11. Federal stimulus funding Energy & SiemensOFFICE OF THE CITY ~AANAGER
CUPERTIN4
CITY HALL
10300 TORRE AVENUE • CUPERTINO, CA 950143255
TELEPHONE: (408) 777-3212 • FAX: (408) 777-3366
SUMM~-RY
Agenda Item No.
Meeting Date: June 16, 2009
SUBJECT
Authorize the City Manager to apply for Federal stimulus funding from the Department of
Energy (DOE) through the Energy Efficiency and (conservation Block Grant (EECBG) program
and enter into an agreement with Siemens to perfoixn a Detailed Energy and Water Audit of city
facilities and grounds.
BACKGROUND
EECBG Overview '
In February 2009 the United States Congress funded the Department of Energy (DOE} Energy
Efficiency and Conservation Block Grant (EECBG) program as part of the American Recovery
and Reinvestment Act {ARRA). The purpose of the: EECBG program is to assist eligible entities
in implementing strategies to reduce fossil fuel emissions within their jurisdictions, reduce total
energy use, and improve energy efficiency in the transportation building and other appropriate
sectors.
Of the $3.2 billion allocated to the EECBG prograrn, Congress designated $2.6 billion for 2800
formula grants to eligible states, U.S, territories, local governments and Indian tribes. The
remainder of the funds will be made available throixgh competitive grants. Based on population,
the City of Cupertino is eligible to receive $526,200 through its formula grant allocation, though
the city may also apply for a competitive grant thrc~ugh the EECBG program. The City must
submit an application to the Department of Energy detailing a plan for the use of its formula
grant funds by June 25, 2009.
The application must include an Energy Efficiency and Conservation Strategy (EEGs} that
describes how the funds will be used, leveraged, sustained, and accounted for by the City. The
DOE must review applications within 120 days from the date of submission. Applicants whose
plans are not approved will be given feedback and ~~ffered the opportunity to resubmit their .
proposals. The funds will be disbursed following DOE approval of the application and EECS.
Further information on EECBG program guideline: and measurement and reporting
requirements are provided in Attachments A and B.
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June 16, 2009
Page 2
The City anticipates the following timeline for its EECBG application:
• 3une 2Sth, 2009 -EECBG application deadline, Cupertino submits required documentation
including its Energy Efficiency and Conservation Strategy.
• October 22"d, 2009 -Deadline for DOE Secretary review application package and allocate
funds (appx. 120 days after receipt).
• February 25th, 2010 -Deadline for Cupertino to submit finalized Energy Efficiency and
Conservation Strategy (if requested by DOE -appx. 120 days after funding allocation).
Project Review Process
Over the past decade, the City of Cupertino has implemented many energy conservation and
cost-saving measures, allowing the city to consistently maintain its energy consumption despite a
growth in staffing and increase in facility hours, as illustrated by the facility energy consumption
graphics provided in Attachment C. In an effort to review opportunities to accelerate
conservation activities throughout the city while establishing a process to achieve burgeoning
regulatory requirements established by AB32 {Attachment D}, since January 2009, city staff has
explored utilizing energy service companies in conjunction with a performance contract.
A performance contract is a process through which the City can use future energy cost savings to
finance installation ofenergy-saving improvements to city facilities. The performance contract
methodology has been used successfully by hundreds of local government agencies across the
United States to implement energy and cast-saving projects that otherwise would require use of
capital improvement funds.
Examples of facility improvements enabled by performance contracting include but are not
limited to, street lighting retrofits, chiller and boiler replacements, modern irrigation controls and
fixture replacements, and installation of solar facilities.(Attachment E) Performance contracting
bundles these individual energy conservation, water conservation, and renewable energy
generation components together into a comprehensive "clean energy" project that can be
quantified, financed and implemented as an integrated program, with a reasonable pay-back
duration. Additional information on performance contracting is provided in Attachment F.
Energy Savings Performance Contract
Through a competitive RFP process, a team comprised of members from Environmental Affairs
Division and Public Works Department recommends Siemens as its partner to first conduct a
Detailed Energy Audit (DEA) and develop an Energy Savings Performance Contract (ESPC)
based on the findings of the DEA (Attachment G). Upon approval of the performance
contracting approach by city council, staff will submit the application for the EECBG.
The City Manager will enter into a Letter of Intent with Siemens, which describes the scope and
parameters of the DEA (Attachment IT), and commits the City to a cost for the DEA of $74;400.
