Financing Utility Programs to Promote Advanced Energy. Moderated By: Jack Laverty Columbia Gas of Ohio

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1 Financing Utility Programs to Promote Advanced Energy Moderated By: Jack Laverty Columbia Gas of Ohio

2 Panelists: Paul Racher Existing Buildings Project Manager Columbia Gas of Ohio Nicole Stika Senior Director of Energy Services Council of Smaller Enterprises John Seryak Founder/CEO Go Sustainable Energy Jon Williams Manager, Energy Efficiency & Demand Response, AEP Ohio

3 Paul Racher Existing Buildings Project Manager Columbia Gas of Ohio

4 Jump Start your Financing with Innovative Energy Solutions October

5 What is Innovative Energy Solutions? An energy efficiency program for commercial and industrial customers of Columbia Gas of Ohio Provides rebates and incentives for a variety of energy efficiency projects 2 Tiers of Eligibility Annual Usage >=3000 Ccf (300 Mcf) of natural gas Custom program Annual usage <3000 Ccf Prescriptive program 5

6 What kinds of custom projects are eligible? Energy Audits to determine cost effectiveness of energy efficiency measures Up to $5,000; matching $ preferred Energy Efficiency/Conservation Measures Up to $100,000 for a cost effective project Technologies that reduce the use of natural gas High efficiency heating systems, insulation, ventilation control, thermostatic controls, building automation systems, cooking, and process improvements, for instance 6

7 What other kinds of custom projects are eligible? Research and Demonstration Experimental Technologies Building Recommissioning Evaluation, Measurement and Verification 7

8 How to apply? Download, complete and submit Energy Audit Application form Internal team review for approval within 1 week Internal team review final energy audit report for accuracy For EEMs (after energy audit approved), download, complete and submit Energy Conservation Measure (ECM) Application form Requires approved energy audit; project application approval Projects>$50,000 require 3 rd party review/approval Other projects have separate application form Complete approved work and submit payment form 8

9 Additional Information ~$2.5MM available through end of 2016 Program being contracted out to DNV KEMA Partner with AEP rebate programs when possible Customers who commit to do more than an energy audit more likely to be funded 9

10 Program Contact Information Columbia Gas of Ohio Demand Side Management Paul Racher, Existing Buildings Program Manager W: (614) C: (614)

11 Thank you!

12 Jon Williams Manager, Energy Efficiency & Demand Response AEP Ohio

13 Discussion Points Business Programs - Focus on Buying Down Capital Cost Case Studies Our Financing Experience to Date: Capital Acquisition for Energy Efficiency Projects New Program Opportunity and Implications for Ohio s Energy Efficient Future

14 AEP Ohio EE Business Programs Prescriptive Custom New Construction Small Business Express Self Direct Retrocommissioning (RCx) Data Centers Continuous Energy Improvement

15 Efficient Measures (Prescriptive and Custom) Per lamp, horsepower, watts reduced, ton, etc. Lighting HVAC Refrigeration Motors VSDs Compressed Air Measures Custom measures

16 New Construction/Major Renovation: Construction Whole Building Based on 10% efficiency over ASHRAE Owner incentives $0.08 to $0.12/kWh Based on 10% efficiency over ASHRAE standard

17 Express Program for Small Business For AEP Ohio Customers who use 200,000 kwh or less in the last 12 months of usage history Small Business Owners receive: Free Energy Audit with proposal including recommendations, savings, cost, and payback Incentives that cover zero to 80 percent of the total project cost 12 months interest-free financing is available Registered Express Contractors install recommended measures

18 Retrocommissioning Tuning up buildings existing systems to bring them back into an efficient state of operation RCx will not replace your chiller, but ensure it is operating efficiently O&M measures rather than capital investments Typical Measures: Controls upgrade, demand controlled ventilation, chilled water temperature reset, many more!

19 Data Center Program Data centers are up to 200x more energy intensive than typical work environments Any size of IT load is eligible (co-location facility, server room or server closet) Incentives are performance-based: greater rewards for greater energy savings Includes new construction or relocation of data center

20 Continuous Energy Improvement (CEI) A Strategic Management Approach to Achieving Low/No-Cost Energy Savings at Industrial Sites 4 Clusters (cohorts) of industrial sites within AEP Ohio service territory Currently 36 large industrial companies across Ohio are engaged in CEI Total combined electrical energy usage < 1,000 GWh/year Program savings goal = 50+ million kwh/year from low/no-cost initiatives Program savings to date = 15,500,000 kwh

21 Case Study -Self Direct Incentives, Savings Fund Future Projects 2010 Library received approx. $4,000 in SD funds for previous lighting upgrade Used $ for additional EE projects 2013 Library received approx. $20,000 in prescriptive incentives for broader energy efficiency improvements

