Sustainable Building Technical Manual - Etn-presco.net

sharing of knowledge and expertise can actually increase the retrofit’s effectiveness andthe facility manager’s expertise in the long run. Involvement of municipal managers andtheir staff during the entire retrofit (from audit through commissioning) is consideredessential for project success.The ESCO industry has matured tremendously over the past few years. A range of companiesnow offers a wide variety of services to municipalities and private building owners.Municipalities that contract with the ESCOs will find that they:■ offer specialized financial and technical expertise and experience;■ guarantee energy savings and therefore minimize the financial risk;■ offer a range of creative financing options;■ perform building energy audits and suggest cost-effective energy technologies andmeasures; and■ assume the administrative burden of monitoring and verifying energy costs.Lease-Purchase AgreementsLease-purchase agreements offer the local government a “save now, pay later” option forenergy-efficiency projects. Through this arrangement, a third party provides the equipmentfor the efficiency project, and the local government makes payments on the equipmentfrom the savings achieved by the program. At the end of the lease agreement, thelocal government assumes ownership of the equipment or may purchase it for a greatlyreduced price. The two primary benefits of this option are that leases to local governmentsare tax-deductible and, therefore, can often be obtained at a low price. In addition,the lease can be carried off the balance sheet by the local government. (See Chapter25, “The Future of Green Buildings,” for more information on green leases.)L O CAL A C T I O N S.The following section is an overview of some local government programs that have successfullyused a variety of financing options for green buildings.➤The city of Phoenix, Arizona, established the Energy Conservation SavingsReinvestment Plan in 1984 to promote continuing energy improvements in themunicipal sector. The program received $50,000 in seed money from state oil overchargefunds. Each year, half of the documented savings from each project is returnedto the city’s general fund. The other half is reinvested in the energy-efficiency programfund. By 1986, annual energy savings were over $1 million, which allowed the fund toreach its allowable limit of $500,000 a year (recently raised to $750,000 to compensatefor inflation). The fund has financed retrofits resulting in $18 million of audited savingsfrom 1978 to 1992.➤The Sacramento Municipal Utility District in California established the ConservationPower Financing Program (PFP) in 1990. The PFP provides rebates and loans to privatesector businesses for energy-efficiency projects. The utility began this demand-sidemanagement program because it realized that financing projects that reduce consumerdemand (through retrofit of high-efficiency systems and conservation measures) ismore profitable than increasing energy production to meet demand. While the rebatesfrom this program are being phased out (already down from 75 percent credit oninvestment to 35 percent), building operators throughout the municipality are realizingthe potential energy savings and positive environmental impacts that result evenwithout the rebate.➤The city of Chicago, Illinois, is currently undertaking a comprehensive energy retrofitprogram for its buildings. Part of this program includes a Department of GeneralServices retrofit of 45 police stations and city libraries, funded by bonds and utilityvendors. Debt on the project will be repaid by short-term savings from lighting retrofitsand long-term savings from the installation of digital controls for HVAC systems.