News

Originally posted December 11, 2019

The average age of school building in the United States is more than 50 years old. This means they were built before 1972. Older facilities require more effort to properly maintain them so that they can continue to serve the next generation of students.

Older buildings are also notoriously harder to heat and cool because of leaky windows, poor insulation, and aging and inefficient building systems. As such it is very common for K-12 facilities to waste millions of dollars in excess energy consumption without knowing it.

But the good news is that by actively working to cut utility costs, school districts can easily reap savings. These savings can then be used to help fund needed facility improvements.

One of the ways a school district can take advantage of this is through an Energy Savings Performance Contracting (ESPC). An ESPC is a budget-neutral approach to make building improvements that reduce energy and water use and increase operational efficiency.

By partnering with an energy service company (ESCO), school districts can use a guaranteed energy savings performance contract to pay for today’s facility upgrades with tomorrow’s energy savings; without tapping into capital budgets. Through the guaranteed savings program, the dollars that are paid out to utility companies can be reduced and the corresponding savings can help fund needed facility improvements.

The basic process for schools to move forward with an ESPC are:

1. The school district decides to utilize the ESPC process and competitively selects an ESCO.
2. The school district enters into a contract to the ESCO, who will conduct an energy audit of their facilities and develop an implementation proposal, which identifies potential energy conservation measures (ECMs). A wide variety of measures can be included in an ESPC project. Typical ECMs include upgrades to lighting, water control systems, HVAC units, windows, roofs and building automation systems. The ESCO will identify each potential measure and estimate the itemized cost and saving, but the bottom line is what determines which bundle of measures can be included in the ESPC project. Some measures with short payback periods (e.g., lighting) can offset those with longer payback period (e.g. boiler and chiller replacements or renewable energy systems) if they are bundled under one contract.
3. The school District works with their municipal financial advisors or lending institutions to arrange for upfront financing. One of the most common financing for a government ESPC project is a municipal tax-exempt lease-purchase agreement where the school district will issue a certificate of participation (COP) with a lending authority. Districts should also consider internal financing or general obligation bonds and compare rates and benefits. Typically, approval is only required by the Board of Education and financing institution.
4. The ESCO implements agreed-upon ECMs, then monitors energy savings success through measurement and verification.

ESPC projects can include one school facility, or all the facilities within the school district. The size and scope of project is governed by the savings opportunities in the facilities, the types of funding sources that can be applied, the minimum size project an ESCO is willing to manage, and the financing capability. Schools facilities are generally good candidates for ESPC projects, because with long-term ownership of the facilities, most state legislation allow for 15 to 20-year financing terms.

For additional information, check out the US Department of Energy, Office of Energy Efficiency and Renewable Energy

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

Your mobile phone buzzes at your desk and you glance away from your emails to see the notification holds great news, “Your order has shipped!” A big relief -with that special-ordered part on its way, there is still a chance the unit will be repaired in time for Open House.

Back to the emails.

Now it’s time to head over to the new convention center for the ribbon cutting. Final walk-throughs and inspections consumed most of yesterday, but you’re still banking on this afternoon for a chance to catch up on some of your planned-facility reviews. Budgets will be due soon, and you want to make sure everything is operating efficiently to keep costs manageable.

In the lives of facility owners and operators: schedules are tight, demands are great, and resources are limited. Finding a way to “accomplish it all” is the objective. Each facility contains thousands of working parts that are necessary to maintain the desired environment. Add different space needs to heating/cooling season changes; then, multiply by the number of facilities in your portfolio. The pressure for optimal building performance and the resources to accomplish this feat, is immense.

Budget time rolls around. While you’re happy with some of the gains made in different areas, you’re perplexed as to why one of your newest facilities is the most expensive to operate. You recall a former colleague worked in the energy-efficiency industry before retiring. Your friend stumps you with a question: “What does your weekend energy consumption look like?” Seems like a strange question given that staff and production occur during weekday hours only. Nonetheless, a weekend audit is the next logical step. Your walk-through reveals some opportunities for savings such as a few fans and lights that were left on, but nothing as substantial as you were hoping.

On the drive home, it hits you: “We need to be measuring and tracking at a granular level. We need building metering!”

Sure enough, just days after installing the metering, it’s evident that a large energy draw is occurring each evening. Knowing the magnitude and types of equipment in the building, you are quickly able to determine that spike in consumption is tied to the central chiller that provides cooling throughout the building. The best part is that it’s only an issue with the schedule and can therefore be resolved quickly.