Cupertino currently spends $1.3 Million per year on utility costs including electricity, gas and
water. Allocating 5% of this annual cost to evaluate facility upgrades will allow staff, led by
Siemens, to design facility energy, water and cost savings measures and create greenhouse gas
reductions benchmarks required by AB32. Furthermore, the cost of the DEA will be absorbed by
the very first year of savings introduced by the performance contract, as a preliminary study
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June 16, 2009 Page 3
estimates that through improvements, retrofits, or upgrades that Cupertino may be able to save
$194,000 per year, or 15% of utility costs.
EECBG funds are required to be allocated by the L>epartment of Energy within .120 days of
receipt of Cupertino's application package. The D:EA will be initiated once funds are allocated
to the city, to be followed by the performance contract.
In addition, Siemens will assist with the completio~i of the appropriate applications .federal
stimulus funding, specifically the Energy Efficiency Community Block Grant (EECBG}
program. Capital contribution to the project from federal stimulus funds is anticipated to be
approximately $430,000, with the remaining $96,2~~0 allocated to internal administrative and
project management costs.
Detailed Energy Audit Phase:
A detailed energy study is necessary to provide the City of Cupertino with a fnal proposal for
capital improvements resulting in energy and resource savings for the City's facilities and
systems (Attachment T). At a minimum, the following energy conservation, water conservation
and renewable energy generation measures will be analyzed:
Location:
Facility Improvement
Measure: City Hall Quinlan
Com-
munity
Center Carp
Y~~rd Sports
Center Senior
Center Monte
Vista
Rec
Center Biack-
berry
Farm
Poot
Interior Li tin x x x x x x
Exterior Li tin x x x x x x
Ener M t S stem x x x x x x
Premium Efficient Motors x x
Solar PV x. x x x
Solar Thermal X x x x x
Irri ation -- ci -wide --
Street & Park Li htin -- ci -wide -
Implementation Phase:
Allowing sufficient time for development of the project implementation proposal, developing the
financing package, and negotiating the contract, co~istruction could begin by January 2010. The
duration of the implementation phase will depend cn the facility improvement measures
ultimately selected by the City for implementation, but one year is typical. The EECBG program
requires funds to be expended within three years of issuance.
Guarantee Phase:
Specifications for the Guarantee Phase, will be developed jointly by Siemens and city staff.
Monitoring and Verifications (M&V) activities are typically focused on the first several years
after implementation, but may range from no M&V activities at all, to M&V activities that
extend for the entire duration of the project financing.
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June 16, 2009
Page 4
Staff Recommendation
Authorize the City Manager to apply for Federal stimulus funding from the Department of
Energy (DOE} through the Energy Efficiency and Conservation Block Grant (EECBG) program
and enter into an agreement with Siemens to perform a Detailed Energy and Water Audit of city
facilities and grounds.
Should the EECBG grant application be successful, staff will return to council in order to
consider acceptance of grant funding and its conditions, and in order to execute an energy service
agreement with Siemens.
Submitted by:
Approved for submission to the City
Council:
Erin oake, nvironmental Affairs
David W. Knapp, City Manager
Attachments
A -EECBG Eligible Activities
B -EECBG Program Guidelines, Measurement and Reporting
C -Cupertino Facility Energy History Graphs
D - AB32 Summary
E -Initial EECBG Project List
F -Energy Savings Performance Contract Summary
G -Siemens Overview of Qualifications
H -Draft Letter of Intent
I -Detailed Energy Audit Summary
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June 16, 2009 page 5
Attachment A
EECBG ELIGIBLE ACTIVITIES
Source: US Department of Energy ~www.eecbg.energy.gov)
1. Development of an Energy Efficiency and Conservation Strategy: Entities may use a grant
received under this part to develop and/or implement a strategy for energy efficiency and
conservation and to carry out activities to achieve: the purposes of the program. All entities
receiving direct formula. grants from the DOE aze required to submit a proposed strategy for
approval.
2. Technical Consultant Services: Entities may retain technical consultant services to assist the
eligible entity in the development of such a strategy, including formulation of energy efficiency,
energy conservation, and energy usage goals; ide~atification of strategies to achieve those goals
through efforts to increase energy efficiency,.redtxce fossil fuel emissions or reduce energy
consumption through investments or by encouraging behavioral changes. Entities may develop
methods to measure progress in achieving the goals. Entities may develop and publish annual
reports to the population served by the eligible entity describing the strategies and goals and the
progress made in achieving them during the preceding calendaz yeaz.
3. Residential and Commercial Building Ener~~ Audits: Entities may support the conduct of
residential and commercial building energy audits.
4. Financial Incentive Programs: Entities may establish financial incentive programs and
mechanisms for energy effiiciency improvements such as energy saving performance contracting,
on-bill financing, and revolving loan funds.
