TODAY
spaces should include things like varied seating options for students, movable partitions, and various learning areas such as: • Learning Studios — specifically for lectures or group instruction and look like a classroom but with more flexible furniture options • Learning Hubs — areas near the studios that have interactive learning stations used for team teaching • Group Rooms — semi-private areas for small groups or team activities • One-to-One Rooms — small, private rooms used for private instruction, testing or very small group activities K-12 facility designs should also offer a variety of environments for the students; for example, a small nook where they can go to relax in a quiet area or a big project lab where they can work with other students. Creating connections—both physical and visual—between spaces can encourage a creative, collaborative environment where students can work toward their goals. 2. Provide Digital Environments for Lessons Technology allows students to move outside of their traditional, formal learning areas into different, more laid-back environments throughout the building. This shift could include adaptable furniture or incorporating more smart technology into the classroom. Blended learning or “tradigital” learning encompasses a mix of both traditional classroom elements and the new digital learning environment. Instead of remaining in one place for the majority of the day, “tradigital” learning encourages teachers to incorporate stations that students can rotate around in the classroom. Options may include two to five or more main learning stations, focused on areas such as communication, working independently, technology, collaboration, and creativity. The stations lead to a more personalized learning environment because teachers can focus on specific needs in small groups. 3. Use Technology to Interact with Other Classrooms Technology can also make it easier for students and teachers to interact with others. Using video conferencing technologies, students and teachers can connect with other classes within a school, across the country, and even across the planet for shared learning opportunities or to enhance curriculum and development. For some schools with classroom monitors and iPads, students may connect their iPads to monitors to collaborate with other classes or even host guest instructors and communicate with them. An increasing number of teachers are also taking to social media to work with other teachers and share 36
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ideas on how to keep things new and exciting in their classroom. As technology continues to accelerate, new methods of communication across different classes, and even schools will emerge to make classroom learning an even more interactive experience for students and teachers alike.
Technology allows students to move outside of their traditional, formal learning areas into different, more laid-back environments throughout the building.
4. Reduce Class Sizes Moving away from the traditional classroom of 20-some students makes for a more intimate learning experience for students while reducing the challenges of managing large class sizes. Having smaller classes allows teachers to give students a more personalized learning experience, likely improving their academic achievement. The Student/Teacher Achievement Ratio (STAR) study, one of the most influential studies on this topic, makes an excellent case for class size reduction. The STAR study included 79 elementary schools and assigned students to kindergarten classes at random. Some were in classes of 22-26 students, while others were in smaller classes of 13-17 students. These kids stayed in the same size classes through third grade and were tested in reading and mathematics. Students in the smaller classes had higher test scores compared to students in the larger classes, especially for low-income and minority students. The benefits of small class sizes were reported to extend into the upper elementary grades, and students in small classes were even found to exhibit better behavior in the classroom. Follow-up studies years later found that the students in small classes had better academic and personal outcomes for the rest of their schooling and beyond. Schools have recognized the benefit of class reduction, and, today, 25 states have class size restrictions for at least some grades. Seven other states have established class size goals or incentives. Additionally, 77 percent of Americans report they would rather spend education money on reducing class sizes than paying teachers more.
FACILITY ENVIRONMENT & VIABILITY 1. Install LED Lights Switching to LED lights at your K-12 school is now very cost-effective and has many benefits, such as improved energy efficiency, flexibility and durability, and overall better light quality. Schools often see improvements in academic performance after upgrading to LED lights because they can imitate natural light, which has been shown to enhance alertness, mood, energy, and performance. In addition to an improved student learning environment, you can save significant energy and operational costs switching to LED lights. Compared to incandescent lighting, LEDs last 25 times longer and saves at least 75 percent of your lighting energy. Plus, LED light bulbs are more environmentally-friendly than other types of bulbs, as they are mercury-free and completely recyclable.
more sustainable facility management but need some guidance, look into performance contracting for K-12 schools. With more than 700 team
Upgrading your systems can provide multiple benefits for you and your students...
2. Upgrade or Replace HVAC/Temperature Controls According to the Environmental Protection Agency (EPA), 450 K-12 school districts spend more on energy due to aging infrastructure than is spent on textbooks and computers combined. The average school building is over 45 years of age, according to the National Center for Education Statistics (NCES). That is well past their calculated useful life, even when renovations are included. As school budgets are challenged and costs continue to rise, fewer resources are available for energy, operations and maintenance. The failing HVAC/Control systems then have a negative impact on the student learning environment. Upgrading your systems can provide multiple benefits for you and your students, including not just economic, but improved temperature control, better indoor air quality and even sound attenuation. These improvements have shown to reduce absenteeism, increase student concentration and productivity, and positively impact student test scores. 3. Improve Sound & Air Quality Classroom environments must support clear communication. With up to 60% of daily classroom activities involving speech between teachers and students, or between peers, extreme or inappropriate levels of background noise can pose issues for reading and spelling ability, behavior, concentration, attention and overall academic performance. ANSI-ASA (Acoustical Society of America) design standards call for background noise levels to be below 35 dB(A). 4. Become LEED Certified To take your school’s sustainability to the next level, LEED certification could be a consideration for your facility. LEED (Leadership in Energy and Environmental Design), was formed to enhance buildings’ overall energy efficiency and environmental performance. To become LEED-certified, you must meet a series of prerequisites and then earn points to get to different levels of certification.
members, including professional engineers, project managers, certified energy professionals, architects, and building automation experts to support your project, SitelogIQ partners with public and private schools throughout the U.S. to bring comfort, performance, and efficiency to the classroom through customized school construction and modernization. SitelogIQ can provide knowledgeable master facility planning and contracting and financing options for your District based on the laws and regulations of your state to help you find the best ways to make energyefficient improvements to your facilities to meet 21st-century educational goals. To learn more contact: Mike Taylor
If you want to work toward
VP Sales & Marketing Mike.firstname.lastname@example.org (888) 819-0041 ENERGY SERVICES TODAY
METRO NASHVILLE PUBLIC SCHOOLS IMPLEMENTS PLAN TO REDUCE ENERGY USE & SAVE MILLIONS
etro Nashville Public Schools (MNPS) is a school district that serves the city of Nashville, Tennessee and Davidson County and has a staff of nearly
5,800. Additionally, more than 86,000 students are currently enrolled in the District, comprised of 73 elementary schools, 33 middle schools, 25 high schools, 18 charter schools, and eight specialty schools. The District is also supported by service facilities, including a Central Office, Print Shop, Transportation Building, Supply Center, and a Professional Development Center.