At the end of the next month, the energy bill has reduced significantly.

Installing interval metering on electricity provides you the ability to quickly determine which facilities are deviating from expected consumption before the bill arrives at the end of the month. When paired with an analytics platform, a large portfolio of facilities and equipment can efficiently be reviewed. Facility walk-throughs are helpful, but first identifying a targeted set of buildings/equipment to investigate, cuts down on time and effort. Additionally, the issues leading to energy waste are generally occurring at inconvenient times of the day when your facility is vacant.

When it comes to the dilemma of, “Schedules are tight, demands are great, and resources are limited,” accomplish it all by leveraging the power of data to make the most of your time and resources. It’s impossible to know what all equipment is doing at all hours of the day without technologies such as metering and facility analytics.

While in a meeting the next month, that question that used to cause you great anxiety comes into your mind: “Is that chiller running again, and driving my budgets out of balance?” Now, in just a few clicks of the mouse, you access your metering and facility analytics to answer that question before moving on to the next task at hand.

Objective met.

About the author – Zack Flageolle is Navitas’ Director of Optimization Services. His experience in planning, design, and construction has allowed him to gain a greater understanding of what makes a successful project. He provides leadership of our Optimization Services activities for our clients and is instrumental in ensuring the program is successful. He can be reached at zflageolle@navitas.us.com.

Energy service companies (ESCOs) can help school districts improve their buildings without putting more demands on capital budgets.

The following Navitas article was published by the Association of School Business Officials International (asbointl.org) in their December 2021 edition of “School Business Affairs”. It also appears on the Missouri Association of School Business Officials (MoASBO) website.

It’s a hot, humid August morning at Center School District in Kansas City, Missouri. Teachers and students aren’t expected to arrive for another week.

Still, the district’s energy specialist, Nicole Williams, has been on-site working around the clock to make sure the district’s heating, ventilating, and air-conditioning (HVAC) systems are tuned up and ready for the new school year.

“With the district opening back up this year, we want to make sure that we’re providing the best learning environment for our students and teachers. Classroom comfort is a large part of that,” she says.

As Williams walks the halls at the high school, she uses her phone to check the district’s new building automation system (BAS) to pinpoint trouble spots. She explains: “The BAS is a wonderful tool. It has allowed us to manage classroom comfort while also reducing our energy consumption by almost half.”

The BAS was installed as part of a larger energy savings performance contract that allowed the Center School District to install energy conservation measures and make much-needed improvements to its aging buildings.

Deferred maintenance in school districts is common because of the difficulty in finding funding to meet all their infrastructure needs. The unfortunate consequence is that the deferred maintenance will affect the quality of the learning environment for students and staff.

ESCO Basics

One way to improve school buildings without putting more demands on capital budgets is to use an energy service company, or ESCO. An ESCO is a project developer that guarantees energy savings to organizations through a comprehensive array of energy efficiency opportunities, including HVAC, weatherization, building automation systems, and lighting by retrofitting the organization’s inefficient and costly equipment.

The work is detailed in an energy savings performance contract (ESPC). The ESPC process is transparent, collaborative, and flexible and allows all stakeholders to reach a consensus. Energy savings come about through the ESCO’s exhaustive analysis of the organization’s existing facility conditions and equipment to implement energy efficiency measures sufficient to cover the project’s debt service.

Energy Savings and More

Yolanda Cargile is the superintendent of the Center School District. The partnership between her district and an ESCO, which began before her tenure, helps the district financially today and the students today and in the future.

“Prior to my arrival at Center, we needed new roofs and other facility improvements. Rather than ask the voters to include these energy savings–related projects in an upcoming $48 million bond issue, the district decided to use an ESCO to help generate internal savings to fund the improvements,” she explains. “We ended up with $55 million of improvements at no additional cost to the taxpayer. It was a worthwhile experience.”

By working with the ESCO, Center School District could complete all its building improvements. In addition, the district added energy conservation measures that will provide energy cost savings and reduce the district’s operations and maintenance costs.

The U.S. Department of Energy maintains a qualifications process for ESCOs that provide energy savings performance contracts to their clients. The department has created a rigorous annual qualification process for firms that want to be included on its list of qualified ESCOs. Those approved are allowed to compete for federal and other ESPCs. (Access the list at www.energy.gov/eere/femp/energy-service-companies)

In most instances, an investment-grade audit is required as part of the energy savings performance contract. This audit quantifies the existing deficiencies within the school district’s facilities and identifies the measures necessary to remedy those deficiencies. It is usually performed by the prospective ESCO and details the course of action the ESCO will take to deliver guar- anteed results for the school district.

