The Payoff Pitch: How to Secure Funding for Your Project Tim Dantoin – Leidos Engineering Understanding the Game Situation Energy in Perspective Projected Worldwide Consumption OECD 500 Non-OECD 450 400 458 Quadrillion 6x BTU 350 84 % 300 14 % 280 250 200 245 249 2007 2015 Source: EIA International Energy Outlook 2010 2020 2025 2030 2035 National Energy Intensity Competitiveness 60,000 Energy Consumption (Btu) per Dollar of GDP 1 lb coal = 10,000 btu 50,000 China 40,000 30,000 - US 50% India 22% US 33% Germany Brazil Germany 1988 1991 1994 1997 2000 2003 2006 2009 Source: EIA International Energy Statistics 2012 China Brazil India 20,000 10,000 % Change (1988 to 2011) -20% 34% China vs. US 1988 2011 5 to 1 3.5 to 1 Uncertainty or Sustainability ? Pepsi Co ? United Kingdom United States Going with Your Best Pitch Trust in Numbers Barriers to Approval • Funds not budgeted • Lack of clarity in savings • Management has other priorities • Lack of general energy awareness • Energy savings projects are discretionary Relate Energy to Your Organization Key Performance Indicators Total Btu’s Lbs Resin Electric $ p Lbs Resin Electric MMBtu p Lbs Resin Gas $ p Lbs Resin Gas MMBtu p Lbs Resin Tot Energy $ p Lbs Resin Water $ p Lbs Resin Natural Gas No.2 Oil Propane Electricity Business Indicators Total Energy Cost Operating Costs Energy as % Oper. Costs Total Facility Costs Energy as % TF Costs Annual Profits Energy as % of Profits % Increase in Profits with 5% Reduction in Energy Costs 2013 (Annualized) 408,858 $2.76 0.180 $2.53 0.339 $5.29 $0.52 2013 (Annualized) $2,164,782 $15,000,000 14.43% $33,500,000 6.46% $3,450,000 62.75% 3.14% Know Where Energy Goes in Your Organization Electrical MMBtu Chiller #1 Chiller #2 Chiller #3 Lighting Comp Air Office Other Hunt for Opportunities Electrical MMBtu e.g. “Free Cooling” Project Save 2.5% Chiller #1 Chiller #2 Chiller #3 Lighting Comp Air Office Other The Technical Pitch • Get the numbers right • Study the opportunity to identify multiple options • Use third parties to produce reliable numbers. • Place the project in context of overall energy use • The Presentation • Provide a clear and concise project description • Show simple calculations • Include pictures of the project • Past success is an indicator of future performance • Take stock in no / low cost and O&M opportunities • Document savings from installed projects to establish record of success The Financial Pitch • Present a Project’s Financial Value on CFO’s Terms • Simple Payback • Net Present Value • Life-Cycle Cost • Understand Financing Options • In-house Capital Hurdle Rates • Low Interest Loans • Leasing • Other Considerations • Avoided costs • Cost of Not Acting • Savings Relative to Profit Margin • Organizational Image Show Me the Money ! • Standard incentives (pre-approval needed above $10k) • Custom incentives (pre-approval needed always) – $0.06/kWh (lighting) $0.07/kWh (other electrical) $1.00/therm (gas) • Feasibility Studies – $10k up to 50% of the study cost capped at 25% of the estimated annual energy savings identified in study – Pre-approval required with up to 6 months to complete the study • Retro-commissioning incentives for building systems and industrial systems • Competitive incentives: – Competitive Large Incentive Projects (RFP once per year) – Staffing grants (RFP once per year) Delivering a Consistent Performance Strategic Energy Management Continual Energy Improvement • Understand Energy Uses Communication • Generate EE Ideas Planning • Quantify Opportunities A purely technical focus goes only so far • Select Projects Goals Awareness • Provide Justification Motivation • Gain Approval Support Performance Tracking • Implement Projects to Save $$ Energy Use Drivers Weather Square feet Production volume Building occupancy Energy Performance Indicator (EnPI) y = mx + b R2 = correlation coefficient m = energy per variable unit b = base load Variable Load Energy Use Base Load Energy Driver (e.g. Production Volume) Improvement Leads to Approval • EnPIs help identify opportunities by driving energy analysis closer to the time & location of energy use • EnPIs, as indicators of performance, should be at the core of your communication efforts. • Communicating energy efforts and performance is vital for generating awareness, responsibility & action • Effective energy management involves changing organizational culture and individual mindsets Brought to you by: