The Benefits of Retrofits
A huge energy-reduction project produced significant savings at the University of Central Missouri. Performance contracting financed the campus makeover-addressing both efficiency and deferred maintenance.
By Betty Roberts and Jeff Murphy
Nestled in Warrensburg, the University of Central Missouri (UCM) is known for its park-like campus and trademark limestone and sandstone buildings. Some of the original buildings from the university's 1871 founding still remain, and most of the newer facilities were constructed within the past 50 to 60 years. Much reconfiguration has taken place over the decades, creating new maintenance challenges to providing a comfortable campus environment.
When a new vice president for administration arrived in 2006, e-mails and phone calls began coming from professors wanting to know plans for improving air quality ventilation in labs and parents inquiring why a son or daughter had to sit in a cold classroom. This was a quick introduction to the problems facing the building infrastructure. As the weeks progressed, the extent of the deterioration became even clearer. This was particularly true during the transition periods from winter to spring and summer to fall in a state known for its ever-changing weather.
The university's aging mechanical systems simply could not adequately respond to the seasonal temperature fluctuations. In addition, sporadic financial quandaries resulted from such needs as boilers that required $40,000 coolant changes but still couldn't maintain stable indoor temperatures. These problems also led to concerns about wasted labor costs associated with operating in an emergency fix-it environment, where even straightforward projects such as replacing light bulbs and draining flooded parking lots adversely affected the university's financial coffers.
Like many other colleges and universities across the nation, UCM needed to address an aging infrastructure to make the campus more energy efficient. With a backlog of millions of dollars in deferred maintenance projects and no immediate funding solutions, accomplishing such a goal seemed out of reach at first, although the desire was clearly evident.
The university's former president, Aaron Podolefsky, in 2007 had become one of the charter signatories of the American College and University Presidents' Climate Commitment, agreeing to reduce UCM's carbon footprint and create a more sustainable campus environment. He also established the UCM President's Commission on Sustainability to bring about sustainable practices at UCM, focusing on recycling and waste management, standards, transportation, utilities and energy, planning and funding, and curriculum and education.
After much discussion and information sharing, the institution's highest levels of administration ultimately made a clear commitment for improvement. Buy-in from campus leaders, including the board of governors, was, in part, due to a strong case posed by the division of administration and finance. Inspired by the university's sustainability work that was well under way, the division took the lead role in the institution's concentrated team effort by researching the need for improvements, seeking the best possible solutions, and discovering sources of funding.
What ultimately transpired was an unprecedented $36 million project to radically reduce energy consumption on campus while significantly improving the learning environment. Initially scheduled for completion over two years beginning in June 2009, the project was designed to save at least 31 percent of annual energy costs and reduce carbon emissions by approximately 32 percent, or 7,541 metric tons—the equivalent of taking 1,381 cars off the road or preserving 1,714 acres of forested land.
Start With an Energy Audit
The administration building was one of 24
To build a business case, the administration and finance team initiated an in-depth energy audit to identify potential infrastructure improvements and ways the university could reduce energy costs. The audit used historic utility data collected over a three-year period to evaluate operational savings for proposed energy conservation measures. Data provided valuable information about utility use, particularly during seasonal changes. The team conducted operations and maintenance analysis and reviewed 12 months of repair and replacement work orders—more than 30,000 line items—for the school's classrooms.
Also during the audit, students, faculty, and staff provided feedback on classroom and building conditions, an effort that included more than 5,000 hours of campus interviews. A three-month site survey of 26 existing buildings identified additional energy and operational efficiency challenges and potential solutions.
Once data were available, energy modeling software approved by the U.S. Department of Energy was used to evaluate the benefits of potential improvements. The software made it possible for the team to recreate campus buildings in a virtual environment that identified potential systems that could meet the university's needs. The team discovered 265 different potential energy-conservation measures to reduce energy consumption and cost on campus. Utility-rate information was used in the simulation to further determine the extent of potential energy, operations, and maintenance savings.
The audit identified opportunities to save millions of dollars, which could be gained by addressing a $20 million backlog in facility infrastructure repair and $16 million in energy-related savings projects.
With data from the audit, the team developed a business case describing how proposed energy conservation measures could result in a 32 percent cut in utility costs while also reducing the university's carbon footprint. The case also demonstrated that the proposed 24-month, $36 million performance contract could be paid for by reallocating funds from utilities, operations and maintenance, and annual repair and replacement budgets.
Setting the Stage for an ESCO
Fortunately, Missouri legislators had already taken action to pave the way for an effort such as the large-scale sustainability project at UCM. In August 2000, the General Assembly approved legislation enabling a state agency to use the performance contracting method in selecting a qualified energy services company (ESCO) to design and implement a large, holistic energy-efficiency program. The legislation provides the process for selecting the services company that is the best qualified, provides the best value, and is the best fit for an agency such as a public university. The law also enables the ESCO to assume the risk and enables financing with a cost-recovery payback period of up to 15 years.