What to Ask

What questions should a school district ask potential ESCO partners about their energy savings performance contract? Because ESPCs guarantee measurable savings and equipment performance over time, the district needs to know that every dollar paid to the contractor at least offsets, if not returns, additional dollars of savings measured in energy reduction and equipment life. Although risks can never be eliminated from any business venture, the school board must know that the ESPC has considered known risks and offers mitigation plans for each. The process of measurement and verification shifts consequences of underperformance to the contractor through the performance guarantee.

Another question districts should ask relates to the type and depth of training the ESCO provides for district employees. A good ESCO will offer equipment training and guidance for district staff on how to minimize energy consumption and extend equipment life.

Finally, the district should ask for a list of references of other district customers.

In the Long Run

Depending on the terms negotiated in the energy savings performance contract, the ESCO may supply ongoing annual performance reports detailing the utility cost avoidance for the district. These reports often provide granular details on each facility in the district, including greenhouse gas reductions.

Once the district’s facility and maintenance staff have been trained in the efficient operation of the HVAC equipment, staff attention turns to other pressing district tasks. Without dedicated ESCO attention, the performance of the HVAC equipment can begin to decline through unintended neglect. Often, the energy savings performance contract will call for ongoing review of the HVAC equipment by the ESCO to ensure optimal performance and notify the customer when apparent mechanical issues may hinder the equipment’s full performance.

Lastly, but perhaps most important, the ESCO should foster a culture of energy conservation in the district among staff and students through formal and informal news reports on changes within the organization’s energy consumption.
In response to the changing climate, everyone must be educated on their responsibility in school and at home to reduce fossil fuel consumption for the benefit of future generations.

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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

School administrators are always challenged with balancing building needs and capital project funds. In the age of COVID this may have created even more challenges for school districts. One strategy school business officials have at their disposal is the Performance Contracting mechanism. Enabled by RSMO 8.231, this allows school districts to fund building projects out of energy savings, and often provides flexibility to address building needs outside of a bond issue. Alternatively, we have seen schools combine bond issues with an energy project through a Performance Contract to effectively extend the amount of work that can be accomplished through the bond issue. In this article we discuss how schools can potentially address lingering facility concerns that may have been delayed the last 6-12 months while we have adjusted to life and education with COVID.

In Missouri, our schools consume $240,000,000 annually on energy to power our buildings. This equates to between $200-300 per student. Outside of salaries and benefits, energy costs are typically the second most costly item for a school district. We often see schools that are able to save between 20-35% on their energy bills through more efficient operation. These potential savings provide a huge potential for budget reductions or could be used to fund other needs throughout the district.

One school district that has effectively used this mechanism to help address building needs is the Oak Grove School District. As is often the case with schools, Oak Grove recognized they had far more needs than funds available. So, the District considered the implementation of a performance contract along with their bond issue. Through the performance contract, the district will save over $3,000,000 in utilities over 15 years. This project focused on old and inefficient HVAC equipment and building automation systems throughout the district and was completely funded with energy and operational savings. This allowed the other part of the design team – the architect and construction manager to focus on new square footage and other renovations to existing space. Ultimately, this process allowed the Oak Grove School District to effectively extend their bond dollars by 25% through financing part of their project through energy savings!

Early returns on energy savings look favorable for Oak Grove. Below is a graph and table depicting pre- and post-project utility consumption. So far in the last 3 months of 2020, the district seen a 47% drop in their electric consumption! The Middle School has seen over a 50% drop! If these results continue, the district will far exceed savings projections.

The example above with Oak Grove School District is one success story of many we see across the state. Effectively redirecting utility funds back into education is something we have found is a great success story for school boards and communities! While this mechanism is somewhat different than a typical design and construction process, it may have utility to you as you evaluate your building needs. An Energy Services Company (ESCO) can help you through the process of evaluation of utility bills and a preliminary evaluation of your buildings to help determine if this mechanism could be of value to your school district. If you are not familiar with an ESCO, you may start with NAESCO – the National Association of Energy Services Companies, where you can find active companies that might be able to help you in this effort to improve your buildings.

About the author – Ryan Terry is a business development manager with Navitas. His
background as a professional engineer and 15 years of experience in the energy industry
help him bring a practical approach to developing strategies for public sector clients who
want guidance in how to initiate an energy conservation program in their facilities. He
can be reached at rterry@navitas.us.com.