By Chris Peluso, CH2M HILL Water Business Group Global Technology Leader for Distribution Systems
The American Water Summit is taking place this week in Chicago, and one hot topic that is being addressed is what new business models will revitalize the U.S. water sector. Here at CH2M HILL, we recognize that we must consider alternative sales and delivery models to address the ongoing economic downturn and continued evolution of alternative delivery options in the United States. Guaranteed Energy Performance Contracting (GEPC) is one avenue that CH2M HILL is entering to help our clients finance and implement projects.
The model is based on an Energy Service Companies (ESCOs) model where the ESCO or GEPC company identify and evaluate energy-saving opportunities and then recommend a package of improvements to be paid for through savings. The GEPC will guarantee that savings meet or exceed annual payments to cover all project costs—usually over a contract term of less than 10 years. If savings don’t materialize, the GEPC pays the difference, not the client. To ensure savings, the GEPC often offers staff training and long-term maintenance services.
Financing and implementing projects as part of a GEPC provides water utilities an opportunity to carry out energy reduction and cost savings projects and programs without necessarily investing their capital. Whether a utility’s capital funding capabilities are limited or not, the GEPC approach allows a utility to expand its revenue resources for the benefits of its constituents, thus extending the financial capabilities of the utility.
GEPC is a turnkey service that provides customers with a complete set of energy efficiency, renewable energy, and distributed generation measures that are backed by guarantees that the savings realized by a project will be enough to finance the entire project cost, including operations and maintenance. GEPC evaluates a project or a program and develops a fixed (guaranteed) capital cost and operational savings. When considering the massive amounts of energy used in treating and transporting water to and from users, it only makes sense that municipalities think about GEPCs when they look at upgrading
A GEPC might be the right approach for a water or wastewater project if:
— There is an opportunity for private financing and available funding is to be reserved for a greater need
— There is a desire to holistically decrease energy consumption and carbon footprint
— There is a complex project but project details are not defined, nor is the financing
— There are overarching green goals
— There are energy savings available but no money to move the project or projects forward
For instance, we are working with Honeywell International in Wilmington, Delaware, to design a new $35-million renewable energy project that will feature a first-of-its-kind facility that converts two sources of biogas into power and heat for the city’s wastewater treatment plant. Honeywell will get up to 20-year agreement to construct and operate the plant, and has guaranteed the city $16.7 million in savings over current electricity and sludge disposal costs over 20 years. The project is part of a city-wide initiative to decrease energy costs and greenhouse gas emissions, a program that has also included Honeywell-led solar installations and energy-efficient building improvements. Combined, the upgrades will help the city trim its carbon footprint by approximately 35 percent and meet nearly 50 percent of its electricity needs with renewable energy.
The new biosolids facility in Wilmington will capture methane produced by anaerobic digesters at the Hay Road Wastewater Treatment Plant, a potential energy source that is currently flared off. The gas will mix with additional methane from the nearby Cherry Island Landfill, which is operated by the Delaware Solid Waste Authority. The blend will be purified at the facility and used to power reciprocating engines that can generate up to 4 megawatts of electricity, enough energy to provide up to 90 percent of the treatment plant’s power. The biosolids that come out of the digesters will also be dehydrated by heat recovered from the engines. This thermal drying process is expected to reduce the amount of sludge the city needs to truck away by approximately 75 percent — from 140 to 35 tons per day — greatly reducing material-handling costs. The biosolids facility is also projected to trim greenhouse gas emissions by 15,700 metric tons annually. According to figures from the U.S. Environmental Protection Agency, the decrease is equivalent to removing more than 3,000 cars from the road.
Check out this Public Works magazine article “How to finance the energy portion of the ‘water/energy nexus’” by CH2M HILL’s Bill Bellamy and Mike Matichich for an in-depth look at how GEPCs and ESCOs are helping to stretch water and wastewater utility budgets.
Chris Peluso is the global technology leader for distribution systems within CH2M HILL. He has devoted his engineering career to assisting public and private clients with solutions to water distribution systems. Peluso is currently the Project Manager for the Philadelphia Water Department’s water distribution system model development and master plan as well as Project Manager for the Wilmington, DE,ESCO project. His experience encompasses technical, managerial and training tasks of engineering projects from conceptual to design, permitting, construction phase engineering, and regulatory compliance.