UCM issued a request for qualifications and a request for proposals for energy service companies that could provide a comprehensive solution for sustainability and deferred maintenance needs for the campus within a budget-neutral energy performance contract. Three interested companies submitted bid proposals from which UCM selected Trane Corp. of Piscataway, New Jersey, as having the most comprehensive proposal.
Financing Facility Improvements
At the time the university prepared to embark on its ambitious energy retrofit project, there was no state funding available for such activities, despite the Missouri law that made entering such agreements permissible. Capital funding support from the state had dwindled to the point at which revenues were inadequate to meet ongoing infrastructure needs at UCM.
The exploration of ESCO funding options led UCM to Banc of America Public Capital Corp., a subsidiary of Bank of America. With approval from the university's governing board, UCM entered a 15-year lease-purchase agreement that provided financing for all costs associated with the construction, installation of equipment, and labor. In the meantime, as shown in the figure, the performance contract guaranteed annual savings of $735,253 for 15 years.
Remaining costs would be offset by reductions in operating costs, labor, and large amounts the university had been paying just being in reactive mode for repairs and emergencies. The ESCO, along with the other reductions, allowed the university to achieve its goals while keeping the overall project budget-neutral.
Because the university could pay for many of the upgrades with guaranteed annual energy savings of $735,253, plus operational efficiencies, it was possible to achieve a wide range of upgrades that would have taken many more years to accomplish if another funding option had been chosen. Facility improvement measures included:
- Installation of geothermal heat pumps.
- Conversion of constant-air-volume systems to variable-volume systems.
- Installation of high-efficiency condensing boilers to replace old ones.
- Installation of high-efficiency outdoor and indoor lighting including induction parking lot lighting activated with smart sensors.
- Installation and upgrading of the campuswide network of building automation systems.
- Implementation of new and improved energy-efficient controls-scheduling strategies, including desktop control in the facilities, planning, and operations area.
- Installation and upgrade of efficient water-conserving plumbing fixtures in areas such as bathrooms, showers, and lockers.
The project also included life-safety measures, such as the installation of new fire alarm systems with voice activation; green technologies for curriculum use and campus greening awareness; replacement of roofs and windows on various buildings; improved air-handling systems; and acoustical improvements for classrooms and office spaces.
Creating Stakeholder Support
Before authorizing the digging of geothermal wells or installing energy-efficient windows, the ESCO team (comprising the vice president of administration and finance and her staff, contractor representatives, a few faculty members, and representatives of other campus constituents) had to ensure adequate support from all university stakeholders. The team understood that such a large-scale effort—which would change the look and feel of the campus and cover about 2.5 million square feet of building space—demanded support from the whole institution. The team opted for a systemwide approach to informing groups ranging from the administration and governing board to faculty, staff, and students.
The ESCO team met with each group of stakeholders anywhere from one to six times to outline the scope of the project, the types of improvements that would be made, and reasons why they were important. After individual meetings, the team invited the groups to attend large meetings that involved a mix of stakeholders to get a better picture of the project's overall campus impact. This was an important part of the process because it gave stakeholders an opportunity to voice their opinions and pose questions about the project. The team made sure that participants knew their input was valued. Team members kept the campus community continually updated on the progress of the ESCO project once work actually began.
Communication was integral to the project's success. Once a decision was made to move forward, the university launched a kickoff event that included invitations to media representatives as well as those from the campus and local community to learn more about the institution's ESCO project. The special ceremony was held shortly before the end of the spring 2009 semester in the atrium of the Ward Edwards Building, one of the facilities that would benefit from the project. The ESCO team invited several dignitaries involved at top levels of the energy services company to speak. University leaders and corporate representatives provided special remarks. The program positioned the university's leadership role in sustainability among Missouri colleges and universities. It focused on the benefits of meeting deferred maintenance needs and the creative financing solution that allowed the institution to provide a more energy-efficient campus with energy savings helping to pay for the project.
As work on the project began, the next step for the ESCO team was to keep stakeholders focused on key processes and outcomes. Contributing to this effort, the team worked with the university relations department to provide weekly e-mail updates to all campus constituents, making them aware of the ways each stage of the project affected certain areas. Town hall meetings gave project leaders an opportunity to address specific issues and respond to campus constituents' questions and concerns.
While the informational sessions were valuable, the ESCO team also recognized institution employees who looked for creative ways to use the energy contract as a way to accomplish other projects. It wasn't unusual for the team to receive "wish-list" requests from campus constituents, including rooms that needed painting or areas where carpets needed replacing.
