News

A Data Analytics Case Study – Gladstone Community Center

October 29, 2020

Gladstone Community Center

Data analytics allows us to review detailed information on equipment operation in a way that historically was not possible. In the past, a maintenance department could use technology to see how their mechanical systems and equipment were operating on that day, or maybe how it operated over several days previously. Now, using data analytics, we can see how the equipment has operated since the beginning of the energy performance contracting project.

The power of data analytics was recently shown in our work with the City of Gladstone on their energy conservation project. We were able to significantly reduce the energy consumption at the Gladstone Community Center by fine tuning the different mechanical systems.

Historically there have been areas of the Community Center that tend to be over-cooled while other areas are under-cooled, which resulted in comfort complaints from the Center’s patrons and employees. Figure 1 shows the layout of the Gladstone Community Center and the heating/cooling zones for each floor.

Figure 1: Gladstone Community Center Floorplan

Areas like the gym and fitness floor always have a large cooling load, even in the winter, from people working out. But the office area located next to the gym has a much smaller cooling load than these other physically active areas. The units that serve these areas (RTU 1 and RTU 3) supply cold air between 55°F – 65°F year around. Each zone is equipped with a damper to control the amount of air entering the space and an electric heating coil to reheat the cold air as needed to maintain the desired zone temperature. Unfortunately, re-heating the cold air is very inefficient and wastes energy. It also requires a large amount of electricity, which can be very expensive.

To address this over/under cooling problem, our optimization team for the City of Gladstone project used data analytics to analyze the rooftop and each zone’s operation. Once the problem areas were identified, adjustments were made to reduce the electric reheat, thus dramatically reducing the energy consumption. This had to be done methodically to avoid damaging the rooftop units and maintain needed air flow. The following figures illustrate how the adjustments took effect.

Figure 2 shows the electric demand (kW) for RTU 1 and the re-heating status of each zone during the last week of June 2018. A color mark in the lower graph indicates that the zone’s heating status was on. Notice in the upper graph that the electric demand averages around 40 kW per day. These two graphs show that a large number of zones are using reheat.

Figure 2: Gladstone Community Center RTU1 kW Demand (June 2018)

Figure 3 shows the same graphs as Figures 2 but for the last week of June 2020. Notice the average daily kW is now only around 10 kW and the number of units using reheat is limited to just a few offices.

Figure 3: Gladstone Community Center RTU1 kW Demand (June 2020)

If you compare the demand graphs side by side (See Figure 4), you can see the average daily kW, which was 40 kW, has been reduced by 75%! This change has saved the City of Gladstone over $1,500 in cost avoidance savings.

Figure 4: Gladstone Community Center RTU1 kW Demand – June 2019 vs. June 2020

About the author – Devin Klish is an Energy Manager with Navitas. Through the use of Data Analytics and other proprietary tools, he works to educate owners, occupants, and operators to further optimize facility operation and ongoing initiatives.

ESCO vs. Traditional Construction Process

September 18, 2020

Energy service companies (ESCOs) often operate in an open book fashion as compared to a more traditional process that has many of the costs hidden in the contractors bid. Both construction processes have similar costs, whether or not they are broken out in as much detail depends on the transparency of their cost and bidding structure.

Construction and implementation costs are based on the specific project scope and services provided for in the design and specifications and will typically include the categories shown in Figure 1 below.

Figure 1: Cost Structure Comparison between Energy Service Companies and Traditional Construction

Value of Approach Compared to Traditional Construction Processes

There are many benefits that energy service companies can provide because of the way they are able to structure the project team and engage strategies specific to providing value to clients. Many of these strategies reduce costs, improve solution decisions, and enhance the implementation of energy efficiency projects when comparing to traditional construction. Some of these differences are shown in Figure 2 below.

Figure 2: Comparison of Approach between Energy Service Companies and Traditional Construction

A traditional construction process is what many clients are used to but often this approach has inherent problems with collaboration and teamwork between project organizations. The flexibility of guaranteed energy cost savings contracts allows energy service companies to develop and approach solutions and implementation plans that will best meet client needs.

How to Select an ESCO Partner

July 28, 2020

Deferred maintenance in schools is common due to the difficulty in finding funding to meet all their needs. The unfortunate consequence is that this will begin to challenge the quality of the learning environment for students and staff. One way to improve school buildings without putting additional demands on capital budgets is through a guaranteed energy savings performance contract (ESPC), also called a guaranteed energy cost savings contract.