ENERGY MANAGEMENT IMPLEMENTATION MNPS partnered with SitelogIQ in month of April 2019 with the purpose of tracking and reducing energy and water consumption through behavioral and controls-related energy efficiency measures. SitelogIQ began by conducting an assessment of the District’s energy use and consumption behaviors. By studying these trends, the EIQ energy engineers identified opportunities for energy reduction. EIQ Energy Managers performed detailed site audits at 40 of the Districts’ 157 facilities. Based on these audits, key energy conservation measures were compiled, analyzed for potential,
BACKGROUND SitelogIQ has been working with MNPS for over five years
and presented to the District and its stakeholders to demonstrate the feasibility of the program.
on various energy efficiency measures such as smart LED
Due to the positive results they’ve already yielded, MNPS
lighting and various networked controls. Though these var-
has adopted an aggressive, energy-conscious mindset and
ious projects, MNPS has seen firsthand energy savings from
made the success of the program its priority. To date, the
these projects in the range of 40-60% on average. In addition to energy savings, these projects have been focused on maximizing student and employee comfort and safety. Armed with proof that the energy efficiency measures were yielding positive results for the District, the partnership grew in the fall of 2019 to include an energy conservation program through SitelogIQ’s EnergyIQ (EIQ) division, a team of experts focused on bringing together data-driven technology and energy management intelligence to the forefront of facility optimization.
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SitelogIQ EIQ team has taken the following actions to spur along with the progression of the program: • EIQ Data Team developed an interactive dashboard to track energy and cost savings progress throughout the process of the program. • EIQ began supporting MNPS with the hiring of three full-time, onsite Energy Managers. These EIQ Energy Managers work directly with MNPS to aid in the energy management and data analytics services for all 157 facilities, including:
Ongoing staff training and Energy Lessons
Analysis of expected ROI and impact of implementing recommended measures
Strategic recommendations to continuing to build on the energy efficiency measures already implemented
• Forged strong relationships between the SitelogIQ team and District personnel, leading to the development of an interdepartmental committee focused on
reducing energy consumption. • Implemented upgrades to programming to shorten HVAC schedules and limit set-points during periods where sites were not in use. • Developed and executed a shutdown plan that involves all staff, minimizing energy usage during major school breaks: Fall, Winter, Spring and Summer. • Currently in coordination with several District Education Programs, including STEAM and Urban Green Lab to promote outreach of Energy Education.
GOING FORWARD • Complete audits on all sites within the District and develop an Energy Grading System tailored to furthering energy conservation measures • Lead programming efforts to update Building Automation Systems to run HVAC schedules across all capable District sites more efficiently • Develop online resources to further Energy Education outreach and inform the public on the progress of the pro-
PARTNERSHIP HIGHLIGHTS • Between April and December of 2019, energy use has been
gram, further inspiring the City of Nashville to follow suit • Implement recommended energy efficiency measures to
reduced by over 9.4 Million kWh, yielding utility cost
permeate an energy-conscious culture in all directions
savings of $695,095.
• Utility cost avoidance for a 5-year timeframe projected to be $10 Million. • MNPS’s interactive dashboard is complete with multiple methods of comparing energy usage between sites, including the Energy Usage Intensity Map. This map shows
Top-Down through the implementation of policies as rolled out through Senior Management and the Board.
Bottom-Up through educational programs headed by student leadership.
Middle-Out through a collaboration of staff
differences in energy usage per square foot by differing
training, incentive programs, and friendly
sizes in bubbles representing each location (see Fig. 1).
competition between schools.
TESTIMONIAL FROM CASEY N. MEGOW Metro Nashville Public Schools Assistant Director of Facility Planning and Construction “SitelogIQ has been a true partner in creating our district’s conserve energy program. They have been open and honest about our options in building our program. They have offered expert advice and guidance while leading our efforts to implement our program. Working with the SitelogIQ team has been a great experience, and we are looking forward to continuing our work together and realizing continued cost avoidance from our energy conservation program.”
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RESULTS-DRIVEN TEAM CONTINUES TO CHURN ENERGY SAVINGS PERFORMANCE CONTRACTING PROJECTS BY JOSHUA BURNETT
n 2017, the California Department of General Services (DGS) created the Office of Sustainability (OS), some of whose functions were previously housed within other DGS divisions. Consolidating the work under a single team and establishing dedicated resources and leadership emphasized the priority DGS places on addressing the increasing risks of climate change. The functions within OS were not just supported in the statute under Public Utilities Code 388, but also supported by a clear policy direction from DGS’ executive leadership to reduce carbon emissions in state facilities. Nancy Ander, Deputy Director of the DGS OS, explains why this work is so crucial: “We are taking the threat of global climate change very seriously and it is important that the state provide leadership with our own infrastructure to both mitigate climate change and implement adaptation measures to address physical risks. Energy efficiency remains the critical and most cost-efficient first step to reducing our energy use and our emissions.”
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The OS supports state agencies in a portfolio of sustainability initiatives, providing leadership in both statewide sustainability policy as well as in specific operational programs. Recent operational focus areas have included renewable clean energy generation (such as solar and wind power), energy retrofits in existing facilities, and implementation of electric vehicle charging infrastructure to support both our state fleet and workplace charging. On the policy side, the OS has established a policy for zero net energy (ZNE) buildings and is looking forward to developing a zero net carbon policy to support the statewide goal of carbon neutrality by 2045. Ander states, “Sustainability is a priority strategic direction at DGS and involves not just our office, but many other DGS divisions.”
THE ESCO PROCESS OUTLINED One of the core functions of the OS is the Energy Service Company (ESCO) program, led by Program Manager, Valerie Keisler. At any given time, the Office of Sustainability is managing between 12 and 20 open energy savings performance contracting (ESPC) projects from inception to completion. OS’ program is modeled after the U.S. Department of Energy’s federal ESPC process and uses similar terminology, procedures, and a prequalified pool of ESCOs. Keisler’s team identifies which ESCO projects to pursue by following a standard process, which begins with a preliminary audit. At this stage, the team identifies an ESCO through a competitive process, then performs a site audit and cost approximation. All efforts at this point are purely preliminary, and no financial obligations are made. If an ESCO is approved to move to the next stage, the ESCO performs an investment grade audit (IGA). This is a robust, comprehensive effort to develop specific project energy efficiency measures (EEMs) and outline specific costs more fully. When an ESCO moves into the IGA phase, a financial obligation is incurred because of the thorough na-
ture of the audit. Although a monetary commitment exists, it does not guarantee that the ESCO will move to approval: the IGA numbers need to align with the initial estimates developed during the preliminary audit. If deviations are proposed, the ESCO will provide a written justification. Once an ESCO is approved, a formal kickoff meeting is held where the project director outlines his or her objectives, timeline, budget, and other critical specifications. This individual will manage the ESCO project from start to finish. After all the work has been completed, the OS team engages in a measurement and verification (M&V) process with the ESCO to verify the estimated savings, then closes out the project after a final site inspection. Since 2017, numerous successful projects in energy efficiency, renewables and electric vehicle infrastructure have led to increased budget and staffing, and the OS is now made up of 25 people, including engineers, project managers, and construction analysts.
