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Illuminating Efficiency

Steps for a City to Hire an Energy Savings Company

In the pursuit of sustainable development, cities around the world are increasingly prioritizing energy efficiency as a key component of their growth strategy. Recognizing the significance of reducing energy consumption and carbon emissions, many cities are turning to energy savings companies (ESCOs) to harness expertise and drive transformative change. Hiring an ESCO is a strategic move that requires careful consideration and planning. Here, we outline the essential steps for a city to engage an ESCO effectively and pave the way for a more energy-efficient future for its citizens.

Step 1: Define Objectives

Before embarking on the journey of hiring an ESCO, a city must first identify its energy efficiency goals. This involves evaluating existing energy consumption patterns, identifying potential areas for improvement, and setting realistic targets. Whether the focus is on upgrading municipal buildings, street lighting, transportation systems, or public facilities, clear objectives will serve as the foundation for the entire process. This could be inclusive of all city owned properties or just one building.

Step 2: Market Research and Pre-qualification

Cities must undertake comprehensive market research to identify potential ESCOs with proven track records in similar projects. Pre-qualification ensures that only experienced and financially stable ESCOs move forward in the selection process, minimizing risks and ensuring the city’s interests are protected.

Step 3: Request for Proposals (RFP)

The RFP stage is critical, as it provides ESCOs with a detailed understanding of the city’s needs, expectations, and project requirements. The RFP should include technical specifications, performance benchmarks, evaluation criteria, and contractual terms. A well-structured RFP allows ESCOs to submit comprehensive proposals that address the city’s unique challenges and propose innovative solutions.

Step 4: Evaluation and Selection

City officials, sustainability experts, and other stakeholders evaluate the submitted proposals based on predefined criteria. Evaluations may consider technical expertise, financial viability, proposed energy-saving measures, project timeline, and potential for community engagement. The selection process aims to identify the ESCO that offers the most compelling and well-aligned approach to achieving the city’s energy efficiency goals.

Step 5: Negotiation and Contracting

Once the preferred ESCO is selected, negotiations begin to finalize the project scope, terms, and contractual agreements. Key aspects to address include performance guarantees, measurement and verification protocols, project costs, and project duration. The contract should clearly outline responsibilities, risk allocation, and dispute resolution mechanisms to ensure a smooth collaboration.

Step 6: Implementation and Monitoring

With the contract in place, the city and the chosen ESCO begin the implementation phase. This involves executing the proposed energy-saving measures, which could encompass a range of activities such as retrofitting buildings, upgrading lighting systems, installing renewable energy sources, and optimizing infrastructure. Throughout this phase, regular monitoring and reporting mechanisms are established to track progress against predefined benchmarks and ensure that the projected energy savings are being realized.

Step 7: Measurement and Verification

Following the implementation phase, an independent third-party measurement and verification process is crucial to confirm the achieved energy savings. This step ensures transparency, accountability, and trust between the city and the ESCO. If the energy savings fall short of the agreed-upon targets, the contract may include remedies or adjustments to address the discrepancy.

Step 8: Continuous Improvement and Collaboration

Energy efficiency initiatives should not end with the completion of the initial project. Cities and ESCOs should engage in ongoing collaboration to explore additional opportunities for energy savings and sustainability improvements. By continuously monitoring and optimizing systems, cities can maximize the long-term benefits of their partnership with the ESCO.

Navitas can help you from start to finish. We’ve helped cities with the proposal process and guiding them through a continuous improvement plan well past the installation of the energy efficient projects. We are here to be your partner. Contact us today for more information on how we can help your city starting saving taxpayer dollars.

Teaching Kids About Engineering

Our own Bob Wimmer, Project Director of Infrastructure Solutions, joined the 4th grade students at Ebb Valley Elementary School in Manchester, Maryland, as part of the STEM program to see what an engineer does every day. Bob showed how spoiled food and other food waste can be converted into renewable natural gas through anaerobic digestion. The students learned how renewable fuels and converting waste into energy can provide additional options for producing energy. The students asked great questions about what an engineer does every day and Bob showed how engineering applies math, science, social skills and many other disciplines in order to construct new facilities and structures.