The Process to Implement an Energy Savings Performance Contract

The initial step in implementing a guaranteed energy savings performance contract is to determine whether a viable opportunity to save money exists. This may be accomplished by engaging one or more energy service companies to complete a preliminary analysis of the district to establish feasibility. If it is determined that energy efficient upgrades are financially viable, the district should get board approval to put out a request for qualifications (RFQ) or a request for proposals (RFP).

Stages of an energy conservation project — Figure 1

The process typically involves three primary stages: project development, implementation, and performance (see Figure 1).

The project development stage typically includes a preliminary analysis to confirm economic viability and the completion of a request for qualifications or proposal to select the energy service company that will best meet your needs. Once your partner is selected then the detailed audit is started to develop the detailed project scope, design, cost, savings and a mutually agreed-upon measurement and verification plan.

According to the National Association of Energy Services Companies (NAESCO), typical costs for a comprehensive energy audit range between $0.04 and $0.12 per square foot of facility, depending on the size and complexity of the buildings. Some companies may offer the audit at a reduced marketing rate or for free and then make up the costs when they implement the projects. The fee may be rolled into implementation cost (no out-of-pocket money required) or be paid outright by the district if it elects not to proceed with implementation.

It is often during this stage that the energy service company will select or negotiate with vendors and contractors to provide project pricing. The detailed audit is a detailed analysis that will result in an array of energy conservation and facility-improvement measures, with guaranteed savings and cost amounts identified. The data provided will enable you to make an informed decision regarding implementation. Once this detailed study is complete, contracts are created to implement the upgrades and a decision is made by the district on whether or not to move forward.

Project implementation begins after mutually agreeing on the energy conservation and facility improvement measures to include from the detailed audit and signing a contract. The implementation stage provides for final design, contractor and vendor contracts, construction, training and often commissioning. Conceptual and detailed engineering design is done during the detailed audit. System commissioning may or may not be optional but ensures all mechanical and electrical systems are ready for active service. Energy service companies should offer training, including technical training (on-site and hands-on) on the systems installed.

Project performance is the multi-year period encompassed by the savings guarantee and/or finance term associated with financial parameters of the project. Unlike traditional construction, energy service companies are committed to the long-term effectiveness of the measures they install. This final stage is performance management, which encompasses the services of construction closeout through the savings guarantee period. During this stage of the project, the energy service company provides measurement and verification of the savings projected and may also provide service and maintenance to ensure program effectiveness is maintained.

As your project partner, it is the energy service company’s responsibility to work with you to define your project and provide experts to fulfill the needed roles for evaluation, implementation, and long-term performance.

Selecting an ESCO Partner

Process for selecting an ESCO — Figure 2

Fundamentally, many risks can be minimized through the selection of the right partner for the project. Because of the long-term contractual relationship that is a part of guaranteed energy cost savings contracts, the selection process is even more critical. Consider establishing criteria or a list of qualities and characteristics that are important for you to have in your partner (see Figure 2). Explore areas such as a company’s ability to make unbiased product decisions, their history of successful projects, use of industry accepted methodologies for savings verification, corporate focus on performance contracting, corporate longevity, and financial stability.

Creating a Request for Qualifications or Proposals

The primary difference between using an RFQ versus an RFP is the element of cost. While an RFQ focuses solely on the energy service company’s qualifications and past experience, an RFP may require that the company’s fees be provided, or preliminary project cost information and savings estimates be provided. It is very important, however, to recognize that until the detailed audit is completed, the project costs and savings estimates are preliminary and should not be over-emphasized or valued more than the energy service company’s qualifications and capabilities. Firm and accurate project pricing and savings projections are completely dependent upon the final negotiated scope of technical measures and services provided by the company.

The Evaluation Process

It is important to identify members of the evaluation team early in the procurement process in order to receive their input during the development of the project and scope of procurement. The evaluation team may be comprised of any number of school personnel including but not limited to the following:

Facility/operating engineers
Maintenance staff
Purchasing agent
Energy manager/ designated project manager
Administrative financial manager
Legal council

However, the team is assembled, it is important that they be involved with the daily facility operations, the challenges you are trying to overcome, or the solution implementation.

The evaluation process is usually composed of the following three steps:

Review of written proposals
Client reference checks
Oral interviews of short-listed companies (Optional)

It is also advised that the evaluation criteria be weighted to reflect its relative importance to the overall goals of the specific project. An example of some of these may include the following:

Experience

Technical qualifications and experience of personnel
Experience with implementing guaranteed energy cost savings contracts
Quality of project history and documented savings performance of past projects
Quality of customer service on past projects
Reliability of equipment performance on past projects
Quality of technical skills on past projects
Is the energy service company National Association of Energy Service Companies (NAESCO) accredited?

