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Table of Contents
                            Planning and Financing Energy Efficient Infrastructure in Appalachia
Executive Summary
Key Findings
Chapter 1: Review of Existing Energy Management Planning and Financing Tools
	1. Energy and resource efficient buildings
		Energy measurement
		Building retrofits and renewable energy systems
		Holistic frameworks
	2. Water and wastewater management
		Tools for improving the energy efficiency of centralized water and wastewater infrastructure
		Improving the energy efficiency of wastewater treatment
		Tools for Water Conservation
		Improving efficiency by encouraging decentralized water infrastructure
		Combined Heat and Power for wastewater treatment plants
	3. Green workforce training and resources
	4. Financing and support
		Financing water management improvements
		The role of utilities in financing
	5. Policy development and lead-by-example frameworks
		The ACEEE Scorecard
		Regulatory frameworks
		Building codes and standards
		Zoning codes
		Developing public policy
		Best practices public policy examples
Chapter 2: Best Practices in Planning and Financing Energy-Efficient Infrastructure—Case Studies in Appalachia
	Eight Energy Conservation Measures–Snapshots of Best Practices
		ECM 1—Detecting and repairing leaky water supply systems and reducing inflow and infiltration (I&I) into sewer lines
			Description
			Example Project:  American Water—Connellsville, Pennsylvania, Advanced Metering Infrastructure Pilot Project
		Extrapolation of cost savings to the region
		ECM 2—Improving stormwater management practices
			Description
			Example Project:  Chattanooga, Tennessee, Low-Impact Development (LID)
		Extrapolation of cost savings to the region
		ECM 3—Replacing inefficient pumps, motors, and equipment for water/wastewater treatment plants and relying on gravity flow where possible
			Description
			Example Project:  Bartlett, Tennessee, Wastewater Treatment Plant
		Extrapolation of cost savings to the region
		ECM 4—Using combined heat and power (CHP) or geothermal energy for public facilities and buildings
			Description
			Example Project: Cayuga Nature Center Biomass Combined Heat and Power, Tompkins County, New York
		ECM 5—Retrofitting HVAC and lighting systems with energy-efficient alternatives
			Description
			Example Project:  Calhoun County, Alabama, Building Lighting and HVAC System Retrofits
			Extrapolation of Savings to the Region
		ECM 6—Replacing grid-sourced power with community-owned onsite renewable energy
			Description
			Example Project:  Community-owned Anaerobic Digester for Biogas Production, Cayuga County, New York
			Extrapolation of Savings to the Region
		ECM 7—Traffic Signal Retrofits
			Description
			Example Project:  LED Traffic Signal Installation, SEDA-Council of Governments (SEDA-COG) of Central Pennsylvania
			Extrapolation of Savings to the Region
		ECM 8—Commissioning building energy systems.
			Description
			Example Project:  Erie County, New York, Juvenile Detention Center Building Commissioning
			Extrapolation of Savings to the Region
		Conclusions
Chapter 3: Case Studies of Counties in Appalachia
	Introduction
	Methodology of Case Study Selection
	Case Study 1–Tompkins County, New York
		Overview of Efficiency Efforts
		County Background and Local Context
		Devising an Energy Efficiency Strategy
		Formal Planning Efforts
		Taking Action
		Achievements
			Emissions Reductions
			Financing Strategies
			Benchmarking and Tracking Progress.
			Active Interaction Between the Public and Private Sectors.
		Water and Wastewater Treatment Efficiency Achievements
			Overview
			Description of Drinking Water and Wastewater Services
			Specific Energy and Water Efficiency Improvements
			Opportunities for Financing Through State Revolving Loan Funds
		Replicable Strategies
		The Future: Ongoing Challenges and Potential Roadblocks to Future Progress
	Case Study 2–Fayette County, West Virginia
		Overview of Efficiency Efforts
		County Background and Local Context
		Devising an Energy Efficiency Strategy
		Taking Action
			Energy Efficiency Activity in the Government Sector
			Energy Efficiency Activity in the Community and Non-Profit Sectors
			Energy Efficiency Activity in the For-Profit Sector
		Achievements
		Replicable Strategies
		The Future: Ongoing Challenges and Potential Roadblocks to Future Progress
		Acknowledgements
	Case Study 3–Hamilton County, Tennessee
		Overview of Efficiency Efforts
		County Background and Local Context
		Designing an Energy Efficiency Strategy
			Formal Planning Process
		Taking Action
			Public-Private Cooperation
			Committed Local Institutions
		Political Leadership
		Achievements
		Water and Wastewater Efficiency Achievements
			Description of Services
			Specific Energy and Water Efficiency Improvements
		Replicable Strategies
		The Future: Ongoing Challenges / Potential Roadblocks to Future Progress
		Hamilton County Acknowledgements
	Case Study 4–Calhoun County, Alabama
		Overview of Efficiency Efforts
		County Background and Local Context
		Devising an Energy Efficiency Strategy
			Drivers of Energy Efficiency Initiatives
		Taking Action
		Achievements
		Water and Wastewater Efficiency Achievements
		Replicable Strategies
		The Future: Ongoing Challenges / Potential Roadblocks to Future Progress
		Acknowledgments
Chapter 4: Self-Assessment System for Local Governments in Appalachia
	The Actions of the Self-Assessment System
	The Importance of the Threshold Tier 1 Actions
	Measuring Energy Use at the Community Level
		Method 1: Aggregation of measured energy usage
		Method 2: Energy usage per customer at the utility level
	Applying the Self-Assessment System to the Four Case Study Counties
Chapter 5: Partnership and Financing Opportunities
	Financing options for local governments
	On-bill financing
	Energy Services and Power Purchase Agreements
	Energy Performance Contracting (EPC)
	Implementing EPC
		Importance of Measurement and Verification in EPC
	Conclusions
                        
