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Business Case Results for Energy Performance Contracting
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Summary and Background Information:
The attached presentation provides an overview of a proposed Energy Performance Contracting (EPC) program for the City. EPC allows the use of guaranteed future energy savings to fund upgrades that reduce costs and environmental impact without upfront capital expense. Before a City can enter into a contract with an Energy Service Company, there must be a guarantee that utility and maintenance savings will repay all EPC contracts over a twenty year period. In order to ensure that the projects would be self-funding, the City entered into a sole source agreement with Schnieder Electric.
Over the last few months, Schneider Electric performed a no-cost business case to determine the technical and financial viability of pursuing an Energy Performance Contract through the Colorado Energy Office. The resulting report, summarized in the attached presentation, includes high level utility benchmarking, maintenance and operating analysis of buildings, identification of potential energy efficiency scope measures, identification of city goals and community engagement opportunities, and a financial feasibility analysis of savings and potential economic impact. In order to conduct the business case, Schneider was provided escorted access to City-owned facilities to conduct site visits, 24-36 months of utility (gas, electricity, water) data for municipal owned buildings and assets, and meeting time with key personnel to discuss operating requirements and requests for information.
Schneider Electric’s no-cost business case has provided the City with the following:
A) Identification of organization goals/ mission/ vision of Commerce City;
B) A current state of operations analysis including potential cost savings estimates;
C) Identification of potential solutions opportunities for advancing organizational goals;
D) A financial analysis/ overview for savings and overall economic impact;
E) A means for addressing public awareness and community engagement opportunities.
Schneider was conservative with their projections to ensure that an EPC is the right choice for Commerce City. Their projections indicate the following:
• $6.1 million of needed infrastructure upgrades identified across City buildings and facilities.
• Antiquated lighting, leaky HVAC, and high energy costs burdening facility budgets.
• Utility inflation jeopardizes General Fund without action - costs rose 6.5% over 12 months
• Upgrades could reduce 500+ metric tons of emissions per year to meet climate goals
• $202,000+ in annual utility and maintenance savings achievable
• 25-year lifecycle savings estimated at $7.5M when accounting for utility/cost inflation
• Existing grants can supplement funding further ($50-300k range)
• Scalable approach allows phasing of upgrades across fiscal years
Next Steps
• Formalize relationship with Schneider Electric, an Energy Service Company that is approved by the State.
• Sole source contract is allowable per 29-12.5-102.
• Refine project costs, savings potential, and scope through Investment Grade Audit.
• Utilize EPC to sustainably achieve priorities in Strategic Plan and Sustainability Action Plan.
Kate Sipla with Schneider Electric will lead the presentation.
Staff Responsible (Department Head): Jim Tolbert, Assistant City Manager
Staff Member Presenting: Jenna Hahn, Executive Management Analyst
Financial Impact: Positive
Funding Source: No upfront capital expense
Staff Recommendation: Enter into a sole source contract with Schneider Electric for Energy Performance Contracting
Suggested Motion: N/A