EFFECTIVE COMMUNICATION IS CRUCIAL TO A SUCCESSFUL PROJECT The OS oversees and supports energy retrofits in stateowned buildings, but this effort includes a very extensive team beyond OS. It is particularly critical to coordinate with
the facility management team from the outset. This can involve everyone from leadership at headquarters to the actual site team, including the building manager and building engineer. The headquarters leadership will have the responsibility over project priorities and budgets, while the site team has the greatest insights into actual operational issues and needs. The OS team takes the lead in overseeing the ESCO team and developing potential solutions that are cost-effective and beneficial to the state over the project’s life cycle. Because this can involve extensive coordination with the entire facility management team, effective internal communication is critical, not only for immediate project execution but also for long-term sustainability. “We make sure that we're not doing a project in isolation and then handing it over to those responsible for operating and maintaining the building,” Ander says. “We bring in the building manager and the building engineer at the outset to help us identify critical building measures for integration into our ESCO’s scope.”
THE CALIFORNIA HIGHWAY PATROL WINS BIG WITH A SIMPLE PROJECT One of the most memorable projects Ander and Keisler have overseen to date was a comprehensive LED lighting
Energy Performance and Infrastructure Construction ﬁnance team
Identifying and funding ESPC and essential purpose infrastructure projects nationwide
What sets us apart
Representative of recent relevant experience
Senior Vice President, Public Finance Banker
Senior Vice President, Public Finance Banker
A team that identiﬁes opportunities built upon understanding the current credit and interest rate environment
Established record of success funding ESPC projects
Seasoned knowledge of lenders and their standards
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retrofit across multiple California Highway Patrol (CHP) Academy buildings, which was awarded to Enovity in 2015. The project’s scale was significant and involved renovating training rooms, cooking facilities, dormitory spaces, large storage areas, and service garages for fleet vehicles. Despite its broad scope, the DGS OS was able to meet project objectives within budget constraints. “One of the things we really liked about this project was that it was budget-neutral,” Keisler stated. “We leveraged our state financing program, GS $mart, and were able to accomplish it without any added out-of-pocket expenses from the client department. Although this isn't always the case, when we can facilitate this, it means a lot to departments that don’t have extra cash.” The project was completed in textbook fashion. It started and ended on time, and the ESCO process worked flawlessly. The cost savings were immediate, allowing the CHP Academy to reduce its annual energy use by nearly a million kilowatt-hours.
THE ELIHU HARRIS BUILDING RETROFIT One of the most complicated projects the OS team is currently undertaking is a sophisticated, multi-system upgrade to the 24-story Elihu Harris Building. Project renovations include interior and exterior LED lighting and controls, air duct sealing, and a comprehensive building management system, for a total estimated savings of $717,000 annually. Willdan Group, Inc. was awarded the $9.8 million energy savings performance contract in January 2019, with construction expected to be completed in the third quarter of 2020. The OS team works hand-in-hand with Willdan, scheduling biweekly meetings to discuss projects and updates, and the project manager then passes construction updates through the building manager to each tenant. A rolling three-week “look ahead” schedule is continuously maintained, allowing tenants to plan for any potential work disruptions. The project has high stakes, and for reasons beyond just energy conservation. “This project requires a high level of coordination because it's a multi-tenant building, and all tenants are vital to California’s government operations,” said Keisler. “We don’t want to disrupt client operations.” These departments include the Franchise Tax Board, Department of Justice, Social Services, and the State Senate, among many others. Despite high visibility and consistent pressure, the DGS OS has consistently made the grade. In just three and a half years, the office has transformed from a newly commissioned unit to a well-staffed, high-performing, results-driven team. With nine projects currently in either construction or M&V phase, DGS OS looks forward to many more complex, largescale projects in years to come. 42
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ACTIVE PROJECTS Elihu Harris State Office Building
Willdan Group, Inc.
Napa State Hospital
Patton State Hospital
San Bernardino, CA
Atascadero State Hospital
San Luis Obispo, CA
East End State Office Complex
Mission Valley State Office Building
San Diego, CA
Willdan Group, Inc.
Ronald Reagan State Office Building
Los Angeles, CA
Franchise Tax Board Headquarters
Van Nuys, CA
Willdan Group, Inc.
Van Nuys State Office Building
The projects listed are either in the M&V or construction phase. There are a handful of projects in the preliminary stages.
Deputy Director of the DGS
DGS Office of Sustainability
Office of Sustainability
(Photos by Samantha May)
GET RECOGNIZED BY THE DEPARTMENT OF ENERGY
WRITTEN IN COLLABORATION WITH ENERGY SERVICES MEDIA & FEDERAL ENERGY MANAGEMENT PROGRAM (FEMP)
ince 1981, the U.S. Department of Energyâ&#x20AC;&#x2122;s (DOE) Federal Energy Management Program (FEMP), within the Office of Energy Efficiency and Renewable Energy, has hosted an annual award ceremony to recognize outstanding achievements of federal employees related to energy and water efficiency, distributed energy generation, and fleet management at federal facilities. The Federal Energy and Water Management Awards acknowledges, recognizes, and honors an incredible group of individuals that are advancing federal agency missions
while achieving energy independence, resilience, and security. In 2018, FEMP created the first Award Winning Champions Shared Lessons Learned Forum as part of the awards ceremony. This forum provides a platform and opportunity for federal agencies to share best practices, successes, barriers, recommendations, and lessons learned in an informal setting.
2019 FEDERAL ENERGY & WATER MANAGEMENT AWARDS CEREMONY On October 29, 2019, FEMP hosted
its 39th Award Ceremony at the U.S. Institute of Peace in Washington, D.C. FEMP Director, Robert Ivester, and Deputy Assistant Secretary (DAS) for Energy Efficiency, Alex Fitzsimmons, recognized 28 individuals and teams across the federal government for their contributions in achieving significant energy and water cost savings for their agencies. Many of the winning projects include on-site renewable energy, energy storage, and combined heat and power technologiesâ&#x20AC;&#x201D;a reflection of the growing importance of energy integration and resilience, which are top DOE priorities. Color Guard, 2019 Federal Energy and Water Management Awards Ceremony (Department of Energy photographer, Donica Payne)
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2020 AWARD NOMINATIONS For more information on the 2020 Criteria Guidelines for the 2020 Federal Energy and Water Management Awards competition visit FEMP’s Energy and Water Management Awards website. Nominations must be submitted to FEMP by May 8th, 2020, via FEMP’s Awards Nomination Portal.
Awards are given to federal agencies and federal employees. Private sector companies cannot receive these awards, with the exception of individuals a federal agency wishes to recognize as part of the federal team. Any nominations developed by private sector partners on behalf of federal sites need to be approved and vetted by the federal agency project leads.
FEMP ANTICIPATES PRESENTING 2020 AWARDS IN 5 CATEGORIES
Project Awards for individuals or teams that are exemplary in their implementation of energy and water efficiency, resilience, and technology achievements; distributed energy; cyber security; and/or vehicle fleet management projects.
Program Awards for individuals or teams that implement and institutionalize effective management, policy, and strategy in areas including energy and water-efficient technology and/or process improvements, resilience, distributed energy, cyber security and/or fleet management. Alex Fitzsimmons, Deputy Assistant Secretary for Energy Efficiency, presenting awards at the 2019 Federal Energy and Water Management Awards Ceremony. (Department of Energy photographer, Donica Payne)
Contracting Awards for individuals or teams instrumental in supporting the award of energy performance contracts and/or making notable efforts to enhance procurement practices.
Career Exceptional Service Awards to individuals in recognition of extraordinary service to the federal government over their careers (e.g. 15 or more years).
FEMP Director’s Award to an individual, organization, or team for leadership, benefits through collaboration with FEMP, and/or a replicable model for success that can be transferred across the federal government. This award is given at the discretion of the FEMP Director.
Robert Ivester, FEMP Director, presenting awards at the 2019 Federal Energy and Water Management Awards Ceremony. (Department of Energy photographer, Donica Payne)
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1-ON-1 WITH AWARD-WINNING
HILL AIR FORCE BASE BY JOSHUA BURNETT
ill Air Force Base (AFB), located in northern Utah, is remarkable for several reasons. With an annual economic impact of more than three billion dollars, the base is the largest single-site employer in the state. The 75th Air Base Wing (ABW) oversees 1,000,000 acres and more than 1,700 facilities valued at four billion dollars, making it the second-largest Air Force base by both population and geographic size. The installation supports the Ogden Air Logistics Complex, Air Force Life Cycle Management Center, Air Force Nuclear Weapons Center, Air Force active duty 388th and Reserve 419th Fighter Wings, and over 50 mission partners that employ more than 21,000 personnel. Hill AFB was recently recognized by the Department of Energy (DOE) at the 2019 Federal Energy and Water Management Awards for their recent energy savings performance contract (ESPC) with Energy Systems Group (ESG) in collaboration with DLA Energy. The base is no stranger to implementing energy efficiency measures, utilizing the ESPC procurement vehicle to do so. Over the last twenty years, Hill AFB has executed six task orders: three with Honeywell and three with Ameresco. One of the ESPCs was the first contract under DOEâ&#x20AC;&#x2122;s alternative fuels ESPC contracts. Ameresco installed a landfill gas
plant that runs off of methane sourced from the county landfill a few miles outside of the base. It produces 2.2 megawatts of electricity and was recognized as a substantial advancement in the baseâ&#x20AC;&#x2122;s support of alternative energy sources. Other projects include infrared heating, large-scale lighting, and a small solar array that captures another 211 kilowatts of electricity. These contracts were initially executed in the early 2000s and are coming to the end of their lifecycle. One expired last year, and Hill AFB bought out three more to prepare for another ESPC. The final two contracts with Ameresco are still active; the most recent ESPC with Energy Systems Group is in the construction phase. Nickolas King is the base energy manager and is also the contracting officer representative for the ESPC installation. As the single point of contact for ESPC-related issues, all submittals, questions, approvals, commissioning sign off efforts, and day-to-day management of the contracts are his responsibility. He reports directly to the contracting officer at DLA Energy, who provides contracting support. In this interview, King shares his experience working on an award-winning energy savings performance contract.
PROJECT STATS TERM
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Hill AFB receiving their award at the 2019 Federal Energy and Water Management Awards Ceremony (Pictured Left to Right) Alexander Fitzsimmons (Deputy Assistant Secretary for Energy Efficiency, DOE), Keith Carvalho (Contracting Officer, DLA Energy), Brian Walsh (Resource Efficiency Manager, Hill AFB), Nickolas King (Base Energy Manager, Hill AFB), Karen Bastian (Energy Conservation Tech/Outreach Coordinator, Hill AFB), Mark Correll (Deputy Assistant Secretary of the Air Force for Environment, Safety, and Infrastructure), and Rob Ivester (Director, Federal Energy Management Program, DOE). Photo by Department of Energy photographer, Donica Payne
ESM: What sparked the interest and need to pursue another
It was a significant effort and took quite a bit of time.
ESPC within the last couple of years?
When the project was submitted, the initial scope included over 40 Energy Conservation Measures (ECMs);
King: Most of the previous ESPCs were awarded in the early
that is a pretty high number even for a procurement ve-
2000s, and it had been quite a while since we had made
hicle of this size. As we went through and evaluated each
any substantial new efforts to increase our energy effi-
proposal, we invested time assessing projects and slowly
ciency. We determined that there was a significant op-
worked through the list. When the project was awarded,
portunity to utilize new technologies. We knew that a
the scope included seven separate ECMs.
new ESPC was going to come around eventually, and we wanted to be ready, so in 2015 we began the initial work
ESM: When you are sourcing an Energy Service Company
of putting one together.
(ESCO), what do you look for in a partner?
ESCO: ENERGY SYSTEMS GROUP (ESG) NUMBER OF BUILDINGS IMPACTED
Overall energy consumption will be reduced by 9% and the energy costs will be reduced 13%. The distributed/renewable energy portfolio will increase by 30%.
PNEUMATIC TO DDC CONTROLS
STEAM DISTRIBUTION INSULATION
SOLAR ARRAY (3.55MW)
INDUSTRIAL AIR VENTILATION
DIP TANK COVERS
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We try to strike a balance between good stewardship of those resources while achieving the best overall outcome for the project.
King: At the base level, we want someone who has experience in the ECMs we are looking to implement. The landfill gas plant, for example, was the first that the Air Force had ever attempted, so we did not have a lot of expertise in that specific technology. Another example is the combined heat and power project. The ESCO showed that they have already built several similar systems and walked us through some of the challenges and solutions they had previously encountered. In addition to expertise, the cost is a constant priority. We are not the final say on procurement price at the installation level, but we always keep in mind that we are spending tax dollars. We try to strike a balance between good stewardship of those resources while achieving the best overall outcome for the project. We take our due diligence seriously to avoid a situation where we have paid a lot of money for something that does not end up working as well as we had expected. Another thing we look for in a winning bid is a company that has a well-developed project management team. We have learned the value of having a fully developed commissioning plan in place before the project is awarded: this should be one of the top priorities and never an afterthought. A good ESCO team is heavily involved throughout the entire process, from project development to commissioning. It is not uncommon for engineers who
initially worked on project development to be assigned to other tasks; changing the team makeup can present a new challenge. ESM: What were some key ECMs that set the project apart and led to award-winning results? King: Since we were still in the construction phase when we submitted the project, we submitted it under the Innovative Contracting Efforts. What sets the ECMs apart is the inclusion of process-centered ECMs. These efforts affected one of our largest tenants, the Ogden Air Logistics Complex, where they perform maintenance on aircraft and aircraft components. We included several ECMs that were directly related to their processes, which required a lot of coordination to ensure the improvements did not negatively impact the workload. One of these ECMs was dip tank improvements, where we installed lids on top of the tanks to allow us to close them off when not in use. This reduced the amount of heating needed in each tank. Historically, the base has focused on more typical projects. It has become a priority to build energy efficiency into processes. We focused on efficiency within the contract itself, taking advantage of opportunities for utility incentives throughout the contract lifecycle. We worked hard with ESG during the project development to identify what those potential energy utility incentives were
PROJECT DOE AWARD RECIPIENTS KAREN BASTIAN
Energy Conservation Tech/Outreach Coordinator, Hill AFB
Base Energy Manager,
Manager, Hill AFB
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going to be; to date, we have gathered over $600,000 just from lighting improvements alone, and that all goes to help pay for the improvements that we have made. ESM: What advice would you give to other military bases that are interested in an energy savings performance contract? King: Before working with your contractor, have a clear definition of the ECM scope. Try and work through as many challenges as possible before you hand it off to the contractorâ&#x20AC;&#x201D;that will significantly help the IGA
development. We have focused on building our local teams so that we can go out, perform the investigation, and identify the scope and projected savings before we put it out to bid. Do not get discouraged about some of the internal steps that you have to take. It is a lot of work to execute a project of this size and complexity. Prepare yourself for the amount of time required to see a project through to completion. The benefits that you can achieve far outweigh the effort you will put into it.
