Eight Southeast Medical Centers Will Save $140,000 per Month with Super ESPC

November 11, 2003

The Department of Veterans Affairs (VA) recently awarded a $17 million energy savings performance contract (ESPC) that is guaranteed to yield savings of $140,000 per month for eight medical centers in the Veterans Integrated Service Network centered in Atlanta, GA (VISN7–the Atlanta Network). The delivery order under DOE's Southeast Region Super ESPC, awarded to Ameresco on May 20, 2003, is for 36 energy conservation measures (ECMs) to improve healthcare facilities in Georgia, Alabama, and South Carolina.

Robert Baugh, FEMP Project Facilitator, said this most recent VA investment in energy efficiency is a standout project. "This is a good, comprehensive project and an excellent value for the VA. With an interest rate of only 5 percent and a relatively short term of 10.5 years, finance costs on this project will be unusually low," Mr. Baugh said. Including no-offset and make-whole provisions in the contract helped the VA negotiate the low interest rate. Financing costs were also minimized by paying $988,000 to Ameresco early in the contract term from cost savings that accrued during the 18-month construction period. These terms decreased the financed amount and made the contract term shorter.

Energy costs for hospitals are normally higher than for other buildings because they operate and require space conditioning 24 hours per day, 7 days a week, and also have special air quality requirements. Oportunities for improving efficiency and cutting costs, however, are proportionally large. Predictably, most of the retrofits and upgrades will be related to the HVAC systems including chiller and boiler plant replacements; motor replacements; VAV conversions; variable speed pumping; chiller heat recovery for preheating of hot water; and steam traps and condensation return system replacements.

ECMs include water conservation measures, and upgrades to lighting and energy management control systems. Substantial cost savings will result from power factor correction and utility rate renegotiation.

Jeff White, VISN7 Infrastructure Program Manager, championed the project and views ESPCs as an important asset for supporting VA's mission. White said, "Meeting the capital needs of a hospital system the size of VA consumes significant resources and must be maintained in order to deliver reliable care to our veterans. Energy savings performance contracting expanded our ability to maintain our infrastructure without additional resources, while at the same time reducing energy consumption."

Doug Culbreth of DOE's Altanta Regional Office credits White with pursuing a strategy for scoping the project that guaranteed maximum benefits to the VA. White used the ESPC to focus improvements on only mission-critical or mission-critical-support areas in the hospitals. White and Ameresco staff then pared down a list of about 140 potential ECMs to the final 38 that were most cost-effective and paid back quickly enough to keep the contract term close to 10 years.

Close cooperation and continual communication kept Ameresco's efforts on the right track and allowed project development to move quickly through the initial and final proposal stages. White said, "A positive partnering arrangement with the ESCO [energy service company] and technical support made available through the DOE's Super ESPC vehicle and their FEMP Project Facilitator were key components to the successful development of this contract."

For more information about the project please contact Jeff White, VISN7 Infrastructure Program Manager, at 205-554-3826 or Jeff.White@med.va.gov; or Bob Payne, Ameresco, at 704-916-3505 or rfpayne@ameresco.com; or Doug Culbreth, DOE's Atlanta Regional Office at 919-870-0051 or Carson.culbreth@hq.doe.gov.

For information about Super ESPCs, please contact Tatiana Strajnic, FEMP Project Financing Team Lead, at 202-286-9230 or tatiana.strajnic@ee.doe.gov; or the FEMP representative in your DOE Regional Office (see www.eere.energy.gov/femp/ financing/espc/getting_started.html).