5. Energy Efficiency Retrofits: Crrants may be made to nonprofit organizations and
governmental agencies for the purpose of retrofitting existing facilities to improve energy
efficiency.
6. Energy Efficiency and Conservation Programs for Buildings and Facilities: Entities may
develop and implement energy efficiency and conservation programs for buildings and facilities
within the jurisdiction of the entity. The range of,activities includes the design and operation of
the programs; the identification of the most effective methods for achieving maximum
participation and efficiency rates; public education; measurement and verification protocols; and
identification of energy efficient technologies.
7. Development and Implementation of Transportation Programs: Entities may develop and
implement programs to conserve energy used in ti°ansportation, including but not limited to:
• Employee flex time programs;
• Promoting use of satellite work centers;
• Development and promotion of zoning guidelines or requirements that promote energy
eff cient development;
• Development of infrastructure such as bike lades and pathways and pedestrian wall~w-ays;
• Synchronization of traffic signals;
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June 16, 20U9
Page 6
• State/locals/regional integrated planning activities (i.e. transportation, housing,
environmental, energy, land use} with the goal of reducing GHG and vehicle miles traveled;
• Incentive programs to reduce commutes by single occupancy vehicles;
• Improvements in operational and system efficiency of the transportation system such as
implementation of intelligent transportation system (ITS} strategies;
• Idle-reduction technologies and/or facilities to conserve energy, reduce harmful air
pollutants, and greenhouse gas emissions from freight movement; and
• Installation of solar panels on interstate rights-of--way to conserve energy in highway
operations and maintenance activities.
8. Building Codes and Inspections: Entities may develop and implement building codes and
inspection services to promote building energy efficiency.
9. Energy Distribution: Entities may implement distributed energy resource technologies that
significantly increase energy efficiency, including:
• District heating and cooling systems
• Combined heat and power systems
• Cogeneration systems
• Energy Storage systems
• Absorption chillers
• Desiccant humidifiers
• Micro turbines
• Ground source heat pumps
10. Material Conservation Programs: Entities may implement activities to increase
participation and efficiency rates for material conservation programs, including source reduction,
recycling, and recycled content procurement programs that lead to increases in energy efficiency.
11. Reduction and Captare of Methane and Greenhouse Gases: Entities may use grant funds
to purchase and implement technologies to reduce, capture, and, to the maximum extent
practicable, use methane and-other greenhouse gases generated by landfills or similar waste
related sources, such as wastewater treatment plants, operations producing food waste, dairy
farms and other animal operations.
12. Traffic Signals and Street Lighting: Entities may use grant funds to replace traffic signals
and street lighting with energy efficient lighting technologies, including light emitting diodes;
and any other technology of equal or greater energy efficiency.
13. Renewable Energy Technologies on Government Buildings: Entities may use grant funds
to develop, implement, and install on or in any government building of the eligible entity onsite.
renewable energy technology that generates electricity from renewable resources, including solar
energy; wind energy; fuel cells; and biomass.
14. Any Other Appropriate Activity: Entities may submit any other appropriate activity for
approval in the Energy Efficiency and Conservation Strategy.
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June 16, 2009
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Attachment B
EECBG PROGRAM GUIDELINES, MEASUIItEMENT & REPORTING
Source: US Department of Energy (www.eecb€;.energy.gov)
1. Program Gwidelines
DOE has developed the following core principles to guide entities during the program and
project planning process:
• Prioritize energy efficiency and conservation 'first as the cheapest, cleanest, and fastest ways
to meet energy demand
• To maxi_mi~~ benefits over the longest possible terms, entities should look for ways to link
their energy efficiency efforts to long-term priorities (especially community economic
development, community stabilization and poverty reduction efforts).
• Invest funds in programs and projects that create and/or retain jobs and stimulate the
economy while meeting long term energy goals.
• Target programs and projects that will provide substantial, sustainable and measurable
energy savings, j ob creation and economic stimulus effects.
• Give priority to programs and proj ects that leverage federal funds with other public and
private resources, including coordinated effon:s involving other Federal programs targeting
community development funded through the )Etecovery Act such as the Community
Development Block Grant program, HOME, ~md j ob training programs.
• To the extent possible, develop programs and strategies that will continue beyond the funding
period.
• Ensure oversight, transparency, and accountability for all program activities.
• Enact policies that transform markets, increase investments, and support program goals.
• Develop comprehensive plans that benchmark: current performance and set aggressive goals.
