Due to our current economic situation, there is an increased focus on fiscal responsibility andcost reductions for utilities, coupled with a higher and ever increasing level of environmentalquality standards which they must meet. This puts a brighter spotlight on improving operationalefficiencies, which is driving utilities to optimize the performance and operation of their facilities.Doing so not only saves energy and mitigates rate increases to customers, but also makes themmore environmentally sustainable.Utilities can reduce their power bill by implementing energy efficiency related improvementswhile also looking for opportunities to supplement their needs through the implementation of arenewable energy strategy. Energy audits are the first step in identifying potential savings. Highlevel energy audits can identify and rank potential savings, and investment grade audits documentand quantify those savings. These audits can also identify savings of other resources, such asprocess chemicals, solids handling and disposal, non-energy related utilities, or parasitic waterloss.The following are typically evaluated as part of the energy audit process:1.Current energy use, patterns of use, billing rate structures and opportunities toconserve. This also includes development of an energy baseline and benchmarking.2.Treatment process configuration and operation, including identifying operationalmodifications or capital upgrades that can be made to reduce energy or loweroperating costs.3.Building envelope and support facilities, such as HVAC systems and lighting.4.Alternative energy related to biosolids, solar, wind, small hydro, and geothermal;including onsite production and procurement from third parties.Unfortunately, most utilities have difficulty using traditional sources of financing andconventional project delivery models to make the initial investment required to implement theseimprovements. This is where performance contracting can be used. Performance contractinguses the associated savings from the improvements to pay off the initial capital investmentrequired to effect the improvements needed to realize the savings. Therefore, a large initialcapital investment on the part of the utility is not required; rather, guaranteed long-term operatingsavings are leveraged to secure financing provided by an energy service provider or other thirdparty. Most times, the risk of achieving these savings resides with the energy service provider,although this requires a properly defined baseline and effective measurement and verification.Once the potential energy savings opportunities are identified, they are prioritized, and the oneswhich are most attractive are included in the performance contract. Typically, those with the bestreturn on investment or payback are the ones that are included. Similar to an annuity, savingsfrom initial improvements can be used to fund the implementation of subsequent improvements.Using this model, the initial cost is annualized, and paid off with guaranteed savings generatedby the improvements.This paper will describe the procedure used to identify and develop the cost savings to fund aperformance contract at a wastewater treatment plant. It will highlight some of the key areas ofopportunity that are often explored, including the unique considerations that must be made tomaximize the benefit of the project to the owner. Renewable generation and both process and alsonon-process energy efficiency and operational improvements will be discussed with experiencefrom case studies interwoven throughout the discussion.In summary, performance contracting is a viable alternative approach to funding andimplementing improvements at municipal water and wastewater facilities. A successful programmust go beyond the initial implementation of audit results, and include ongoing measurement andverification, as well as continuous improvement practices. Measurement and verification must becarefully planned and incorporated into the facility, as this is the basis for the guaranteed savings.
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