February’s Michigan Energy Forum event, Financing Your Commercial Energy Project, will focus on highlighting an array of financial mechanisms that exist to help commercial building owners make their energy efficiency and/or renewable energy project a reality.

1. Financing
Your Commercial Energy Project
CEC Forum
February 2, 2012
Energy Performance Contracting
Diane Mills, Certified Energy Manager
dmills@ameresco.com

2. What is Energy Performance Contracting?
“The use of guaranteed savings from the maintenance and operations budget (utilities) as
capital to make needed upgrades and modernizations to your building environmental
systems, financed over a specified period of time.” ~The U.S. Department of Energy
“Energy savings performance contracting enables building owners to use future energy
savings to pay for upfront costs of energy-saving projects, eliminating the need to tap into
capital budgets.” ~Valerie Brader, Chief Energy Policy Officer, State of Michigan
2

3. Spec/Bid vs. Energy Services Performance Contracting
Floor Abatement Environmental
Environmental Contractor
Contractor
Insulation
Architectural
Services
Engineering Architectural
Services
Engineering
Carpentry Services
Flooring General
Contractor Sheet Metal
Contractor
Masonry
Flooring
ENERGY SERVICES
Construction
Client PERFORMANCE
Contractor
Manager CONTRACTOR
Systems Electrical
Contractor
Controls Electrical Insulation
Contractor Contractor
Lighting Roofing
Contractor
Roofing
Contractor
Equipment
Equipment
Ameresco at Risk
NO Change Orders
District at Risk Mechanical
Plumbing Mechanical Guaranteed Results
Contractor Change Orders (10-20%) Contractor
One Contract
No Guaranteed Results
Pre-Qualified Trades
Multiple District Contracts Vs. Savings Measured & Leveraged Controls
Sheet Metal
Low Bidders Only Contractor
No Layers of Mark-up (horizontal)
No Savings Measured/Leveraged
Can use Bond Issuance $’s
Multi Layers of Mark-up (vertical)
Can use Private Financing
Plumbing
33% Faster Implementation, with Contractor
significant construction cost savings*
* 1997 Construction Industry Institute study, in
conjunction with Penn State University, 351 projects
studied in 37 states

4. Spec Bid Approach Energy Services Performance Contract Approach
• Money Spent before cost, scope and funding are • No Dollars spent until all details of the project are
finalized known
• Overall project cost is not known until project is • Guaranteed project investment is known before
completed proceeding with agreement
• Who is Accountable for the success of the project • Accountable for all aspects of the project
• What if there is a change order? • No Change Orders
• Concerns about Speed and flexibility of the • Complete flexibility to change course midstream and
project on time completion guaranteed
• It is difficult to ensure competent and /or local • Responsible for securing competent contractors and
contractors in a low bid situation local worker participation
• What professionals do you hire and when? • Turn Key process
(engineers, construction manager and Architect)
• Many bids and many contracts • Compressed time frame with one contract
• Specification based • Solution based

5. Performance Contracting
Before During After
$$$ Savings Savings
ESCO &
Debt
Service
$$
Energy Energy Energy
+ O&M + O&M + O&M
$

6. The Process
Analysis Phase
 Utility Data Analysis
 Needs Analysis And Preliminary Audits
 Preliminary ECM (Energy Conservation Measures) Collaborative Review
Verification Phase
 Detailed Audit
 Evaluate Possible Operational And Maintenance Savings
 Develop Energy Conservation Measures (Ecms)
 Calculate Energy Savings
 Research Utility Rebates And Incentives
 Collaborate To Finalize Scope
 Evaluate Financing Alternatives And Financial Impacts
Implementation Phase
 Construction Management
 Project Administration
 Commission, Measurement & Verification (M&V)
 Maintenance Plan
 Training
 Ongoing reporting and M&V
 Acceptance Letter