2. Measurement and Reporting
DOE seeks to ensure oversight, transparency, and accountability is maintained for all program
activities. To achieve these goals, the City must t-e able to demonstrate and report on the
following five metrics for selected projects:
• Jobs created and/or retained
• Energy saved
• Renewable energy generated
• Greenhouse gas (GHG) emissions reduced
• Cost savings
In addition, following approval of its application the City will be required to provide detailed
reports on its progress according to the following schedule: -
• Quarterly -financial and ARRA performa~sce progress reports
• Annually -DOE performance progress refbrt
• At project completion -financial and property certification reports
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June 16, 2009 page g
Attachment C
CUPERTINO FACILITY ENERGY ffiSTORY GRAPHS
Ci of Ca ertino: S Year Electrici Usa e w Per Ma'or Facili
540,004
500,000
400,000
+CZuinian
~-iir--CITY HALL
300,(300 _ -l-Community
Hall
-~CDRPORATE
YARD
200,000 - ~SP~RTS
_ CENTER
-I-SEN I~R
CENTER
100,000 -+-Blackberry
Farm
Monta Vista
COMM CTR
0
2403 2004 2005 7046 200] 2008
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June 16, 2009
AB32 SUMMARY
Page 9
Attachment D
Signed into law in September 2006, The Global ~'Varming Solutions Act, also known as AB 32,
requires California to reduce its greenhouse gas emissions to 19901evels by 2020 - a reduction of
approximately 30 percent, and then an 80 percent reduction below 19901evels by 2050. Many of
the 74 proposed measures to reduce greenhouse gas emissions, scheduled to become regulatory
requirements in 2012, rely on local government a~:,tions.
The "Scoping Plan" is California's policy blueprint containing the broad overview of the
programs, measures, and approaches that will help California achieve the required reductions of
greenhouse gas (GHG) emissions required under .AB 32. The Plan, when ~it is completed, will
have a range of GHG reduction actions, which could include direct regulations, alternative
compliance mechanisms, monetary and non-monetary incentives, voluntary actions, and market-
based mechanisms such as asap-and-trade system.
Through the Scoping Plan, ARB recommends that local governments set their GHG reduction
goals to 1 S percent below present levels by 2020. To achieve this target, Cupertino has partnered
with ICLEI to apply its Local Government Operaa'ions Protocol {LGOP} to inventory and report
the city's municipal greenhouse gas (GHG) emissions. The LGOP is the California Air
Resources Boazd (ARB), California Climate Action Registry (CCAR), The Climate Registry
(TCR}, and Local Governments for Sustainability (ICLEI) agreed upon greenhouse gas:
emissions inventory and data. collection methodology for local government. Cupertino's report,
scheduled to be released in June 2009 will challenge the city to set emissions reduction targets,
to be achieved by measures identified through a stistainability/climate action planning process.
To achieve greenhouse gas emissions reductions, required through the 2006 California Global
Warming Solutions Act (AB 32), and demonstratf, climate leadership within an environmentally
progressive region, the City of Cupertino has committed to benchmazking, tracking and
implementing actions to reduce its energy consurription. The Energy Efficiency and
Conservation Block Grant program provides the financial stimulus and means for the city to
move beyond its benchmarking phase to prioritize: projects that will provide substantial,
sustainable and measurable energy savings.
~~ -s
June 16, 2009
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Scoping Plan Subgroups
Agriculture, Cement, Economics, Energy, Forestry, Green Buildings, Land Use, Recycling, State
Fleet, Water /Energy
Scoping Plan & AB 32 Implementation Timeline
AB 32 YMPt1<T~1~I~i'1"A~ON l'X3~I~1.xI'IE
NOV h1A~ StJM ~~ 1~ JAtJ JAN 1, IAtV 1,
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CAT Sub- CAT dub- ARB to Dead~-ne CAT Deadline Regulatlnns
groups are groups Submit draft to adapt members to adopt enforceable
formed with suttmit AS ~2 5[t~ping assigned atl
reps frwn sectar scapsng plan plan recsu~tton regulatory
depls proposals to meet measures measures
t0 ARB goals
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June 16, 2009
INITIAL EECBG PROJECT LIST
Page 11
Attachment E
As part of an internal benchmazking exercise, the Environmental Affairs Division inventoried
existing environmental programs and services through interviews of program managers and
department heads, a listing of which now appears on the city's green website
(www.cupertino.org/green). Through this process, ;staff also identified programmatic gaps that
have now shaped the city's scope of future environmental priorities, which has become the focus
of the city's internal green team agenda. This list provided below offered staff a launching point
to analyze projects eligible for EECBG funding.