Nickolas King is the Base Energy Manager for the 75th Civil Engineering Group at Hill Air Force Base in Utah. Hill Air Force Base is the Air Force's second largest base by population and geographical size, and fourth largest in energy consumption. The 75th Air Base Wing is the host unit at Hill Air Force Base and oversees 1,000,000 acres and over 1,700 facilities valued at $4B while providing installation support for Ogden Air Logistics Complex, Life Cycle Management Center, Nuclear Weapons Center, 388th and 419th Fighter Wings and more than 50 other mission partners that employee more than 21,000 personnel. The base also has support responsibility for the operation of the Utah Test and Training Range. Located in Utahâ&#x20AC;&#x2122;s west desert, the airspace is situated over 2.3 million acres of land and contains the largest block of overland contiguous special-use airspace in the continental United States. King has a B.S. in Construction Management with an emphasis in Facilities Management from Weber State University. King has been at Hill since 2006 working in various capacities including environmental remediation, project management, and energy management.
L L II G GH HT T II N NG G T TH HE E P PA AT TH H T TO O R RE ES S II L L II E EN NC CY Y
NAESCO accredited Energy Efficiency Contractor, NAESCO Energy Efficiency backed byaccredited 26 years of experience and Contractor, expertise backed bySavings 26 yearsPerformance of experience and expertise in Energy Contracting and in Energy Savings Performance Contracting and UFC implementation. We are the national partner UFC implementation. We are national partner for lighting design, audits, andthe retrofits. for lighting design, audits, and retrofits.
Mara LaVoice 1-800-690-0420 Mara LaVoice 1-800-690-0420 www.GreenTechEnergy.com www.GreenTechEnergy.com
Federal Agency experience includes the U.S. Federal Agency experience includes the U.S. Department of Defense, Department of Veteran Department of Defense, of Veteran Affairs, General Services Department Administration, and Affairs, General Services Administration, and Department of Corrections. Department of Corrections.
INSIDE THE IMPLEMENTATION OF THE
HILL AIR FORCE BASE ESPC BY JOSHUA BURNETT
nergy Systems Group (ESG) is an accredited Energy Service Company (ESCO) that provided energy savings performance contracting (ESPC) services to three federal agency projects that were recognized by the Department of Energy (DOE) Federal Management Program (FEMP) in 2019. Two of these occurred on Air Force bases (AFB): Hill AFB in Utah and Eglin AFB in Florida. Robert Phillips is the lead ESG operations manager for the Hill AFB ESPC. Phillips and his team, led by project manager Pat Roemer, strategized, scheduled, and executed the implementation of the seven Energy Conservation Measures (ECM) that make up the 91.1 million-dollar project. The planning phase involved strategically drafting both a short and long-term schedule that governed both
overall installation efforts as well as timelines for each piece of the project. Roemer recognized that, although the entire ESPC effort was a single venture, it consisted of seven mini-projects, each with its own schedule, points of contact, specifications, and budget. He treated each ECM as a standalone project, approaching the overall undertaking as if it was a puzzle. Roemer and his team utilized the critical path method to determine how all of the pieces would fit together most efficiently. Throughout the planning process, one of the crucial factors the team had to incorporate into their plans was how the ECM implementations impacted the normal operations tempo of the Air Force base. Many areas of the installation involved restricted access for either the building itself or the
The availability of the work area can prove to be a real challenge. Your daily schedule is impacted by the priority and operation of the base because you can’t stop their process— you have to find ways to work inside of it.
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general area in which the building was located, requiring a tremendous coordination effort. Scheduling could involve a unique point of contact for every step, and timelines were occasionally very strict. Phillips describes the challenges in this way: “The availability of the work area can prove to be a real challenge. Your daily schedule is impacted by the priority and operation of the base because you can’t stop their process—you have to find ways to work inside of it. Sometimes you can only work at night or on weekends, and occasionally you could only get access during a holiday.” The ECM priorities were determined by starting with projects that would provide the most immediate savings with the least amount of effort. In this case, the first ECM slated for completion was LED lighting retrofits, which encompassed 300 buildings across the base. Once the LED lighting retrofit ECM was underway, the team began the second phase of planning. The second phase involved a tremendous amount of time and detail for several reasons. First, one of the factors the
team had to take into account was the design aspect of each ECM, which in some cases, could take up to a year to complete. Secondly, a handful of ECM’s involved changing a process; this required incredible attention to detail because a government process was being changed. There was no room for error. The third phase focused on buyouts. Roemer looked at all of the ECMs and evaluated them based on how long their lead times were, the engineering duration for each one, and how all of the factors impacted pricing. He created an overall priority matrix that determined his team’s buyout approach, and the effort proved to be tremendously successful. Although the project was both long and complicated, Phillips’ guidance ensured success. His “can-do” attitude that treated each obstacle as an opportunity was often the difference between consistently completing project stages ontime and getting bogged down in the details. “You always end up getting a mix of easy and hard, and you work your way through it,” he said.
In addition to the Hill Air Force Base, ESG was also a part of the award-winning efforts at the National Aeronautics and Space Administration (NASA) Glenn Research Center and Eglin Air Force Base. Both received award recognition at the 2019 Federal Energy and Water Management Awards.
NATIONAL AERONAUTICS AND SPACE ADMINISTRATION GLENN RESEARCH CENTER CLEVELAND, OHIO
NASA Glenn Research Center implemented a $14.8 million energy savings performance contract that includes nine energy and water conservation measures at Lewis Field and Plum Brook Station. This project is exceptional for its scale, site-wide perspective, and broad scope that spans diverse facilities separated by 50 miles, and includes measures to improve heating, ventilation, and air conditioning, lighting, and potable water systems. The project is saving 61.8 billion Btu and 7.2 million gallons of water per year. In the first year, the estimated energy, water, and maintenance cost savings totaled $1.2 million.
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EGLIN AIR FORCE BASE EGLIN AIR FORCE BASE, FLORIDA
Eglin AFB awarded a $57.8 million ESPC that includes energy conservation and resilience measures, a microgrid, and solar arrays and combined heat and power systems capable of producing 121 billion Btu annually. As part of the ESPC, Eglin also entered into a unique agreement with Okaloosa Gas District, allowing resilience assets to be supported under the terms of the ESPC contract vehicle. Together the projects are estimated to reduce total electrical consumption by approximately 35%, or 50 billion Btu, and will save nearly $4.4 million annually.
