Thursday, August 18, 2011

School District Considers Self-Financing Energy Savings Projects

On Thursday, the Board's finance committee listened to a presentation from a consultant who has been evaluating our school facilities and assisting us in preparing a long term maintenance plan.  (Every school district must prepare and update long-term facilities plans to assure the State that we are not allowing our facilities to deteriorate and also to assure that we use our facilities improvement budget responsibly). 

Our consultant is recommending that we consider implementing about $1 million dollars in energy-saving projects next year.   We spent most of our finance committee time listening to his recommendations and asking probing questions.   The selected projects supposedly will pay for themselves, literally, out of the savings in energy costs.  

Let's use lighting fixtures as an example.   In many of our buildings we have very old, energy inefficient lighting, dating from the days when energy was cheap. Today's newer fixtures use far less energy, and if you buy the new fixtures, allegedly you can recover the cost of the fixture (including installation) in under ten years with the savings.  The idea is that the vendor leases the electrical fixtures on a lease-to-own basis, and promises that the lease payments will be lower than the energy cost savings.  Under the plan, your payments never exceed the actual energy cost savings realized by the improvements, guaranteed.  

Additional savings come from taking advantage of a variety of rebate incentives that will make a contribution to the cost, and some federal tax credits that are available to the vendor for offering and implementing an energy savings project.   Now the lighting is just one example.   If an old school has a door system that is not energy tight, that door system can be replaced as well, and potentially paid for out of the energy savings.  When all is said and done, the consultant claims, our school district could implement $1 million in energy savings projects, completely paid for by energy savings, guaranteed. 

The concept seems attractive.   We retrofit our facilities, for free, as it were, paid for out of reduced energy costs, and when the lease period is over, we have continued energy savings and newer improved facilities fully paid for.   But there is significant due diligence left to be done.   The finance committee recommended that the administration begin that due diligence process by obtaining a detailed proposal on the items that could benefit from this approach.  Then, if the administration recommends that we continue, we would develop a request for proposals, to assure that we afford competing vendors with an opportunity to submit competing proposals.   We must assure ourselves that the work, if authorized, is done by the best qualified vendor for the lowest possible price.  

Care is required in implementing these projects.  Because they are self-financing, it is important that one doesn't think of them as "free."  Public money is involved: scrutiny should be applied to assure that the best value is being obtained for the money expended.  Also, scrutiny is required to assure that the method of calculating savings is legitimate.  The vendors who facilitate these transactions have expertise, and they are surely motivated to prevent themselves from taking an undue risk.   It is important to make sure that the formula only recognizes legitimate savings arising from the project. 

Easy Access to Energy Improvements in the Public Sector
Energy Star
Lease and Lease Purchasing for School Facilities
Learning by Design 
Minneapolis Tribune Article "Schools Learning to Save"

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