Energy Conservation Measures -Detailed Ener~~ Andit
Energy Conservation Measure is a term widely use~3 to represent any energy eff ciency project
that will reduce energy expenditures. Specific applications identified for Cupertino facilities
could include the installation facility improvement measures such as energy management
systems, window film or PC power management sa~flwaze. Initial analysis indicates that certain
upgrades, including the replacement of pump and f ~n motors, temperature control systems,
and/or lighting systems will allow the City to mainl:ain energy efficient building systems that
optimize occupant comfort in a time when fmancia.:l resources are limited. To evaluate and select
the appropriate mix of energy conservation measur~;s for Cupertino facilities, staff recommends
working in partnership with a qualified f rm to conduct a Detailed Energy Audit.
Cost Estimate: $74,400 Energy Savings Potential: Not applicable
Photovoltaic System
Staff, Council Members and Commissioners have expressed interest in installing a photovoltaic
system on city facility rooftops, in designated ground areas, and on parking lot structures to
further demonstrate Cupertino's commitment to emrironmental initiatives. In addition to helping
the city to reduce power consumption from the utility grid during times of peak demand, a highly
visible solar project can reduce greenhouse gases a:~sociated with facility operations, enabling the
city to achieve AB32 tazgets. Though solar companies have offered simple recommendations on
select city facilities, a comprehensive solar audit should be conducted to assess the city's solar
assets.
Exploring the city's potential to benefit from the "aggregate net metering" approach, recently
enabled by AB2466, will be an important component of the solar audit.
Audit Cost Estimate: proposed as part of DEA
Solar Project Cost l~stimate: $ Range of $250,000 to $3,500,000
Energy Savings Potential: $10,000 to $140,000
Streetlight Retrofit
Through its 2005 municipal-wide greenhouse gas emissions inventory, recently completed with
ICLEI USA, the city identified that street lighting accounted for 41% of its total electricity
consumed and 39% of its total cost of operations. A,s such, street lighting has become a primary
focus for efficiency upgrades as current equipment, namely the city's high pressure sodium
lamps, reaches the end of its useful life.
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June 16, 2009 Page 12
This level of consumption is not unique to Cupertino; studies estimate that electricity used for
municipal public lighting represents between 25% and 70% of any individual local government's
energy consumption and greenhouse gas emissions. For this reason, over the past five years
extensive pressure from government and the private sector has driven efficiency in public
lighting, resulting in the creation of new technologies able to reduce current energy consumption
from street lighting by around 50%.
To identify and select the most appropriate lighting technology and establish the ideal mix of
technology controls, Cupertino should work with an energy expert to inventory existing
streetlights and analyze/select optimal streetlight technologies to guide future retrofit activities.
Audit Cost Estimate: proposed as part of DEA
Retrofit Project Cast Estimate: $2,800,000
Energy Savings Potential: 880,000 kwh/yr (44%) and $100,000 plus operational savings
Irrigation Upgrades
Though existing water conservation measures allow city to achieve reductions required by the
Water District during #imes of drought, upgrades to irrigation infrastructure will allow the city to
more effectively manage water resources to reduce costs, maximize infiltration, provide retention
and slow runoff. Irrigation systems can provide remote control capability and improved
irrigation management to ultimately save water, while improving the appearance of public areas.
The City of Cupertino would like to further evaluate water savings potentials through irrigation
improvements for its parks and golf course, as well as the sports fields it maintains on behalf of
local area school districts, through a detailed irrigation audit. This audit would evaluate systems
such as weather smart automated irrigation controls, which use weather factors such as soil
infiltration and rainfall intensity which are compared to determine the exact effect weather has
on irrigation needs. This type of system will allow the right amount of water used to irrigate the
parks and fields, and eliminates the risk of property damage caused by water.
Audit Cost Estimate: proposed as part of DEA
Irrigation Project Cost Estimate: $200,000 Energy Savings Potential: $42,500/yr
Acterra Green@Home
Green@Home trains volunteers to install energy-saving devices and perform home energy audits
for Cupertino residents. The program also builds community awareness of climate change by
giving yard signs to participants and working with neighborhood groups to publicize the program
and the need to reduce the burning of fossil fuels. Each participating household receives free
energy-saving devices and achieves measurable results. Funds are used to pay the salary of
Acterra staff to train and coordinate the volunteers and provide supplies for the residents. The
2009 goal is to serve 150 Cupertino households, averaging 5/week after sufficient volunteers are
trained.
