State Building Energy Performance Contracting
Proposed Amount of Funding: $10 million
8-7-09: Guidelines have been established for this program. Click
here
for more information.
Funding will be used for efficiency and renewable energy performance contracting projects in State Buildings. Energy efficiency is required by ARS 34-451. The Department of Commerce will enter an Interagency Service Agreement with Department of Administration (ADOA) to be project manager for energy performance contracts for state building retrofit projects.
The application proposes using ARRA funds to buy-down the cost of the energy performance contracts to achieve immediate utility cost savings. Dedicating ARRA funds in such a way is consistent with priorities of the Department of Energy in their program guidance:
· States are encouraged to use their ARRA funding not only to support current energy efficiency and renewable energy projects but also to seed sustainable programs and put in place long-term funding mechanisms such as revolving loans and energy savings performance contracting that will provide lasting benefits and lead to long-term market transformation. (Page 23, DE-FOA-0000052)
· To increase the impact of these stimulus funds, DOE encourages plans which achieve a high degree of leveraging, and/or projects that extend the impact of the funds. Examples of programs which provide high leverage are revolving loan programs and performance contracting. (Page 28, DE-FOA-0000052)
· States may wish to consider the following program areas for inclusion in their State Plans: programs for financing energy efficiency and renewable energy capital investments and programs which may include loan programs in performance contracting programs for leveraging additional public and private sector funds, in programs which allow rebates, grants, or other incentives for the purchase and installation of eligible energy efficiency and renewable measures in public or nonprofit buildings owned and operated by a state, a political subdivision of the state or agency or instrumentality of the state, or an organization exempt from taxation under 501(c )(3) of the Internal Revenue Code of 1986 including public and private nonprofit schools, hospitals, and local government buildings. (Page 34, DE-FOA-0000052)
By providing an incentive buy-down of energy performance contracts with a portion of the state’s ARRA funds not to exceed 20 percent of the whole cost of the projects, these funds have the opportunity to deliver a 5:1 leverage. This may equate to as many as five times the jobs created and as much as five times the greenhouse gas reduction while creating more productive work environments, eliminating deferred maintenance concerns, lowering the annual operating costs and reducing maintenance costs for state facilities. Incentive funds will act as a catalyst leveraging the private sector and engage the financial industry in proven industry practices to maximize impact.
Nature of Projects: ADOA has already identified 16 state buildings for energy performance contracts. We anticipate that the performance contracts will mainly address lighting, lighting controls, HVAC and HVAC controls, motors, building automated controls, and insulation with ARRA funds being used to buy-down the cost of deeper infrastructure improvements such as boiler and chillers and solar equipment to achieve an energy performance contract with a 10 to 15 investment year paybacks, which are industry standards.
Timeline: The Energy Office, in discussion with ADOA believes that ADOA can award a first round of projects by the late fall and winter of 2009. Construction of these projects could begin in late 2009.
Long-term Benefits: The Energy Office estimates the following annual benefits (assumes a $10 million state investment and $36 million local investment).
· Annual utility cost savings: $5 million
· kWh annual savings: 50 million kWh
· CO2 annual reductions: 60 million pounds
In addition to the energy savings, this program will lay the foundation for an enhanced and successful performance contracting industry in the Arizona.
Job Creation: For building retrofit projects, the Energy Office staff estimates if the State’s $10 million investment is leveraged into at least $46 million in projects, the efficiency program would create approximately 543 jobs.
Implementation: The Energy Office is working with ADOA and the federal National Renewable Energy Laboratory to develop template performance contracts. ADOA staff and Energy Office staff will analyze proposals and closely track performance that meets ARRA energy auditing standards. Administrative and programmatic costs are included in the total project budget proposed above. Staff members who implement or manage the overall strategy or programs are direct costs to the project.