Project Management

Ability to effectively manage past project construction
Ability to manage challenges and emergencies effectively on past projects
Quality of energy service company’s communication skills

Technical

Comprehensiveness of technical approach to past projects
Ability to plan and complete all schedule phases of past projects
Quality of engineering and product selection on past projects
Comprehensiveness of measurement and verification services on past projects
Quality of technical energy auditing
Quality of provisions for training facility staff

Financial

Stability of energy service company
Demonstrated ability to provide or arrange financing on past projects
Ability to effectively manage budgets on past projects
Reasonableness of financial assumptions proposed on project
Quality and reasonableness of fee structure

And finally, remember that while there are many well-qualified companies in the energy services industry, the team chemistry created by the company’s representatives working with your staff is just as important, if not more so, than a company’s technical proficiency or lengthy history. The desire of the energy service company’s staff to work on your behalf, and not just theirs, can determine the success or failure of your project.

Whatever your method for narrowing down the companies you engage, be diligent about checking references. The energy services industry is built on reputations for delivering savings for the long-term, so you should be able to find out who delivers on their promises. Consider this when requesting references, since proximity to your city or town is merely one aspect of experience to evaluate. A resource to consider is the National Association of Energy Service Companies (www.naesco.org), the long-standing industry organization. They have an energy service company accreditation program that rigorously examines the core competencies and business practices of participating companies. This may also provide valuable information for your selection process.

Did You Know Window Coverings Can Save You Money?

July 15, 2020

Did you know that in the summer about 76% of the sunlight that shines through your windows becomes heat?

We all know that the sun’s rays carry heat. We can feel the heat on our skin when we stand in direct sunlight. That’s why we try to stay in the shade in when its hot outside. When we move under a tree or an awning the sun’s rays are blocked and that helps us stay cool.

This same concept applies to your home. When sunlight shines into a room, the glass in the window doesn’t block the heat that comes along with it. This extra heat means that your home’s cooling system has to work harder to maintain a comfortable temperature, which means that it’s costing you more money to cool your home.

But, when you pull down the shade, or close the curtains, or close the blinds; this blocks the sun’s rays and keeps the heat on the other side of that window covering. The sun’s rays still enter through the window, but the heat is trapped between the window and the window covering.

Depending upon the type of window covering you use, this can be an effective way to keep the heat out a room. The less heat in a room, the easier it is for your cooling system to keep the room at a comfortable temperature, AND the less energy you use. Less energy used means a smaller electric bill.

There are a many different types of window coverings available; some are more effective than others. If you would like to find out more, check out this link to the U.S. Department of Energy’s website (https://www.energy.gov/energysaver/energy-efficient-window-attachments). Remember, savings energy isn’t just good for the planet, it’s good for your pocketbook.

Avoiding Pitfalls of Energy Savings Performance Contracts

July 1, 2020

A guaranteed energy savings performance contract provides a method to finance and implement capital improvements and services that save energy and operational dollars. The energy and operational cost savings produced by the project are typically enough to cover all project costs (including financing and any ongoing services) over the contract term.

As with most opportunities to succeed, there are also some potential risks, but in guaranteed energy savings performance contracts they can be mitigated with a little common sense. The potential pitfalls of implementing guaranteed energy savings performance contracts are well documented. When selecting a partner, you should make sure they have an approach that will alleviate these concerns.

Although the concept and process are proven, some energy service companies have taken advantage of schools by failing to explain or inform them of the key technical and financial decisions that need to be made by the administration and board of education. Instead, in such cases, the energy service company made the decisions without administrations involvement and simply crafted the contract to favor the energy service company and not the district. A summary of major pitfalls is listed below:

Utility Bill Guarantee

Some companies have elected to provide a guarantee based on your utility bills, which allows for an energy baseline adjustment. If not done properly, this can create a significant problem for schools in the long term. This provides the potential for arguments and often does not provide the data to make you feel comfortable that you are really achieving savings. The concept of this method is that your bills are entered for three years and that “baseline” is used to compare future energy usage.

But schools are always changing equipment or operating times, so no year is exactly the same as the last year. Therefore a “baseline adjustment” must be made to increase the baseline when more energy is used. For example, if you added more students, there may be a formula designed to consider the heat load that student added to your facility (especially if it negatively impacts the savings guarantee). There will likely be adjustments for things such as weather, attendance, activities, hours of operation, construction, computers, copiers, coffee machines, refrigerators, fans, etc. Are you going to check all the calculations? For each of your buildings?