The purpose of Acterra's Green@Home program is to assist residents in reducing their home
energy use, thus decreasing the city's CO2 emissions. Utilizing volunteers to offer home energy
audits, Green@Home reinforces the need for citizen involvement in reducing the burning of
11 - 12
June 16, 2009 Page 13
fossil fuels and builds a sense of community among; Cupertino residents. By involving
neighborhood associations and offering a colorful "We're Green@Home" yard sign to
participating residents, the program raises awazeness of the need for conservation and establishes
a new norm of civic-minded behavior.
The cost to continue this project is projected to be pit least $24,000 and is currently included in
the Environmental Affairs Division 2009 Budget. Staff proposes expansion through a
competitive California Energy Commission grant.
Cost Estimate: $24,000 + Energy Savings PotentiaUhousehold: $400/yr
Green Banding Ordinance
Development of a green building policy to establish green building standards for municipal
facilities, residential homes and commercial and institutional buildings was recently added as the
top priority of the Planning Commission's 2009 Work Plan. Utilizing grant funds for some, or
all, of this project would free up staff and CIP fund's for other projects. However, the grant
metrics required to demonstrate energy efficiency rind greenhouse gas savings cannot be easily
tracked for this project. As such, Cupertino will continue participation in the Santa Claza County
Cities Association's Green Building Collaborative, tasked to develop and recommend a green
building standard and policy framework for cities, and design an implementation strategy for the
proposed policy outcome. Administrative funds allocated through the EECBG program will help
offset the staff costs required to fully develop and implement this program and associated
education and outreach activities.
Cost Estimate: unkn~~wn Energy Savings Potential: unknown
Community GHG Inventory
The Environmental Affairs Division has acquired i~rom ICLEI the tools required to conduct a
community-wide greenhouse gas emissions invent~~ry. Staff anticipates initiating this analysis in
3uly, working in collaboration with volunteers from the Kirsch Center at De Anna College. It is
expected that administrative funds acquired through the EECBG allocation will support project
management costs for this project. This inventory ~~vill scaffold the launch of the city's Green
Ribbon Task Foxce, expected to begin in fall 2009, to draft Cupertino's citywide sustainability
plan. To support this stakeholder working group, the city will investigate alternative grant
funding resources available for climate change and. sustainability planning through agencies such
as the Association of Bay Area Governments and the Bay Area Air Quality Management
District. These grant opportunities are more appropriately suited for benchmazking qualitative
outreach goals versus demonstrating quantitative utility gains from efficiency measures.
GHG Inventory Cost Estimate: $15,000 (based on municipal inventory costs)
Energy Savings Potential: Not applicable
Caltrain/VTA Eco-Pass Subsidy
This program could supply City employees with up to $100 per month in commuter checks
toward the purchase of a monthly train or bus pass. This employee benefit was eliminated in
recent yeazs due to a lack of participation. However, following a recent employee commute
survey administered by the Environmental Affairs Division in collaboration with ICLEI, the city
documented employee interest to once again offer this benefit. While this project could
demonstrate energy and greenhouse gas savings, City staff would need sufficient time to develop
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3une 15, 2Q09
Page 14
an alternative commutes program for employees in order to determine the most appropriate and
beneficial use of funds. This is proposed as an activity for the next fiscal yeaz, to also include
research for alternative funding mechanisms. Administrative funding provided through EECBG
funds will potentially support this research and program development.
Cost Estimate: $180,000 (for l50 employees} Energy Savings Potential: Not yet
analyzed
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June 16, 2009 Page 15
Attachment F
ENERGY SAVINGS PERFORMANCE CONTRACT SUMMARY
ESPC is a combination energy and financial solutions approach to address facility improvement
needs in a budget constrained environment. The E;3PC approach utilizes existing budgets and
redirects utility and operational savings generated 'to fund the cost savings improvements. A
performance contract will allow the city to leverage its EECBG funds and money saved on
energy and operating costs to pay for building improvements. it also offers an alternative to the
traditional bid and spec process by placing the burden of performance and guaran#eed results on
energy service contractors. Savings realized will l~~ applied toward facility improvements, within
existing budgets and without the need for capital fiuiding. Furthermore, this contract will allow
the city to achieve the EECBG's ambitious targets required for cities to successfully access
fiznding including job creation, funds leveraged and energy/emissions reduced.
Using utility billing records, facility data, and characteristics of applicable sites, an Energy
Services Company (ESCO) identifies an inventory of these clean energy opportunities, each with
an estimated capital cost and pay-back period. Items having shorter pay-back periods (typically
energy conservation) can be bundled with items having longer pay-back periods (typically
renewable energy generation} to achieve an overall project package with an acceptable pay-back
period.
