SEATTLE — MacDonald-Miller Facility Solutions Inc., a design-build contractor headquartered here, and the Snohomish County Public Utility District developed a new, comprehensive approach to overcoming the first-cost hurdles that many commercial building owners must deal with when making needed capital improvements for inefficient building systems — the Energy Savings Purchasing Program (www.macmiller.com/ESPP).
It allows mid-size to large commercial buildings to make significant improvements to their heating, cooling and lighting systems to reduce energy costs without making a capital investment.
“The Energy Savings Purchasing Program addresses the historical barriers for building owners to prioritize investments in reducing energy cost,” said Perry J. England, vice president of building performance at MacDonald-Miller Facility Solutions. “It is the first-of-its-kind utility program that takes a long-term approach to paying for delivered results. The program allows SnoPUD to purchase the consumption and capacity benefits without encumbering the working capital of the building owner.”
The program will maximize local building’s operating efficiency while helping SnoPUD to achieve its conservation target of seven million kilowatt-hours per year and 10 million kilowatts per year.
The ESPP idea grew out of a program between MacDonald-Miller and the city of Seattle in the early 2000s. The program was called Community Power Works, and MacDonald-Miller was tasked with developing an energy-efficiency program for the city’s large commercial building sector.
“We learned a lot from working with commercial building owners and developed a robust and thoughtful set of contract documents and a contracting vehicle to be able to help building owners make smart decisions, smart investments in their buildings that pertain to energy-conservation measures,” England explained.
MacDonald-Miller used Community Power Works as the blueprint for the ESPP. It’s taken the mechanical contractor about two years to fine-tune the program with market research and contract development. It’s now an official pilot program in the Snohomish County district that is marketed to commercial office building owners.
“One of the biggest barriers [to energy-efficiency projects] is creating a vehicle that allows building owners to run their buildings more efficiently without compromising their own working capital, but also give them the avenue to invest in their own building if they find the return on investment to be attractive,” he said. “The ESPP is fairly flexible in that regard.”
With the ESPP, SnoPUD is buying only the kilowatts and kilowatt-hours verified through the utility meter, the delivered savings. “It's shifting the thinking and the responsibility to the service provider and the building owner to deliver the savings,” England added. “If they do, the utility will compensate them accordingly through their conservation program.”
The ESPP is opening up new market opportunities for MacDonald-Miller to grow its business, England explains, while engaging in a long-term commitment to help its commercial customers run their buildings more efficiently.
“There’s a financial commitment by MacDonald-Miller to make sure this program is successful not only for the district but also for the building owner,” he said. “We only get paid if we guarantee the energy savings to the building owner. It’s a unique delivery model. Now our customers have a committed partner in MacDonald-Miller to make sure the right technology is implemented, the right training of their operating staff is happening so we can be accountable to deliver our end of the agreement, which is the actual utility savings. If we don't do that successfully, then we’re going to be writing them a check for the difference.”
The program covers HVAC systems, interior and exterior lighting/controls and water conservation. As an electric utility, SnoPUD is only covering savings on the electrical side. England notes that MacDonald-Miller works with Puget Sound Energy, the natural gas supplier for the Snohomish County district, to develop more traditional energy-conservation grants that go to offset the first costs for energy-efficiency projects.
“We’re finding interest in this program because of its comprehensive approach,” England said. “It's intended to help building owners with some of their end-of-useful-life issues, replacement issues. What we're presenting to the building owner is a financial business case that makes their property more attractive and more comfortable to its occupants, which seems to be compelling.”
With program approval secured in May, MacDonald-Miller has one customer in the pilot program so far — SNBL USA, a large research facility in Everett, Wash. And while the ESPP was initially developed for the commercial office space, the design-build contractor is finding it is very adaptable to other types of buildings.
“The program is enabling SNBL to address many of our aging infrastructure needs,” said Ron Wren, director of facilities of cost reduction, SNBL. “We are getting this work done as a program instead of many small projects over multiple years. In fact, the lighting improvements to LED would have never been funded.”
When a commercial customer expresses interest in the ESPP, MacDonald-Miller assesses the energy performance of the building — such as examining historical utility consumption and bills, and conducting a preliminary site walk — and qualifies the building to be able to meet the requirements of the program. The investments that MacDonald-Miller is scoping must have an energy savings stream that will pay for themselves in less than 10 years.
Once the scope of work is developed, all parties review and approve it. Then the work begins. When the energy-efficiency improvements are completed, the project moves into the savings period, which is when the 10-year clock starts. MacDonald-Miller works with the building operations staff and provides monthly reports on the progress toward the stated targets. If necessary, adjustments are made to the systems to ensure that targets are met and the customer is satisfied.
“The ESPP does have pull-through benefits to the contractor,” England stated. “It presents opportunities for contractors to expand their business in the areas of measurement and verification, and other kinds of preventative maintenance services.”