ASK AN EXPERT
Q & A WITH FINANCE BANKER
SENIOR VICE PRESIDENT, D.A. DAVIDSON & CO. Q. What are the top criteria that impact the lender assessment of an Issuer? A. The bankability of the Issuer is driven by project specific technical, managerial, and financial (“TMF”) considerations, the quantitative metrics of the Issuer, and the “goodness of fit” qualitative metrics of the Issuer. The following questions can assist ESPC providers through the process of vetting potential clients. The Dodd–Frank Wall Street Reform and Consumer Protection Act, which became effective in 2010, made it imperative for Issuers, their consultants, and ESCOs to engage with the necessary external finance professionals as early as possible in the project funding lifecycle. This is to benefit the modeling of the project and finance structure so they are closely in concert with each other, and in the best interest of the Issuer to help avoid known conflicts of interest.
UNPACKING TMF ON THE SIDE OF THE ISSUER: THE QUANTITATIVE Technical • Is the project scope well thought out and well documented? • Are the projected / guaranteed savings reasonable and conservative, relative to the Investment Grade Audit, business case, or the scoping document (collectively the “IGA”)? Is the IGA a true “deep dive”: a comprehensive and complete analysis of the needs and proposed solutions? • Are the solutions provided the most beneficial solutions to the Issuer? • Has the Issuer been actively engaged in the review of the IGA as well as the underlying/governing contract document,
the performance-based contracting methodology, and the performance guarantee or is the Issuer a bystander? Managerial • What is the recent and long term history of financial disclosure and transparency of the Issuer? • Has the Issuer been proactive in investing in/budgeting for the maintenance of its physical assets and equipment? • Has the Issuer been mindful of and compliant with existing loan covenants, required operating ratios, required coverages, etc.? • What is the combined general and enterprise debt load, term, and financial as well as operating covenants relative to the overall general fund and enterprise fund budgets? Financial • Irrespective of a performance guarantee, is the project cash-flow positive? • Are a disproportionate amount of the projected savings developed through operational optimization, efficiency (labor and productivity), projected useful life, etc. or measurable energy savings and direct maintenance savings? • Does the Issuer have the capacity and demonstrated willingness to fund a performance shortfall without the need to exercise the annual make-whole provision of the performance guarantee?
GOODNESS OF FIT: THE QUALITATIVE • What are the broad brush issues and trends of the Issuer and its service area, region and state in regards to population, enrollment, employment, construction permitting, ENERGY SERVICES TODAY
ASK AN EXPERT
changes in assessed values, employment trends, taxpayer or employment concentrations, etc.? More Issuer-centric matters of best practices, longevity, management continuity, visioning, strategic planning, labor relations, voter/customer engagement, etc. all weigh in the credit underwriting. In a project funding lifecycle (as opposed to a project lifecycle), Lender concerns addressed early and remedied may result in a corresponding increase in a willingness to consider the Issuer, a willingness to go longer term, and a willingness to obligate at more competitive interest rates. Based on market surveys and experience: Lenders are underwriting primarily to the credit of the Issuer, not the
balance sheet of the ESCO or the performance guarantee. By the ESCO dialing in and engaging with the external finance professionals as early in the process as possible, optimally during the IGA phase, the credit story can be built and presented to Lenders in order that the ESCO can accurately represent the savings/funding costs to the Issuer. Next issue: Lender assessment of the Energy Savings Contract Provider If you have a question or issue related to the financing of energy savings performance contracting/essential purpose infrastructure financing please direct it to Julie Chesna, Editor, at email@example.com.
CHARLES ZITNIK, SENIOR VICE PRESIDENT, D.A. DAVIDSON & CO. A 35+ year veteran with a clear vision of the industry. Zitnik carries extensive experience in the structuring of multiple revenue stream tax advantaged project financing. An advocate of early stage life cycle development finance and transition finance, Zitnik is a proven catalyst in the establishment of innovative patterns and directions in the energy savings finance field. D.A. Davidson & Co. is a 1,300 employee brokerage firm with offices coast to coast. Zitnik holds an undergraduate degree from the University of Kansas and a Masters of Business Administration from Rockhurst University with additional coursework at Columbia University. Zitnik has been with Davidson and its predecessor firm for over 20 years.
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ADAPTING TO CHANGING EXPECTATIONS
BY TIM UNRUH
nvironmental, Social and Governance (ESG) investing means investing with a purpose to both seek positive returns, but also to have a long-term impact on society and sustainability. With the increasingly frequent and severe symptoms of global climate change affecting our lives, the importance of energy efficiency, sustainability and resiliency is present every day. With renewable power becoming cost effective, what the future holds for our traditional methods of energy production and distribution, power generation, transmission and consumption is uncertain. What’s indisputable, though, is the need for investors and executives in the U.S. energy sector to prepare for the inevitable: changing expectations. It’s for this reason that we at the National Association of Energy Service Companies (NAESCO) are determined to make 2020 a year of reflection and renewal—a year of building trust among our customers, member and non-member energy service companies (ESCOs), policymakers, investors and other stakeholders in the U.S. energy community. With our roots in the energy crisis of the 1970s, ESCOs in the United States have for decades been critical in helping thousands of customers navigate the risks associated with energy scarcity, rising costs, changing regulatory environments and activist investors and consumers. The current U.S. energy efficiency market that ESCOs have built is worth nearly $100 billion, supports millions of jobs and, most importantly for today’s ESG investor, cuts millions of tons of greenhouse gas emissions on an annual basis.
Simply put, together ESCOs—many of whom are proud NAESCO members—are credited with the modernization of America’s building infrastructure. As a result, ESCOs are rightly considered an essential piece of any energy sustainability, security or resiliency puzzle. But the advent of ESG-principled investment, governance and consumption makes this puzzle more complicated. For ESCOs and their customers, this spells a unique opportunity.
Timothy D. Unruh, Ph.D., PE, CEM, LEED AP Executive Director National Association of Energy Service Companies
As the Deputy Assistant Secretary, Dr. Unruh managed the nation’s
“For ESCOs and their customers, this spells a unique opportunity.” In 2020 and beyond, NAESCO—as the leading advocacy and accreditation organization for ESCOs—will seek to build upon the proven success of the industry’s public-private partnerships model that’s delivered America’s major energy consumers vital energy expenditure and emissions savings for years. We at NAESCO understand that while energy savings remains crucial in the performance contracting market, rapidly evolving consumer expectations require increasingly more of our member and accredited companies. Like our members, we must and are adapting to a maturing marketplace. Our organization’s founding mission—to be a vocal and visible advocate, educator and leader for our industry—resonates today more than ever.
renewable power research, while also providing oversight to the Grid
NAESCO National Association of Energy Service Companies
Modernization Initiative. Also while at the DOE EERE, Dr. Unruh directed the Federal Energy Management Program (FEMP). As FEMP Director, Dr. Unruh oversaw the implementation of policy and actions that resulted in energy efficiency
Dr. Timothy D. Unruh is the Executive Director
implementation, renewable energy adoption, and reductions in energy and
of the National Association of Energy Service
water use in Federal government operations. Dr. Unruh coordinated with DOE
Companies (NAESCO). In this role, he manages
national laboratories and other Federal agencies in that capacity.
the representation of its member Energy Service
During his career, Dr. Unruh has performed numerous assessments, project
Companies. NAESCO provides advocacy for the
analyses, and energy engineering services for an array of facility types.
industry at the Federal, State and Local levels, and
He is involved in the development of electrical power quality standards
provides for member company Accreditation.
with the Institute of Electrical and Electronics Engineers (IEEE) Power
Prior to this role, Dr. Unruh was the Deputy
Assistant Secretary of Renewable Power at the Energy Efficiency and
Dr. Unruh has doctorate, master’s, and bachelor’s degrees in electrical
Renewable Energy (EERE) Office of the US Department of Energy (DOE).
engineering from Wichita State University in Wichita, Kansas.