Typically, part or all of the capital financing associated with a performance contract can be
provided by a third party lending agency, with capital lease payments allocated from resulting
utility cost savings. All facility improvements made as part of the performance contract become
the property of the city upon the completion of the lease payments.
In addition to the benefits of facility upgrades and ~;ost savings enabled by a performance
contracting approach, a further beneft is the ability of the city to demonstrate measurable
greenhouse gas emissions (GHG} reductions in a short timeframe relative to many other
sustainability and climate protection strategies. Hiring of local sub-contractors for these "green-
collar" construction jobs can. also contribute to the vitality of.local economies.
Performance Contracting is a four-phase process: 1) Preliminary Study, 2) Detailed Energy
Audit (DEA), 3) Implementation, and 4) Guarantee Phase. The final three phases are performed
by a single ESCO. Because of the continuity provided by the fact that the DEA and the
Implementation steps are performed by the same company, that company is able to guarantee the
energy savings that will be realized by the city over the project lifecycle, as validated in the
Guarantee phase by monitoring and verification (M&V) methods.
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June 16, 2009 Page 16
Attachment G
SIEMENS OVERVIEW OF QUALIFICATIONS
Through a competitive RFP process, a team comprised of members from Environmental Affairs
Division and Public Works Department recommends Siemens as its partner to first conduct a
Detailed Energy Audit (DEA) and then to develop an Energy Savings Performance Contract
(ESPC} based on the findings of the DEA.
Siemens AG is a global corporation with headquarters in Munich, Germany employing roughly
480,000 people in 190 countries world-wide and reporting annual sales of approximately $107
billion in fisca12008. Siemens companies spend over $6 billion each year on research and
development, and hold 62,000 worldwide patents.
Headquartered in Buffalo Grove, Illinois, Siemens Building Technologies, Inc. is one of 1.4
Siemens operating companies in the United States.
Siemens has been providing performance contracting services to public entities since 1995 when
it acquired the performance contracting business of Landis & Gyr (Zug, Switzerland, founded in
1895) and the industrial activities of Electrowatt Ltd. (Zurich, Switzerland, founded in 1895),
thus combining several aspects of facilities and energy expertise and integrating many decades of
experience into its operations.
During the past 10 years, Siemens has completed 515 performance contracts in the United States
of a similar size to that being contemplated for Cupertino (between $1 and $b million). 73 of
these have been in California, and of those, 17 have been with municipalities.
Siemens has branch offices providing performance contracting services in Hayward and
Sacramento covering the Northern California region. Its regional approach tv project
management ensures local commitment and accountability for quality and customer satisfaction.
Last year alone, the two Northern California offices executed $112 million of work.
Siemens ensures that the City gets the most attractive project package possible by seeking out all
applicable rebates, incentives, and funding sources for the project. Throughout the project
development process, Siemens works closely with utility companies (i.e. PG&E, water utilities)
and other agencies (ABAG, Santa Clara Valley Water District) to incorporate all potential
rebates and incentives into a project package. State incentives (like the California Solar
Initiative or CSI) and funding opportunities offered by the California Energy Commission (CEC)
axe also incorporated into the project package as appropriate. Siemens has been an active
participant in the grant application process to for Cupertino's Energy Efficiency Community
Block Grant funds.
As a general contractor, Siemens has a professional procurement staff and uses a competitive bid
process in developing the project package on behalf of the City. A minimum of three bids are
used in determining the best value (price and quality) for every Iabor and material component of
the project.
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June 16, 2009
Page 17
Siemens provides the City with a Guaranteed Maximum Price (GMP) in the performance
contract, with no change orders.
Because of the reputation, conservative management, and demonstrated financial stability of the
company, staff has confidence that Siemens will h~~ve the longevity and financial wherewithal to
back its Performance Guarantee of the energy savings it promises. Siemens will write a check to
the City of Cupertino to the extent that energy savi~~gs are not realized. Smaller competitors may
not have this capability, particular in lean and uncertain financial times.
Siemens Guaranteed Maximum Price, in combination with its Performance Guarantee and the
self-funding nature of the performance contract essentially minimizes all risk to the City of
undertaking this program.
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June 16, 2009
DRAFT LETTER OF INTENT
Page 18
Attachment H
June 17, 2009
Balachandar Jayaraman
Siemens Building Technologies, Inc.
25821 Industrial Boulevard, Suite 300
Hayward, CA 94545
Subject: Letter of lnten#
Re: Clean Energy Project for the City of Cupertino
Dear Mr. Jayaraman:
This document is to serve as a Letter of Intent between Siemens Building Technologies, Inc. (Siemens) and City of
Cupertino (CC).
