1. A Road Map to Energy Savings: Elements of a Comprehensive Energy Plan Presented by: Kenny Esser, Senior Associate June 18, 2014 Passaic County Division of Economic Development Greening Your Company in 2014: Opportunities to Improve Cash Flow and Maximize Environmental Benefits

2. Table of Contents Energy Initiatives  Energy Planning  Energy Procurement  Energy Audit Process / Energy Efficiency Initiatives  Renewable Energy  Demand Response Financing Energy Initiatives Keys to Success Summary

3. Energy Planning Comprehensiveness in approach is key Create a short and long range plan incorporating both supply and demand side strategies Other: Combined heat and Power, Micro-grid strategies, battery storage, renewable energy Facility owners/managers must understand where their facilities stand today.  First step is to establish existing benchmark. 3

4. Energy Planning Understand your energy use through billing information and energy audits. Establish EnergyStar Baselines for comparative purposes Identify problem sites  Higher energy usage sites compared to EnergyStar rating.  Utility cost per sq ft of site  Sites with comfort, humidity, mold, etc issues.  Prioritize list of sites based on above information Comprehensive Energy Master Plan Approach. Evaluate both supply and demand related systems. 4

5. 5 Energy Procurement Energy Components Delivery Component  Regulated Service  Provided by Local Distribution Company Commodity Component: The shopping credit is the part of the utility rate which customers avoid when they switch suppliers  Competitive Service  Provided by:  LDC - Basic Generation Service (BGS)  Third Party Supplier (Competitive Market)  Market based Rates

6. 6 Energy Procurement Cost of Electricity and Natural Gas: Delivery by Utility  Average about 20-30% for Elect and about 15-20% for natural gas of total price  Both Regulated; very stable Power Supply  Average about 70-80% for elec. and about 80-85% for natural gas of total price  Capacity, interstate transmission about 20-25% of supply cost  Energy costs about 75-80% of supply cost  For electricity capacity and transmission costs relatively stable, although capacity prices can move with market  Pipeline costs relatively stable, although can move with market  Energy Costs and commodity extremely volatile

7. Energy Audit Process Initial Meeting  Gather utility bills, floor plans, drawings.  Ask general facility questions, ie largest consumers of electricity, operating parameters, etc.  Discuss problem areas to address: hot/cold spots, inadequate light levels, indoor air quality, etc.  Discuss financial parameters for project.  Discuss goals for project. Is it a capital improvement project vs. energy savings.  Discuss recently approved projects, long range plans, etc.  Discuss sustainability initiatives and goals.  Discuss economic market drivers and programs 7

8. Energy Audit Process Site Visit: Conduct an inspection of each site and its operations; Include interviews with facility personnel. Conduct a review and audit of all mechanical and electrical equipment and systems in each facility to understand the following; Condition, Age, Operating characteristics, etc. Identify potential energy savings or operational improvements associated with these systems. Investigate Demand Response Strategies Note potential failure scenarios for major equipment based on input from the staff, equipment age vs. mean life expectancy.  Use industry standards  ASHRAE life expectancy for equipment life. 8

9. Energy Audit Process Types of Technologies To Consider:  Lighting and Lighting Controls  Motors and Pumps  Variable Frequency Drives (VFDs)  Energy Management Systems  HVAC  Combined Heat & Power (CHP)/Cogeneration/Peak Shaving/Demand Response  Boiler Upgrades  Geothermal Systems  Fuel Cells/Microturbines  Building Envelope (windows, roofs)  Water Technologies  Transformer Technologies (power factor)  Solar Systems (photovoltaic and thermal)  Wind  Process Improvements  Battery Storage 9

10. Energy Audit Process Energy audit completed including:  Existing and proposed conditions and energy efficiency measures for improvement  A financial analysis with project costs and savings estimates by technology  Available financial incentives  Life-cycle cost analysis  Summary of environmental benefits (reduction in GHGs). After reviewing the report, decide which projects to move forward with. Selected projects will require final engineering with cost estimates, to prepare bid specifications. Coordinate funding. 10

11. Renewable Energy 11 NJ Solar Economic Drivers: Solar Renewable Energy Certificates (SRECs)  SREC value has stabilized over last year as a result of legislation signed into law in July2012.  Spot prices were as high as $180 in January/February and currently at around $170-180.  New PSE&G Solar Loan Program has been approved by the BPU. First auction occurred and PSE&G currently reviewing proposals. Federal Investment Tax Credit (30% of capital cost until 2016) Accelerated Depreciation Electricity revenue Lower overall installation costs enabling projects to be developed despite lower SREC values. PPA Rates in the $.08-$.13/kWh range based on type of project

12. Demand Response The region’s power administrator, PJM, offers payments to utility customers who are willing to curtail their power demand during utility peak periods. By curtailing power usage during peak power usage periods, customers also save on energy costs. These two benefits can make Demand Response a lucrative opportunity for energy customers. 12

13. Keys to Success Property owners, facilities managers and CFOs all must be on-board with the concept. Decide on a financing mechanism. Treat the proposed program like a wish list.  Look at every possibility for savings and building improvements.  You can always eliminate items before you finalize the bid specs or establish multiple phases for the improvements. Do not base your investment decision on lowest first cost. Instead, look at life-cycle cost. 13

14. Summary Enables company to upgrade mechanical and electrical equipment and make much needed capital improvements. Good for the environment. Cuts back on U.S. dependency on foreign fuel. ENERGY & OPERATIONS SAVINGS 14

15. Contact Information Joe Santaiti, Vice President Gabel Associates 417 Denison Street, Highland Park, NJ 08838 t. 732-296-0770; e. joe@gabelassociates.comjoe@gabelassociates.com 15