22 Case Study-Delco Water Measures Implemented Efficient Lighting & VFD s Project Cost $16,885 Annual kwh savings 105,492 kwh AEP Ohio Incentive $7,375 Payback without Incentive Approximately 2.0 years Payback with Incentive Approximately 1.15 years Program types Efficient Lighting/Motors Payback calculated at $0.08 per kwh

23 (Office Building project #7359) Project Cost $64,756 Annual kwh savings Case Study - Custom Measures= Air handler retrofits, VFD s run at half speed flow 179,021 kwh AEP Ohio Incentive $18,595 Payback without Incentive Payback with Incentive Program types 4.5 years 3.2 years Custom Payback calculated at $0.08 per kwh

24 Capital for EE Projects; i.e., Capital to Grow/Sustain Your Business Financing Is It a Deal Breaker? Yes and No Our Financing Experience to Date: Capital Acquisition for Energy Efficiency Projects The Fight for Capital Is a 25%+ ROI Bad? Utility Funded Customer Incentives Limited Financing and Other Strategies are Critical

25 NEW AEP Ohio Bid to Win Progam What is Bid to Win? - Consists of a series of online reverse auctions for financial incentives. - Pre-qualified Customers and Solution Providers submit bids to deliver energy savings at a price per kilowatt hour. Who is eligible for the Bid to Win Program? Customers and Solution Providers Goal Provide competitively bid funding to meet customers IRR and capital planning schedules.

26 Thank You Jon Williams Manager Energy Efficiency/Demand Response Web:

27 John Seryak Founder/CEO Go Sustainable Energy

28 Thank you!

29 Nicole Stika Senior Director of Energy Services Council of Smaller Enterprises (COSE)

30 Ohio s Energy Future Financing Solutions to Achieve Energy Efficiency Goals October 31, 2013

31 Council of Smaller Enterprises Mission We help small businesses be more successful by Saving them money on the cost of doing business Connect them to the resources and people they need to succeed Serve as the voice of small business at local, state and federal levels

32 Complete turnkey, energy solutions customized to meet the needs of the business

33 Overcoming Barriers Despite its potential, there are barriers to pursuing EE measures: High upfront costs, with uncertain benefits realized over many years Current financing mechanisms rely on public funding and are insufficient in scale and standardization to effectively address EE Lack of widespread access to low-cost financing Many property owners constrained from borrowing due to little to no equity, first mortgage Incentives are often misaligned (owner/tenant)

34 Providing a Pathway to Capital Commercial Bank Financing Bankable at typical standards Any size project cost Enhance Credit COSE Energy Loan Guarantee Not bankable at typical standards Up to $35,000 total project cost guarantee Alternative Funding Ohio Efficiency Fund Mid-Market Business; off balance sheet $100,000 - $1,000,000 total project cost

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38 Introduction to Metrus Metrus ESA Structure Value Proposition Case Study Questions / Appendix Delivering an Integrated Solution CUSTOMER Project Installation ESCO designs and installs the EE project and provides long-term maintenance. Project Origination and Support COSE provides customer support throughout all aspects of the program and assists in project development. Efficiency Services Agreement OERF covers 100% of project cost. Customer repayment based on avoided energy use and reduced operating expense. CONTRACTOR Efficiency Services Performance Contract (ESPC) Agreement OERF and ESCO/Contractor enter into a turnkey project installation and maintenance contract, backed by a performance guarantee.

39 Project Transactions Efficiency Services Agreement FUND Efficiency Services Performance Contract Fund Sign efficiency services agreement with customers Enter into key project-level contracts with trade contractors Mitigate key investment risks Utilize low-cost sources of capital to enable customers to implement projects that would otherwise go undone CUSTOMER CONTRACTOR Customer Enter into the ESA; provide facility access to trade contractors to install & maintain EE project Reduces energy usage; continue utility service Make ESA payments to the Fund based on realized energy savings Efficiency Services Contractor Enters into EPC, O&M, M&V agreements with Fund Provides performance guarantee on energy savings

40 Introduction to Metrus Metrus ESA Structure Value Proposition Case Study Questions / Appendix Proposed Project: Preliminary Terms Project Characteristics Scope: Lighting retrofit RTU/Split Replacement Compressed Air Upgrade On-Demand DHW HVAC Controls Cooling Add/Waste Heat Recovery $453,488 million project costs $44,237 in total annual savings Y1 utility incentive = $18,056 ESA Terms ESA contract term of 10 years Existing Utility Rates: Electric (kwh) = $0.069/kWh Electric (kw) = $10.68/kW Thermal (mmbtu) = $6.69/mmBTU Utility Escalation: 3% ESA Rates: 100% of existing rate ESA Escalation: 3%

41 Nicole Stika Senior Director, Energy Services W: C: cose.org/energy

42 Thank you!

43 Q & A