Are you going to make sure the energy service company considers all the factors that positively affect your savings, so they do not take credit for it? If so, it may end up being a full-time job by itself. But if you do not, you may never be sure you are achieving the savings. Companies that use this method often charge you for all their time to come up with the adjustments. This method of verifying savings tries to track your savings by measuring the effect of everything that consumes energy in the building except for the efficiency measures themselves.

Energy Baseline Adjustment

It is crucial that the district administration participate in establishing the energy baseline, instead of the energy service company establishing the baseline on its own. It is also important that the district administration agree on the definitions and methodology for making any future adjustments to the energy baseline.

The reality is that there are an unlimited number of things in your facilities and how you operate them that can change energy use (weather, attendance, activities, hours of operation, construction, computers, copiers, coffee machines, refrigerators, fans, etc.). There is no way to identify every possible scenario in an up-front contract of how you might have to adjust a baseline for these things.

The district can include a provision that requires or allows third party opinions on adjustments, but unless energy service companies can provide you with all the possible adjustment calculations in the contract, the third party that the district might hire will not have a basis to work from. The utility bill “guarantee” should probably just be avoided.

Maintenance and Operational Savings

These savings include items that are not energy. They can be labor or material savings that result from the implementation of a particular energy conservation measure. For instance, if a school has new lights installed in all classrooms, no labor or materials will be necessary in these areas for changing out lamps or ballasts for a well-defined time period. Temperature control systems will save you time in theory, but you may not actually eliminate any staff.

Any claimed operational savings should be carefully examined and verified by the district before agreements are signed. In some cases (such as the case with labor savings) the savings may never actually be realized and will not show up in the budget (i.e., you do not save labor unless a position is eliminated).

Capital Cost Avoidance Savings

This term applies to implementing measures that will allow districts to avoid future costs but does not always save hard dollars in budgets. For instance, if a school knows that it needs to replace a boiler within the next ten years, it will need to appropriate capital dollars to do so. However, if the school installs a boiler under the guaranteed energy cost savings contract today, it will avoid spending the future capital outlay on the boiler.

Districts need to be careful! When energy service companies propose the inclusion of cost avoidance in calculating savings, districts must make sure they budget for the payments. Districts should not include these so-called savings in their calculations unless they have a stream of future capital dollars that can be earmarked toward the project.

Excessive Finance Charges

There have been instances where energy service companies inflated the interest rate on the funds borrowed to generate additional profits. Districts should check the rates against local banks or other national institutions to make sure they are competitive. Districts may be able to arrange their own financing at lower rates.

Pre-established Escrow Payments

Some companies have decided to set their payments on a pre-established schedule, instead of having you pay based the percent of project completion. This allows the company to obtain better cash flow and additional earnings through interest by collecting your money before they have completed the work. This not only costs you extra money, but also puts you at risk if the project is not completed and you have already paid.

Product Bias

Some companies in this industry are also product providers. They will often utilize their products to attempt to meet your needs regardless of whether they are the right solution, cost, or value for the client. They may even say they will use other vendors product instead of their own but may skew the design to benefit their solutions.

Subcontracting Parts of the Construction to Themselves

A request for proposals (RFP) may require fees and markups to be negotiated and pre-established. This option is impossible to manage when these fees can be circumvented by an energy service company that is a direct provider of products or construction labor. If they provide these services, they will provide them as a subcontract to themselves. It is difficult for these types of energy service companies to get competitive prices on the products and labor they provide because they are asking their everyday competitors for a price and there is significant opportunity for funny business. It is not likely you will get a fair price and these types of companies might not be the best partner. Your interests may become secondary to theirs in not disclosing additional or exaggerated profits in their product or construction pricing.

Required Maintenance Agreements

Some energy service companies have required that the preventive maintenance on facilities also be outsourced to that energy service company. As such, they tie the maintenance agreement to the guarantee agreement. Districts need to be careful! Typically, these maintenance agreements are very expensive in relation to the value provided. Often, the argument for the maintenance agreements by the energy service companies is that if the maintenance is not performed by their staff, they cannot assure that the guaranteed savings will occur. Not all energy service companies agree with this position. In many cases, there are energy service companies willing to guarantee savings while providing training for district maintenance staff so they can handle maintenance requirements.

Lack of Local Facilities Control

There have been abuses in the guaranteed energy saving performance contract business where energy service companies have restricted after-hours building usage. The objective of the performance contract should be to increase comfort and control, and not restrict a valid facility use.