Document Text Contents
Page 1

Planning and Financing Energy Efficient
Infrastructure in Appalachia

Final Report





































December 30, 2011



Prepared for the Appalachian Regional Commission under Contract CO-16504-09

With Academic Partners:


Regional Research Institute, West Virginia University
Virginia Polytechnic Institute and State University

Page 2

Planning and Financing Energy Efficient Infrastructure in Appalachia i



Table of Contents

Executive Summary ......................................................................................................................................... 1

Key Findings ................................................................................................................................................... 2

Chapter 1: Review of Existing Energy Management Planning and Financing Tools ............................................... 5

Chapter 2: Best Practices in Planning and Financing Energy-Efficient Infrastructure—Case Studies in Appalachia 35
Eight Energy Conservation Measures–Snapshots of Best Practices ................................................................ 36

Chapter 3: Case Studies of Counties in Appalachia .......................................................................................... 62
Case Study 1–Tompkins County, New York ................................................................................................. 65
Case Study 2–Fayette County, West Virginia................................................................................................ 75
Case Study 3–Hamilton County, Tennessee ................................................................................................. 84
Case Study 4–Calhoun County, Alabama ..................................................................................................... 95

Chapter 4: Self-Assessment System for Local Governments in Appalachia....................................................... 100

Chapter 5: Partnership and Financing Opportunities ...................................................................................... 112



List of Figures

Figure 1: Map of 2010 ACEEE Energy Efficiency Scorecard Rankings .................................................................. 28

Figure 2: Number of EPA Permitted Combined Sewer Overflow Systems per County in the Appalachian Region 39

Figure 3: View of Chattanooga, Tennessee’s Renaissance Park Rain Garden ..................................................... 41

Figure 4: Crop and Forest Residues in the United States ....................................................................................... 49

Figure 5: Relationship of Commissioning Costs and Payback Times in Existing Buildings ................................... 59

Figure 6: Geotube Illustration .................................................................................................................................. 82

Figure 7: Continuous Assessment Cycle............................................................................................................... 104

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Planning and Financing Energy Efficient Infrastructure in Appalachia 58

state level—offers an LED Traffic Signal Analyzer, and we looked to this tool for information on costs, savings,
and other non-quantifiable benefits of LEDs, such as reduced signal failure and improved visibility.55