Things to Consider Before Moving Forward With an ESCO

The goal of many educators is to become a superintendent. You go to school to obtain the right degree, certification, and knowledge to lead a school district. The problem is that most of the education and training we receive does not fully prepare us to do the job that we are expected to do by staff, parents, and our community. When I became a superintendent, I thought I had a pretty good grasp of how to do the educational side of the job. I was not as prepared or educated on how to deal with the maintenance and upkeep of the district and everything that goes with it. Ultimately, I turned to an Energy Service Company (ESCO) to help meet the needs of my district. From my personal experience, here are some of the things you should consider if you feel an Energy Performance Contract (EPC) is in your school district’s best interest.

District Concerns

What is your pain? Meaning, what is your biggest issue you are facing in your district? Is it finances, deferred maintenance, or salaries, etc.? Who is the driving force behind these issues, the BOE, community, staff, or matters that you are concerned about? How can you address these issues in a way that will satisfy the needs of all parties involved? There are many avenues that a superintendent may go down to accomplish this, the goal is to figure out what best fits your district. Understanding the driving force behind hiring an ESCO is essential to starting the process of hiring one.

Energy Service Company (ESCO)

Understand how an ESCO can help your district can be accomplished in a few ways:

  1. Through funding mechanisms. Using an EPC allows you to be more flexible with the districts money in how you approach your district’s needs.
  2. Through guaranteed energy savings. An ESCO can evaluate your district and find cost saving measures through replacement or upgrades of current mechanical or electrical systems or items. There are considerable savings in LED Lighting, Building Automation and HVAC. For instance, when I used an EPC, I was guaranteed $30,000 dollars of energy savings every year, which I validated and saw a reduction of over $30,000 annually on my electric bills. This was a substantial savings for our small school district.

Deferred Maintenance

As I mentioned earlier, deferred maintenance was something I was not as prepared for. My district had so many needs. We needed a new roof and tuck pointing. We had HVAC issues (building automation), gym wall issues, building weatherization issues, and a few other minor issues. Trying to figure out how I was going to accomplish all these needs was a little overwhelming until I had my first conversation with an ESCO. As we had further conversations, it made complete sense for our district to hire an ESCO, as most of our district’s deferred maintenance needs could be met in one project. The next issue that arose was how the district would pay for all of this. If some of your projects fall under Missouri Statue 8.231, then looking into an EPC may be very beneficial to your district.

Funding the Project

Funding in public schools is always a concern. There seems to never be enough money to meet the needs of a school district. This is where you really need to have a good working relationship with your financial group. Learn how they can help you financially to meet your district’s needs. It could be through a no-tax bond, a tax levy increase, or maybe a lease purchase. I know there is a lot that goes into this from what your status of reserves to bonding capacity to AV growth, etc. Your financial group will help you determine what is the best fit financially for your district or even if it is possible for you to tackle these issues. I was fortunate that we had healthy reserves and a good bonding capacity that we were able to do a million-dollar lease purchase to address most of our deferred maintenance. The following year I rolled that lease purchase into a no-tax bond, which freed up money to put into teacher salaries. The teachers loved that!

Right Fit

You need to determine if hiring an ESCO is the right fit for your district or if going through an architect is a better path. It really depends on the needs of your district. Both are good avenues, and at times it may make sense to hire both! From my experience, hiring an ESCO was the right thing for the needs I had in my buildings, and it gave me guaranteed savings that I could then use for teacher salaries. It became a win for me with having lots of deferred maintenance and needing to bolster teacher salaries to be competitive. Educate yourself as much as possible about this process to make the best decision for your school district.

This information is to provide some direction as you consider moving forward with your construction and deferred maintenance needs. I know it can be scary and a little overwhelming at times but, it wasn’t as bad as I thought it would be. Find a company you trust that will have the best interests of district in mind and ask as many questions as you can through the process.

About the author – Scott Archibald is an Education Consultant with Navitas. His background as a school administrator and 28 years of experience in the education sector help him bring a practical approach to developing strategies for school districts wanting guidance on how to initiate an energy conservation program in their facilities. He can be reached at sarchibald@navitas.us.com. 

Energy-Savings Performance Contracting to Address Aging Infrastructure

This article originally appeared in the November 2022 issue of School Business Affairs magazine. Click here to download a PDF of the article.

Jefferson City is the capital of Missouri and home to the Jefferson City School District. The school district serves nearly 9,000 students in 16 school buildings. Like many school districts, Jefferson City is faced with aging facilities, rising utility costs, and limited financial resources.