ENERGY SERVICES TODAY
ENERGY SERVICES COALITION 9TH ANNUAL MARKET TRANSFORMATION CONFERENCE
ctober 26th-28th, 2020, Energy Services Coalition is hosting its 9th Annual Market Transformation Conference at the Driskill Hotel in Austin, TX. If you are in a position of managing, developing, implementing or marketing guaranteed energy savings performance contracting (GESPC) programs, products or services, this conference is designed for you! The conference will offer a broad range of topics for those involved in the GESPC community and will also feature a number of networking opportunities. These networking opportunities are designed into the conference schedule for exhibitors and attendees to maximize their conference experience. The ESC Market Transformation Exhibit Expo will feature displays of the latest technologies and trends in energy efficiency products, strategies and services from conference sponsors.
The Energy Services Coalition (ESC) is a national nonprofit organization composed of a network of experts from a wide range of organizations working together at the state and local level to increase energy efficiency and building upgrades through guaranteed energy savings performance contracting. The ESC has a network of nearly 30 state chapters located throughout the country. These state chapters reflect the same public/private partnership approach as the national organization. Each is headed by two co-chairs, with representation from a state energy office and an ESCO. ESC’s first state 54
ENERGY SERVICES TODAY
chapter was formed in Colorado in 2001. The main mission of state chapters is to provide statewide on-the-ground education on performance contracting. ESC provides its members with many resources to facilitate performance contracting projects, energy efficiency improvements, and building upgrades. • Informative and interactive meetings at various locations across the country provide a forum to address performance contracting issues and to develop business relationships. These meetings also facilitate stateto-state information exchange on “best practices” in marketing and implementing performance contracting projects. • Workshops on project development, financing, and energy savings performance contracting provide information on new energy-saving technologies and financing options for building and facility owners. • Other benefits available to ESC members include: problem-solving services on performance contracting and financing for building and facility owners, and free educational and technical materials, including standardized documents, such as sample Requests for Proposals and contracts. • Features of the ESC web site include: a listing of individuals representing service providers in each state, and a web-based public sector discussion forum for asking and answering questions about upgrading buildings, performance contracting, and energy efficiency projects. Chapter Activity: New Hampshire’s ESC Chapter recently became active.
ESC Contact Information: www.energyservicescoalition.org firstname.lastname@example.org Conference Contact: Tracey Kohler email@example.com
PRE-QUALIFIED ESCOs S everal State Energy Programs have pre-qualified Energy Services Companies (ESCOs) that have been vetted to be eligible to compete for projects with respective state agencies. This allows the State to develop efficient program delivery standards by identifying companies that meet the minimum requirements of the state. This is an important process for state agencies to be able to select appropriate companies. Please bear in mind that this is a partial list, as some states are currently developing or renewing their lists or did not respond to Energy Services Media. The lists shown were copied from the stateâ&#x20AC;&#x2122;s published listing. We will continue to add and update the listing each issue. Other lists
ARKANSAS Ameresco Bernhard Energy Clear Energy Energy Systems Group Entegrity Excel Energy Group Johnson Controls McKinstry Noresco Performance Services Scenic Hill Solar Todayâ&#x20AC;&#x2122;s Power Trane Arkansas
that can be used are the NAESCO list of Accredited Energy Services Providers/Energy Services Companies or the U.S. Department of Energy (DOE) list of qualified providers. While these lists play important roles in each market, it is important to understand that there are many other ESCOs, not on the list, that may be delivering services in that respective market that have strong operational capabilities. For questions, reach out to the State Energy Office or State Energy Program for advice and direction.
Note: Listings were copied from the state's published pre-qualified ESCO list.
Arkansas Energy Office Chet Howland firstname.lastname@example.org
CALIFORNIA ABM Aircon Energy, Inc. Ameresco, Inc. CEG Solutions ENGIE Enovity Noresco Pacific West Energy Solutions SeaPac Engineering, Inc.
Siemens SitelogIQ SLS Energy Solutions Syserco, Inc. Trane Willdan Department of General Services Office of Sustainability Valerie Keisler Valerie.Keisler@dgs.ca.gov
COLORADO AECOM ENERGY SERVICES TODAY
Ameresco CEG Solutions LLC Honeywell Building Solutions Iconergy Johnson Controls Inc. McKinstry Mid-State Energy, LLC. Schneider Electric Siemens Industry, Inc. Trane/Ingersoll Rand Willdan Performance Engineering Yearout Energy Services Company, LLC Colorado Energy Performance Contracting Program CEO_EPC@state.co.us
DELAWARE ABM Building Solutions Ameresco, Inc. Opterra Energy Services CM3 Building Solutions Incorporated Constellation Energy Project and Services Group ConEdison Solutions Energy Systems Group Honeywell Building Solutions, SES Johnson Controls McClure Company NORESCO PEPCO Energy Services Trane Schneider Electric Siemens Industry, Inc. The Efficiency Network, Inc. Delaware Sustainable Energy Utility, Inc. Anthony (Tony) DePrima 302.883.3048
GEORGIA ABM AECOM Ameresco ConEdison Solutions Energy Systems Group ENGIE Honeywell 56
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Johnson Controls Noresco Schneider Electric Siemens Trane Wendel Georgia Environmental Finance Authority Kristofor Anderson email@example.com
HAWAII Aecom Technical Services, Inc. CEG Solutions LLC ENGIE Services US Inc. Johnson Controls, Inc. Noresco, LLC Siemens Industry Trane U.S. Inc. Hawaii State Energy Office Alan Yonan Jr. firstname.lastname@example.org
INDIANA A Hattersley & Sons Inc. ABM Industries Ameresco Inc Bowen Engineering CMTA, Inc. Energy Systems Group, LLC F.A. Wilhelm Construction Company, Inc. Honeywell International Inc. Johnson Controls Inc. Johnson Melloh Solutions, Inc. Kokosing Industrial Inc Mac Construction and Excavating, Inc Noresco LLC Perfection Group, Inc Performance Services, Inc. Precision Control Systems, Inc. PSG Energy Group Reynolds Construction, LLC Selge Construction Shambaugh & Son, LP Siemens Industry Inc. SitelogIQ, Inc. SmartWatt Energy Inc.