Embracing the Challenges
The University of Central Missouri's
One of the operational and logistical issues in completing such large-scale facility upgrades over a two-year period was scheduling work in buildings where classes were in session. The team had to do a lot of homework to devise an "in-out" scheduling approach. Team members invited faculty and staff members to meet with them and discuss class schedules in every building. By adhering to those schedules, workflow could continue smoothly without disrupting academic activities. Work was often scheduled when there were fewer people on a floor, or during an evening or weekend. If classrooms were occupied on the top two floors of a building, work on infrastructure improvements might take place on the lower floor.
In a few cases, it was not possible to avoid disrupting routine operations, and some faculty and staff had to be moved to alternate locations. Fortunately, the university benefited from a spirit of cooperation among different units. For example, the staff at the James C. Kirkpatrick Library, which was the newest university building at the time the energy improvement project began, made space available to displaced employees. The information services area also welcomed business faculty from the Dockery Building when work there had to be scheduled over several months.
The university looked at every opportunity to ensure that students, faculty, and staff were accommodated during the process. As an example, when major parking facilities were taken off-line while geothermal wells were being installed beneath a lot's surface, the university provided a shuttle service that transported individuals back and forth from another lot farther from their office or classroom.
Technology also posed challenges. Facilities management staff now control heating, ventilation, and air conditioning systems by computer instead of manually. Some individuals charged with making these updates lacked adequate computer skills to manage state-of-the-art technologies, such as geothermal wells and boilers, which now needed to be controlled at the desktop. As a result, there was some initial anxiety among employees regarding their future at UCM. Our team sought to reassure the staff by offering training, using this interaction as an opportunity to emphasize the long-term benefits of enhanced technology skills that could lead to additional jobs at the university. Since the training, some of the employees who initially felt threatened are now among the greatest advocates for energy efficiency on campus and do not hesitate to offer solutions to save additional resources.
Progress and Benefits
By January 2011, the ESCO was in the final stages of development. Trane and its subcontractors were working closely with the university's staff and consultants to perform commissioning, final inspections, and turnover. The project was on its way to completion well ahead of schedule in large part because of the qualified subcontractors who worked on the project. Other factors that contributed to keeping the project ahead of schedule included the weekly university staff, contractor, and building manager coordinator meetings and the flexibility of faculty, staff, and students who were willing to temporarily relocate or assist in other ways.
The benefits of an energy services contract are already apparent, including the capability to manage facilities with centralized automated building-system controls. The facilities staff now has immediate access to real-time energy-use data that makes it possible to direct in a more balanced manner energy resources used in buildings. In addition, facilities staff members are functioning more as energy managers, and there is noticeably improved air quality, which enhances productivity in offices and classrooms. Improvements such as the installation of new windows in classrooms contribute to better energy efficiency and vastly improved facilities aesthetics.
New energy-efficient windows at the
Life-safety systems that were tied to the ESCO project are much improved, and include voice-automated capabilities in campus buildings so that specific instructions can be provided to faculty, staff, and students in an emergency situation. The systems are tested on a regular basis and are invaluable in providing timely information to the campus community when needed.
Tangible benefits include savings from eight staff positions through attrition; energy services contracting requires fewer personnel to accomplish some tasks, such as those requiring constant maintenance of aging equipment. What's more, the project has reduced the facilities operating budget by 13 percent due to energy savings and a reduction in the cost of staff overtime to address emergency building repairs. Including the guaranteed energy savings, an estimated reduction in the university's maintenance and repair budget is up to $1.5 million annually, of which some savings are reallocated to support the institution's academic mission and programs.
The university, through its climate-action plan, has committed to reducing its carbon footprint, and continues to assess its progress in achieving this goal. The use of an ESCO has made campus constituents more conscious of the contributions they can make personally in using energy resources, and the sustainability team is noticing some helpful behavioral changes as building staff are trained to perform energy-management tasks. One such example pertains to the new lights in academic buildings, with sensors that automatically shut them off in 20 minutes if there is no activity in an office. Custodians who see lights on prior to that 20-minute interval are now more inclined to turn them off on their own.
Contributing to behavioral change, the university is placing large touch-screen monitors at key locations around campus. Any student, employee, or campus guest who wants to know about the energy output of 24 different buildings can learn more from these "green screens" and access "green tips" about what they can do in their own homes to be energy efficient.
Some intangible benefits have emerged from UCM's ESCO project. New ideas have made campus constituents more aware of what else can be done to promote sustainability. For example, a student-led recycling program launched in the summer of 2009 and has expanded to providing free bicycles for errands or getting to class. And the university's sustainability commission has recently embraced sustainability as an integral part of curriculum offerings.
With a new university president, Charles Ambrose, who arrived at UCM in August 2010, the university has not lost a step with its ESCO project and overall sustainability efforts. Campus leaders continue to explore ways to improve energy efficiency and, whenever possible, share their intellectual resources regarding retrofitting and sustainability with representatives of schools, businesses, organizations, and private individuals.
All of this culminates with plans for the spring semester to celebrate the greatest energy-improvement project ever undertaken by the university.