This letter is our authorization for Siemens to conduct a detailed energy study necessary to provide CC with a final
proposal for capital improvements resulting in energy and resource savings for the City's facilities and systems. At
a minimum the following energy conservation, water conservation and renewable energy generation measures will
be analyzed:
Location:
Facility Improvement
Measure: City Hall Quinlan
Com-
munity
Center Corp
Yard Sports
Center Senior
Center Monte
Vista
Rec
Center Black-
beery
Farm
Pool
Interior Li htin x x x x x x
Exterior Li tin x x x x x x
Ene M t S stem x x x x x x
Premium Efficienc Motors x x
Solar PV x x x x
Solar Thermal X x x x x
In-i ation -- ci -wide -
Street & Park Li htin -- ci -wide -
As a parameter of the study, project financing will be proposed for I0 years. The proposal will be based on the
presumption that the facility improvement measures will be financed with a capital lease program (or other
financing mechanism) based primarily on energy and resource savings realized from the proposed improvements, as
well as some additional infusion of grant or capital funds.
Solar photovoltaic generation, if included in the final proposal, will likewise be based on capital lease-to-own
purchase potentially with an aggregate net metering scenario. A power purchase agreement approach {PPA} will
also be analyzed.
Siemens will analyze the PG & E rate structure of the City's accounts, and make recommendation for optimization.
Siemens will assist CC with obtaining California Energy Commission (CEC) state funding, utility incentives, and
rebate programs by researching applicable programs and completing the appropriate applications, where applicable.
U addition, Siemens will assist with the completion of the appropriate applications federal stimulus funding,
11 - 18
June 16, 2009
Page 19
specifically the Energy Efficiency Community Block Grant program. Capital contribution to the project from
federal stimulus funds is anticipated to be approximately $430,000.
The City will assist Siemens in its effort to prepare this proposal by providing information deemed necessary and
appropriate to conduct a thorough survey. This information should include, but is not limited to:
• Energy records.
• Service records.
• Service contract data.
• Engineering drawings.
• Building operating schedules.
• Equipment inventory.
• Equipment operating and maintenance data.
• Access to city sites listed above.
Based upon this proposal meeting the above stated financial criteria, it is the intent of CC to enter into a contrac#
with Siemens for the completion of the proposal recommendations. The cost of the detailed energy study, indicated
below, would be roiled into the implementation cost, once the: project is approved for implementation. -
Turnkey implementation would be provided for engineering, ~~osting, procurement, construction, and
commissioning, as well as prospectively for maintenance service. -
Should CC choose not to enter into the implements#ion phase of the agreement with Siemens; CC shall reimburse
the cost of the detailed energy study in the amount of $74,400. Upon payment, the report would become the
property of the CC.
We look forward to this partnership and to the successful co~r~pletion of the project.
Sincerely,
Dave Knapp
City Manager
City of Cupertino
Acknowledged and accepted:
Balachandar Jayaraman
General Manager, Western Zone
Energy & Environmental Solutions
Siemens Building Technologies
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June 16, 2009 Page 20
Attachment I
DETAILED ENERGY AUDIT SUMMARY
The City will assist Siemens in its effort to prepare this proposal by providing information
deemed necessary and appropriate to conduct a thorough survey. This information should
include, but is not limited to:
• Energy records.
• Service records.
• Service contract data.
Engineering drawings.
Building operating schedules.
• Equipment inventory.
• Equipment operating and maintenance data.
• Access to city sites listed above.
Based upon the implementation proposal meeting the above stated financial criteria, and with the
approval of the performance contacting approach by the city council, it would be the intent of the
City to enter into a contract with Siemens for the completion of the proposal recommendations.
The cost of the detailed energy study, $74,400, would be rolled into the implementation cost,
once the project is approved for implementation.
As a parameter of the study provided by the City Manager, project financing will be proposed for
10 years. The proposal will be based on the presumption that the facility improvement measures
will be financed with a capital lease program (or other financing mechanism) based primarily on
energy and resource savings realized from the proposed improvements, as well as some
additional infusion of grant or capital funds.
Solar photovoltaic generation, if included in the final proposal, will likewise be based on capital
lease-to-own purchase potentially with an aggregate net metering scenario. A power purchase
agreement approach (PPA) will also be analyzed.
Where appropriate, Siemens will assist City of Cupertino with obtaining Califorzua Energy
Commission (CEC) state funding, utility incentives, and rebate programs by researching
applicable programs and completing the appropriate applications.
11 - 20