When school district patrons passed a general obligation bond issue to build a second high school and renovate their existing high school, available bond dollars were allocated to the two high school projects. However, the district did not have a clear mechanism to fund the improvements needed in other aging facilities.

Frank Underwood, Jefferson City School District’s director of facilities, safety, transportation, and security, was faced with the challenge of how to maintain and update the school district’s remaining 14 facilities when new general obligation bonds were targeted toward the high school projects.

Underwood wanted to find ways to increase discretionary dollars available to his department by leveraging money already being spent on electricity, gas, and water to finance the needed upgrades and repairs. He saw performance contracting as a potential avenue to make that happen.

By partnering with an energy service company (ESCO), the district entered into an energy-savings performance contract to generate funds for additional improvements in the remaining school sites.

What Is an Energy-Savings Performance Contract?

An energy-savings performance contract (ESPC) uses guaranteed savings from the maintenance, operations, and utilities budget to upgrade and modernize a building’s environmental systems, which are then financed over a specified time.

By partnering with an ESCO, school districts can use ESPCs to improve the energy performance of their buildings, thereby enhancing building operations and saving energy.

ESCOs are project developers; they integrate the project’s design, financing, installation, and operational elements and typically offer turnkey installation ser- vices. The primary differentiator between an ESCO and other energy-efficiency contractors is the guarantee of energy savings, which is specified as part of the terms of an ESPC.

With an ESPC, the school district repays the money borrowed to finance the project, usually over several years, using the energy cost savings generated from the project.

The ESCO monitors the performance of the project for the life of the contract and verifies the resulting energy savings. In some cases, the ESCO may also operate and maintain the new equipment and systems.

Benefits of Hiring an ESCO

Hiring an ESCO is a proven strategy for identifying and implementing energy-saving capital improvements, while managing risks inherent in such projects.

ESCOs can provide a range of services, from an energy audit to a third party–financed turnkey project, with a comprehensive set of measures and guaranteed energy savings. Their specialty is the energy-savings performance contract that shifts some of the project’s performance risk to the ESCO in exchange for allowing the ESCO to capture a share of the savings.

The following are key benefits of working with ESCOs:

  • Effective building performance
  • Options for project financing and risk management
  • Access to professional expertise
  • New equipment
  • Training with little to no up-front cost

The ESPC can apply to an individual building or an entire campus.

The Jefferson City School District Project

The Jefferson City School District completed a request for qualifications process to select and hire an ESCO. The selected ESCO was engaged to perform an investment-grade audit to identify critical facility issues and develop energy conservation and facility improvement measures to address them.

The school district was able to complete the following projects through the ESPC:

  • Upgrade the interior lighting with energy-efficient LED lamps and fixtures
  • Upgrade heating, ventilating, and air-conditioning (HVAC) equipment
  • Coordinate building automation systems
  • Replace water-source heat pumps
  • Implement water conservation measures
  • Weatherize buildings
  • Optimize building performance through data analytics

Underwood explains, “Without using general obligation bond dollars, the district was able to fund $16 million in improvements by utilizing a guaranteed energy-savings performance contract and reallocating dollars made available through the [Elementary and Secondary School Emergency Relief] funding.”

By implementing this project, Jefferson City School District will save an estimated $10.8 million over the 15-year term of the ESPC.

The Jefferson City School District project improved the environment with the annual reduced emission of an estim

ated 6,015,994 pounds of carbon dioxide, a harmful greenhouse gas. That emission reduction is equivalent to preserving 20 acres of forest from deforestation or conserving 308,525 gallons of gasoline.

The school district also qualified for a $586,000 rebate from Ameren, its electric services provider. In April 2022, Ameren recognized the school district for its efforts with its Energy Efficiency Champion Award for conserving resources by upgrading its HVAC systems.

To learn more about ESPCs, visit the National Association of Energy Service Companies website at www.naesco.org.

About the author – Paul Harrell is a business development manager with Navitas. His background as a Certified Public Accountant and 33 years of experience in the education sector help him bring a practical approach to developing strategies for school districts wanting guidance in how to manage their overall budget and utility costs. He can be reached at pharrell@navitas.us.com or 913-344-0049

This article originally appeared in the November 2022 issue of School Business Affairs magazine and is reprinted with permission of the Association of School Business Officials International (www.asbointl.org). The text herein does not necessarily represent the views or policies of ASBO International, and use of this imprint does not imply any endorsement or recognition by ASBO International and its officers or affiliates.

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