Table 16: Traffic Signal Costs and Savings by Intersection

Incandescent LED Traffic Signals DELTA
%
reduction


ASSUMING: 10 bulbs in 1 intersection


Capital costs $(2,000.00) $(2,000.00)
Implementation costs $(1,105.00) $(1,105.00)
Admin costs $ - $ - $ -
Annual energy costs $(806.79) $ (73.51) $733.28 91%
Annual Tariff costs $(224.00) $ (217.00) $7.00
Annual O&M costs $(277.00) $(248.00) $29.00

Total annual costs $(1,307.79) $(538.51) $769.28
Life Operating Costs $(20,615.80) $ (5,810.27) $14,805.53
Life maintenance costs $5,540.00) $4,960.00) $580.00
Total Life Cycle Costs $26,155.80) $13,875.27) $,280.53
Simple Payback (years) -4.04
NPV $3,772.69
IRR 30%
Discount capital rate/cost 7%
Lifespan in years 1 10



For our regional extrapolation, and following SEDA-COG’s assumptions, we assumed an implementation rate of
80%, and thus calculated overall savings for 8,000 of a total regional number of 10,000 intersections. We also
applied SEDA-COG’s bulk discount price of 75% of full market value, resulting in total capital and implementation
costs of $18,630,000. Here were the overall savings we derived for the Appalachian Region:

Table 17: Appalachian Regional Total, Traffic Signal Retrofit Savings

TOTALS Incandescent LED Traffic Signals DELTA
%
reduction

Total Energy Use (kWh) 79,896,000 7,280,000 -72,616,000 91%
Total Annual Energy Cost ($6,454,318.46) ($588,107.52) $,866,210.94 91%
Total Annual Tariff costs ( $1,792,000.00) ($1,736,000.00) $56,000.00 3%

Total Annual O&M costs ($2,216,000.00) ($1,984,000.00) $232,000.00 10%
Total Annual costs ($10,462,318.46) ($4,308,107.52) $6,154,210.94 59%
Total Life Operating Costs $164,926,369.28) $46,482,150.40) $118,444,218.88 72%
Total Life maintenance costs ($44,320,000.00) ($39,680,000.00) $,640,000.00 10%
Total Life Cycle Costs ($209,246,369.28) ($104,792,150.40) $104,454,218.88 50%


55 http://www.lrc.rpi.edu/programs/transportation/led/nystrafficsignals.asp (accessed April 30, 2011)



http://www.lrc.rpi.edu/programs/transportation/led/nystrafficsignals.asp

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Planning and Financing Energy Efficient Infrastructure in Appalachia 59

ECM 8—Commissioning building energy systems.

Description

A 2009 report from the Lawrence Berkeley National Laboratory (LBNL), Building Commissioning: A Golden
Opportunity for Reducing Energy Costs and Greenhouse Gas Emissions (the California Energy Commission, July
21, 2009)56 terms commissioning “the stealth energy saving strategy.” What exactly is it?

For our purposes, commissioning relates to energy performance and energy systems in buildings. The LBNL
report aptly describes commissioning as a “risk-management process” that includes “installation and testing of
equipment and ensuring that problems are corrected and the crew trained to maintain performance.” It sounds
simple—yet it is rarely done. As a result, buildings “are riddled with problems”57—correctable problems such as air
leakage through improperly sealed openings and ducts, plugged filters, lights left on at night, photosensors that
are shaded from sun, broken actuators, malfunctioning dampers, and missing or poorly calibrated controls. The
act of commissioning requires an understanding of building systems and how they interrelate, and needs a
practiced eye for observation. The major costs associated with commissioning are in time and labor: procuring
the services of an experienced commissioning agent for facilities walkthroughs and subsequent development of
recommendations and an action plan. Commissioning does not involve retrofitting or construction activities; its
effects are money- and energy-saving without this expense. Commissioning conserves existing resources by
ensuring that existing systems perform to their best ability through maintenance, adjustments, and occupant and
manager education.

The following graph from the LBNL study well illustrates the potency of commissioning as a cost-savings strategy
for existing buildings:

Figure 5: Relationship of Commissioning Costs and Payback Times in Existing Buildings 58



Source: http://cx.lbl.gov/2009-assessment.html, page 33.

In addition, the “secondary” benefits of commissioning are considerable. These include improved operations and
maintenance, improved indoor air quality, improved equipment life, and reduced liability.


