Performance Contracts Deliver Guaranteed Impact

By Kent Anson, Vice President of Energy Solutions, Honeywell
(This article appears in the August, 2010 issue of The ACUPCC Implementer)

Although battery-powered cars and green fuel tend to dominate the headlines, one of the largest targets for meaningful conservation is sitting right in schools’ backyards. Literally.

Across the globe, buildings account for nearly 40 percent of all energy and 70 percent of electricity use. With more than 4,000 campuses in the United States, colleges and universities are well positioned to have a significant impact on greenhouse gas emissions simply by making their facilities more energy efficient and sustainable.

However, with rising energy costs, tight operating budgets and increasing competitive pressures, finding the resources to implement the necessary changes has been a challenge for administrators.

If there is a choice between a state-of-the-art science lab and making energy-efficient upgrades, for example, the new facility usually wins. Financing tools like energy savings performance contracts (ESPCs) give schools the opportunity to do both, which adds to their long-term sustainability.

Under an ESPC, colleges, universities and other institutions are able to finance environmentally conscious building upgrades — from new boilers to solar panels — through the energy and operating savings the improvements produce over a specified timeframe.

The savings are typically guaranteed by an energy services company so the work doesn’t impact budgets or require additional student or taxpayer dollars.

Many colleges and universities are already reaping the ecological and economic benefits of using performance contracts to improve energy efficiency and address deferred maintenance.

Honeywell has helped design ESPC programs for schools throughout North America, including several that are part of the ACUPCC. For example

  • Stony Brook University in New York, an ACUPCC signatory, is reducing annual energy costs by approximately $2.9 million and carbon dioxide emissions by almost 33 million pounds. The university’s Green Campus Initiative is focused on finding new ways to limit environmental impact and educate the campus community on sustainable practices.
  • A 20-year program with Eastern Illinois University (EIU) will combine energy-efficient building improvements with one of the largest biomass-fueled heating plants on a school campus. The upgrades will help EIU address deferred maintenance, improve its infrastructure, and save approximately $140 million in energy and operating costs; it also is expected to reduce carbon dioxide emissions by more than 44 million pounds each year.
  • Facility improvements at Memorial University of Newfoundland will decrease greenhouse gas emissions by an amount equivalent to taking more than 1,100 cars off the road, according to figures from Environment Canada.

This work was done without up-front capital. And the universities will use the resulting energy and operational savings to make the annual payments for the loans they secured to pay for the upgrades.

Plus, these programs aren’t just about facility improvements. They can also include services for measuring and reporting emissions, as well as educating students and faculty, and raising energy and ecological awareness across the entire campus.

All told, Honeywell’s work over the last decade is expected to deliver hundreds of millions in savings and help schools eliminate around 350 million pounds of carbon emissions annually.

Who knew the path to carbon neutrality could run through the depression-era library on campus?