Educational Procurement Journal - September 2007 - (Page 18) ROAMIN’ W I T H Y E O MAN Raging Inexorable Thunderlizard for Change Talk about an Opportunity by Brian Yeoman NAEP I f you are looking for evidence that the green revolution is underway, look around you now. On May 17, the Clinton Foundation announced a $ 5 billion effort to retrofit buildings in 16 major cities around the world. Three of those cities are in the US and one is in Canada. London and Johannesburg RSA are included. There is nothing in the announcement that precludes colleges, universities, and K-12 schools in those cities from entering into the program; in fact they are encouraged to participate. Imagine what is now possible for our members in New York City, Chicago, Houston, Toronto, London’ Johannesburg and the other cities! The Clinton Foundation operates what may be the world’s largest consortium purchasing operation. Imagine the conversations and negotiations that went into securing a $5 billion dollars credit commitment from five of the biggest banks in the world, ABN Amro, Citigroup, Deutsche Bank, JP Morgan Chase and UBS and four of the premier Energy Services Corporations (ESCO’s); Johnson Controls, Honeywell, Siemens and Trane. The program includes opportunities for the private sector as well as the public. Former President Clinton made sure that the program will work with minority contractors and local energy services companies. The goal is to dramatically improve energy efficiency in buildings, the source of more than 50% of global greenhouse gas emissions. The scope of work begins with an energy audit. The discreet steps are known as energy conservation retrofits. What is an energy conservation retrofit? An energy conservation retrofit involves incorporating energy saving devices, technologies, materials and tactics into older buildings to modernize them, make them more energy efficient, and thus more cost effective to own and operate in today’s environment. What is Energy Performance Contracting? Energy Performance Contracting is a construction method that allows a building owner to complete energy-saving improvements within an existing budget by financing them with money saved through reduced utility expenditures. In our instance the budget to finance the initial outlay is being provided by our banking partners. The cities involved will make no up-front investments and instead finance projects through guaranteed annual energy savings. To enter into a guaranteed energy savings performance contract, typically the building owner will issue a tender known as a Request for Qualifications (RFQ) to select a performance contractor, deliberate and negotiate with the intended performance contractor, usually an energy service company who is called or known as an (ESCO) is selected. The ESCO and the building owner subsequently engage in a detailed analysis of energy usage, categorization of the building inventory, identification of retrofitting options and finally cost benefit analysis and prioritization of potential projects. When an agreement is reached mutually, the work is contracted and executed within the terms of the financial arrangement. During construction, monitoring equipment is put in place to insure the integrity of the work measures up to the performance guaranteed. The building owner recovers the cost of the project through the savings delivered by the improvements. In our case, the building owner pays the banking partner typically in annual payments. To protect the owner, we require that the performance contractor guarantee that the savings will always be at least equal to the payments for the cost of the improvements and the annual interest. Setting Priorities There will be many different approaches to doing this. However, in the end it is highly likely that we will end up with three major categories; quick fixes, routine technology upgrades, and major strategic capital projects. Quick fixes are just that the low hanging fruit; e.g. lighting retrofits, occupancy sen- 18 EDUCATIONAL PROCUREMENT JOURNAL September 2007
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