and verification is accomplished with a complete analysisand reporting of the project’s performance, energy use andsavings. The monitoring and verification phase is conductedby the ESPC or a third party over the life of the contract orwhen terminated by the customer.Exhibit 1 is a block diagram of an Energy SavingsPerformance Contract for a municipality. Energy is used bythe wastewater treatment plant and in turn, money is paidto the Electric <strong>Utility</strong> for their services. The ESCO findsenergy conservation measures and assists the municipalitywith finance arrangements. The up-front costs for theenergy conservation measures are paid to the ESCO and theECMs are implemented. The resulting savings then fundsthe payments for the loan. The ESCO guarantees the savingsfor the life of the contract.Exhibit 1: Block Diagram of an Energy Savings PerformanceContract for a Municipality.Choosing the Right ESCOThe first step in executing a successful ESPC is choosingthe right ESCO for a mutually synergistic partnership. AnESPC is often a 10- to 20-year relationship from contractdevelopment to monitoring and verification of guaranteedsavings, as well as performance throughout the contract lifecycle. Because of the long-term relationship with ESCOs foran ESPC, financial strength and viability are a critical attributeof the ESCO. Ideally, ESCOs should have a history offinancial sustainability and strengths in the water and wastewatermarket. History of ESPC experience in all marketsegments is a key indicator of diverse financial strength andexperience. For example, industrial experience will give theESCO a wide variety of ECMs for processes that could beapplied in water and wastewater. Boiler technology, complexprocesses and combined heat and power applications(cogeneration) are just a few.Experience in the buildings market will demonstrate anESCO’s ability to implement HVAC and lighting energyreduction techniques. Further, the buildings market requiressubstantial experience in cogeneration, emergency generatorand renewable energy applications. The buildings marketwill also give ESCOs experience in obtaining LEEDBuilding Certification. LEED Building Certification hasbeen utilized in water and wastewater and will be in greaterdemand for future energy reduction projects.The ESCO should be technically competent for recognition,development and implementation of conservationmeasures for water and wastewater. Typically, water andwastewater treatment plants need a substantial amount ofelectrical energy to conduct unit processes and operations.Aeration and pumping for wastewater treatmentand pumping for water treatment are the main electricalenergy users. Because water and wastewater are motorrichenvironments, energy usage is not only a substantialoperational cost; it also must be managed properly foruse with complex motor control and monitoring for processesand pumping.ESCOs must be well versed and have experience in power,automation, power monitoring and Supervisory Controland Data Acquisition (SCADA) systems. In addition, experiencein security and other advanced software systems suchas Manufacturing Execution Systems (MESs), EnterpriseResource Planning (ERP), advanced process control, optimizationand reporting programs is essential. These systemsare critical in obtaining substantial success and savings for awater and wastewater ESPC.Trusted environmental engineering consultants should bepart of the ESCO partnership for any ESPC for water andwastewater. Consultants are actively involved in processdesigns, master plans, capacity ratings and water quality formunicipalities. ESCO/Consultant partnerships activelyenhance the success of ESPCs in water and wastewater.Choosing ESCOs with strong Environmental Consultantrelationships and partnerships should be a consideration. Inaddition, ESCOs with environmental engineers on staff willunderstand the complexity of water and wastewater morethoroughly. ESCO environmental experience will allow for abetter liaison and coordination with EnvironmentalConsultation Firms.An ESPC for water and wastewater will require a substantialamount of retrofit and expansion experience for existinginfrastructure. ESCOs with the ability to expand orretrofit multiple manufacturer’s process, electrical andautomation equipment is very desirable. ECMs involving aconfined space and the heavy investment in existing equipmentmay only be of a value in a retrofit in lieu of replacementopportunity.<strong>Water</strong> and wastewater market national as well as globalexperience is also an attribute of a qualified ESCO for waterand wastewater. The ability to pass best practices from onecountry, state or local municipality to another is instrumentalin expanding energy savings information and measuresover the water and wastewater market. Global and nationalexperience can also be used as a barometer to measurefinancial stability and viability.The Energy Efficiency Life CycleESCOs implementing ESPCs in the water/wastewater marketmust understand electric utility rates and structures.Maximizing off-peak demand, as well as load monitoringand shifting opportunities, could provide needed funds foradditional ECMs. Investigating utility rebates, as well asfederal and state grants for energy-efficient operations,could secure additional funds. At the same time, it is crucialto establish an energy usage baseline. This is accomplishedthrough an energy audit.With that baseline established, the four-step energyefficiency life cycle begins. The next two steps are imple-32 <strong>Water</strong> <strong>Utility</strong> <strong>Infrastructure</strong> <strong>Management</strong>November/December 2010
mentation of passive and active energy efficiency measures.Passive energy efficiency measures are those thatare easy to implement without automation. Conversely,active energy efficiency measures require automation andoptimization of processes. The final step is metering andmonitoring to establish future efficiency goals and keyperformance indicators, thus making energy efficiency anongoing process. Exhibit 2 is a diagram of the EnergyEfficiency Life Cycle.ConclusionEnergy Savings Performance Contracts for the water andwastewater market is complex. Energy Services Companiesmust be experienced and financially strong to execute a successfulproject. Experience in environmental engineeringand working with environmental consultant firms is a must.Further, the ability to cross national and global markets isbeneficial in understanding the complete market and allowsESCOs to understand the global and national water sustainabilityissues. To keep the cash flowing for water sustainability,implementing ESPCs with the right ESCO is critical for waterneeds for future generations.EDITOR’S NOTE: This is the first in a two-part series. Part II —“Energy Savings Performance Contracts — Cash Flows for <strong>Water</strong>Sustainability” will explain the ESCO ESPC process in detail.Exhibit 2: Energy Efficiency Life Cycle diagram outlining thefour-step process.In addition, ECMs that can be utilized in the water and wastewatermarket will be explained. Detailed discussions of renewableenergy opportunities and specialized situations for water andwastewater versus other markets will be discussed.Lee E. Ferrell, P.E., is a water and wastewater energy and processconsultant for Schneider Electric.New!Private Partnerships forPublic NeedsThis CD-ROM explains the ways in which public works agencies canpotentially benefit from these partnerships and what resources areavailable. PPP’s can accelerate project delivery, improve service quality,facilitate project finance, and transfer project risks, where appropriate,to the private sector. After completing this program, participants will bebetter able to:•Describe some of the basic PPP modelsused for transportation and otherpublic works projects•Explain what an AvailabilityPayment Program is and how itcould be utilized•Recognize the potential advantagesand limitations of PPP’sPublisher: APWAFormat: CD-ROMSystem Requirements: Windows 98,NT 4.0, Adobe Flash Player 8.0, MicrosoftInternet Explorer 5.0 or higherPrice: $69.00**Shipping and handling not included. Selling price subject to change without noticeOrder Online atwww.benjaminmedia.com/book-storeor Call 330-467-7588November/December 2010<strong>Water</strong> <strong>Utility</strong> <strong>Infrastructure</strong> <strong>Management</strong> 33
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