Thieneman Construction Inc Trane Department of Local Government Finance 317.232.3777
KANSAS Ameresco, Inc. CEG Solutions LLC Control Technology & Solutions, LLC Energy Solutions Professionals, LLC ENGIE Services US, Inc. Entegrity Energy Partners, LLC Johnson Controls, Inc. Navitas, LLC Noresco, LLC Schneider Electric Trane US, Inc. Willdan Energy Solutions Kansas Energy Office 785.271.3352
MARYLAND Ameresco, Inc. CEG Solutions, LLC. CMTA Inc. Constellation New Energy, Inc. Energy Systems Group, LLC (ESG) Honeywell Buildings Solutions NORESCO, LLC. Schneider Electric Buildings Americas, Inc. Siemens Industry, Inc. Office of Energy Performance and Conservation David St. Jean David.StJean1@maryland.gov
MINNESOTA AMERESCO, Inc. Consolidated Edison Solutions, Inc. Control & Technology Solutions LLC ENGIE Services U.S. Inc Harris Mechanical Contracting Company Honeywell Johnson Controls Inc.
McKinstry Essention, Inc. Noresco, LLC Siemens Industry, Inc. Trane U.S. Inc. Minnesota Department of Commerce EnergySavings.Programs@state.mn.us
MONTANA Ameresco Iconergy McKinstry Johnson Controls Montana Department of Environmental Quality Ron Pecarina email@example.com
NEVADA Ameresco ENGIE Services U.S. Inc. Johnson Controls, Inc. McKinstry NORESCO Siemens Industry, Inc. SmartWatt Energy, Inc. Trane US, Inc.
Black and Veatch Brady Trane Burns & McDonnell ConEdison Solutions Energy Systems Group, LLC Honeywell International, Inc Johnson Controls, Inc. NORESCO OpTerra Energy Services, Inc. Performance Services Inc Piedmont Service Group Schneider Electric Buildings Business Siemens Industry, Inc, Building Technologies Div Trane U.S. Inc. Wendel Energy Services Department of Environmental Quality Reid Conway firstname.lastname@example.org
Ameresco, Inc. CEG Solutions LLC ENGIE Services U.S., Inc. Johnson Controls, Inc. McKinstry Essention, LLC Yearout Energy Services Company Trane U.S. Inc.
Ameresco ABM Building Solutions The Brewer-Garrett Co. Constellation Energy Systems Group Honeywell Building Solutions Johnson Controls McClure Company NORESCO OpTerra Energy Services Signify Reynolds Energy Services Schneider Electric Siemens Industry, Inc. Stark Tech Group dba SmartEdge SmartWatt Energy, Inc. The Efficiency Network Trane
New Mexico Energy, Minerals and Natural Resources Department Harold Trujillo Harold.Trujillo@state.nm.us
Foundation for Renewable Energy and Environment (FREE) Pam Hague email@example.com
ABM Building Services Ameresco, Inc
ABM Building Service, LLC AECOM Technical Services, Inc.
Nevada Governorâ&#x20AC;&#x2122;s Office of Energy Lorayn Walser firstname.lastname@example.org
Ameresco, Inc. CMTA Energy Solutions, Inc Consolidated Edison Solutions Energy Systems Group, LLC Honeywell Building Solution Johnson Controls, Inc Noresco, LLC Schneider Electric Siemens Industry, Inc. Southland Energy The Energy Network (TEN) Trane U.S., Inc. Wendel Energy Services, LLC Department of Mines, Minerals & Energy Charlie Barksdale Charlie.Barksdale@dmme.virginia.gov
WASHINGTON Ameresco, Inc. Apollo Solutions Group ATS Solutions, Inc. Integrity Energy Services Johnson Controls, Inc. MacDonald-Miller Facility Solutions McKinstry Essention Siemens Industry, Inc. Sunset Air Trane U.S., Inc. University Mechanical Contractors Willdan/Abacus Energy Solutions Washington State Department of Enterprise Services Roger Wigfield Roger.Wigfield@des.wa.gov
WYOMING Ameresco, Inc. Apollo Solutions Group Johnson Controls, Inc. McKinstry Essention, LLC NORESCO, LLC Energy Systems Group Rocky Mountain Trane Iconergy Wyoming State Energy Office Sherry Hughes email@example.com ENERGY SERVICES TODAY
Cover Feature Johnson Controls Lyle Schumann Director of Business Development Performance Infrastructure (651) 775-7548 Lyle.C.Schumann@jci.com D.A. Davidson Charlie Zitnik Senior Vice President, Public Finance Banker (816) 360-2276 firstname.lastname@example.org
Energy Services Coalition Jim Arwood Executive Director email@example.com
Steve Goehl Senior Vice President, Public Finance Banker (816) 360-2278 firstname.lastname@example.org
GreenTech Energy Services Mara LaVoice Vice President of Sales and Marketing (856) 439-9400 ex 225 email@example.com
mySupplier Taresh Grover Taresh.firstname.lastname@example.org Anita Reed Anita.email@example.com Nenni & Associates (815) 899-9421 firstname.lastname@example.org SiteLogIQ Mike Taylor VP of Marketing & Sales Operations 952.290.3200 email@example.com
National Association of Energy Service Companies (NAESCO) Nina Kogan Director of Operations (202) 822.0952 Nina.Kogan@naesco.org Nexus Solutions Russ Schumacher Director of Design Services 763-201-8400
Energy Services Media is the premier media platform for the energy services industry. We have separated ourselves from the vast array of media outlets for the ENERGY industry by narrowing our focus solely on the ENERGY SERVICES industry and the public sector consumers. The platform was created to take the industry to the next level and fill a void in media coverage. Currently, several media outlets broadly cover the energy and facilities management industry but overlook the large and growing multi-billion-dollar energy services industry. The existing outlets try to be everything to everyone; Energy Services Media is different. With our narrow focus, we funnel the value of the energy services industry to the key decision-makers in the public sector. Energy Services Media headquarters is located in Elmhurst, IL. Visit our website at www.energyservicesmedia.com to stay up to date on the latest news, industry events, and published RFPs.
ENERGY SERVICES TODAY
Nexus Solutions is dedicated to creating safe, healthy and engaging learning environments for public schools Our comprehensive approach integrates innovative designs, energy-eďŹ&#x192;cient infrastructure and 21st century learning spaces to deliver solutions that inspire students and cultivate communities.
By partnering with public schools of all sizes, Nexus has revolutionized the industry and transformed the facility planning process into a comprehensive approach that helps our clients meet the facility needs of their communities.
Our goal is to deliver performance on all levels, by creating thriving facilities that enhance student outcomes and increase community value.
With Nexus at the core of your facilities plan, your vision for a thriving facility can be achieved.
Better Buildings. Better Learning. NexusSolutions.com
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Energy Services Media 312 E Van Buren St Elmhurst, IL 60126
Join us October 26-28, 2020 in Austin, TX for the Energy Services Coalition’s 9th Annual
CONFERENCE at Austin’s Original & Iconic Hotel, The Driskill!
• In-Depth Panel Discussions • GESPC Policy and Program Intel
• Leveraged Networking & Partnering • and…LIVE MUSIC EVERY NIGHT!
Contact Tracey Kohler at firstname.lastname@example.org for more information for both attendees and conference sponsors.