56 http://cx.lbl.gov/2009-assessment.html
57 http://cx.lbl.gov/2009-assessment.html, page 3.
58 http://cx.lbl.gov/2009-assessment.html, page 33.

http://cx.lbl.gov/2009-assessment.html
http://cx.lbl.gov/2009-assessment.html
http://cx.lbl.gov/2009-assessment.html
http://cx.lbl.gov/2009-assessment.html

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Planning and Financing Energy Efficient Infrastructure in Appalachia 120

Importance of Measurement and Verification in EPC

One of the unique and important aspects of EPC is the predetermination of utility cost savings that the project will
create. This is also an important requirement as contractor compensation is based on the ability of the project to
produce savings. Since savings are guaranteed, both parties must come to a mutual understanding of how
savings will be measured and verified. It is essential to develop an appropriate measurement method to ensure
both parties are satisfied. Performance problems could arise if savings are merely “stipulated” or under-
measured. On the other hand, M&V costs can be unnecessarily high when over-measuring. A proper balance
must be established. The measurement and verification process involves specific practices and calculations to
ensure expected savings are being realized. The International Performance Measurement and Verification
Protocol (IPMVP) has become the industry standard process for creating the M&V plan.

Key elements of the plan are developed in the investment-grade audit phase and are completed prior to signing
an agreement. The plan details the procedures that will be used to measure the pre-project existing conditions,
measure the post-project new conditions, and calculate the baseline (or make any adjustments to the baseline or
pre-project conditions). The baseline (or adjusted baseline) will be calculated after the first year that savings
begin. The methods used to calculate the adjusted baseline are critical to determining whether the savings meet
the guarantee. Facility managers and engineering staff can work with the ESCO to determine how savings will be
calculated and verified. Energy accounting software is often used to analyze and calculate the adjusted baseline.

EPC can be an effective approach to building renewal if properly planned and executed. As energy costs continue
to rise, EPC projects will become more viable. Counties may also find that leveraging available internal funds in
conjunction with financing a part of the project will facilitate a larger and more economical project. Sometimes
completely financed projects are more difficult to achieve in areas with low utility rates, such as in Appalachia.
For example, instead of a project consisting of repairs in three large buildings, which can be funded internally,
owners should consider adding two or three more buildings to the overall project and include financing. This way,
there is a wider array of savings that can be applied to a smaller amount of financing.

Conclusions

Given the limitations of county funding to invest in energy efficiency, the introduction of private capital provides a
promising opportunity to vastly expand investment and overcome the first-cost barriers facing local governments.
As the need grows to increase the energy efficiency of buildings and facilities, counties need more innovative
financial models to help avoid large upfront outlays and pay for large efficiency investments over time.
Innovative vehicles for county governments are not widely available, yet energy efficiency in the local
government sector may represent a good opportunity and a fairly low risk for private investors. Whatever the
financing vehicle adopted, it will be important to balance the needs of counties and investors—for example, to set
payment terms that balance the need of participants to minimize monthly utility plus finance costs against the
desire of funders to reduce risks—and to ensure support for the options most beneficial to citizens. As the
benefits of the ECM analyses of Chapter 2 suggest, low-tech approaches to energy efficiency—rather than the
higher-tech options presented by renewables—present the largest, and potentially most beneficial, economic
opportunity.

The positive consequences of the potential wealth from implementing energy efficiency cannot be ignored, and
should not be postponed:

• Cost savings can fund future local government operations or can be rebated to taxpayers when funding
needs are met. A measure of high performance, this signals accountability to taxpayers.

• Energy savings are usually the lowest cost approach to reducing carbon emissions. Reducing carbon
emissions is likely to become more important over time, and governments must increasingly respond to
Federal and State mandates that require them to pledge reductions in both energy use and carbon
emissions.

• Energy efficiency upgrades save money, induce investment, and create jobs. In some cases, these jobs—
such as a local government’s choice to hire an energy manager—may be a direct result of savings now
reinvested in human “capital.” Energy efficiency investments can generate new sources of wealth and
employment as private and public investment seeks to maximize cost savings that enhance quality of life,
and support forward-thinking leadership.

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