The energy sector in the United States is undergoing one of the greatest paradigm shifts ever experienced, with revolutionary changes that are affecting every academic institution, business and individual. The industry has evolved from regulated utilities into dynamic enterprises. Where large, vertically integrated monopolies once dominated the industry, entrepreneurs and private investors are taking advantage of new opportunities to provide goods and services in a competitive marketplace. Where government once stood guard over the public interest through regulation of the market, policymakers are now re-examining the nature of that interest and the best way to serve it.
Today, academic, business and government leaders rightfully are concerned about the costs and reliability of power in a time of utility deregulation. Consider California's experience. Before deregulation of the state's electric utilities in 1996, the people of California were promised an energy-cost reduction of 10 to 25 percent. Yet by December 2000, energy costs had risen by more than 70 percent with no guarantee the costs will not continue to escalate. At the same time, power reliability had all but disappeared.
By 1999, power-generation facilities in the United States had an aggregate production capacity of about 800,000 megawatts per day, yet energy use has been soaring. According to the U.S. Department of Energy, a projected 363,000 megawatts of new generating capacity will be needed by 2020 to meet the growing demand for electricity in the United States and to offset planned retirements of existing old and inefficient generating capacity. This expansion is estimated to cost between $300 billion and $500 billion.
Need for clean power
The fastest-growing market segment for power consumption is the communications industry. Such growth is driven by the power requirements associated with the geographic expansion of communications networks, as well as the incremental power needed to support capacity expansion required by the growth in broadband, especially the integration of video. Many universities are installing new broadband capabilities for on-campus communications infrastructures, bringing with it new energy requirements.
In addition to increasing demand for quantity, many end users also are demanding more reliable, higher quality, more readily accessible and lower cost energy. In particular, there is a rapidly growing market for reliable and clean power — free of harmonics and voltage irregularities. K-12 schools, colleges, and universities are no exception. Driven by the need to minimize electrical disturbances of mission-critical educational programs and research facilities, many schools and universities now require the minimum “Three Nines” (99.9 percent) reliability standard in these facilities. Meanwhile, the “Six Nines” (99.9999 percent) requirement rapidly is becoming the new standard in the digital economy.
Energy crisis on campus
Against this backdrop, education institutions already are at a significant disadvantage with respect both to on-campus power capacity and reliability. School buildings typically are older facilities. Often the institutions' energy infrastructures — electrical and natural-gas distribution systems, lighting and HVAC systems — are as old as the buildings surrounding these infrastructures. They are outdated and inefficient as well as costly to maintain. Lighting consumes 21 percent of the total annual energy usage; space conditioning (heating and air conditioning), 36 percent; water heating, 16 percent; office equipment, 15 percent; and other uses, 12 percent.
However, almost all academic institutions have limited budgets. They are struggling to maintain and repair the equipment, not to mention replace aging and inefficient systems with new, state-of-the-art, energy-efficient systems.
Schools and universities need to allocate the majority of their budgets on the core mission: educating students. Many alumni and other school supporters prefer to contribute money to educational programs. Similarly, funds from major corporations are donated for medical research and technology advancements, not for infrastructure upgrades. And at a time of growing enrollment, K-12 administrators often are forced to choose between financing for expanded classrooms or energy infrastructure upgrades.
Innovative financing, branding
This fact of academic life and the increasing cost of energy have forced schools, colleges and universities to look for alternative financing solutions that will generate enough energy and operating-cost savings to pay for infrastructure upgrades over time. Some are employing “asset monetization,” selling existing infrastructure to a third party that upgrades, operates and maintains the systems in return for a promise to purchase its product (e.g., electricity or natural gas) for a period of time.
Another potential financing method is branding, which has been used by many American cities as a means to finance new sports stadiums and arenas. Branding or “naming rights” to a facility are sold to a corporate sponsor for an annual fee — often in the millions of dollars.
Colleges and universities have had a longstanding tradition of naming facilities for individual donors, but they have been slower to offer branding or naming rights to corporate donors. Yet, they can use corporate branding to finance an energy infrastructure upgrade, soliciting a donation for naming rights on a new or existing academic, research or sports facility, and then applying the funds to the energy infrastructure. With public K-12 systems, the issue of branding becomes problematic.
Comprehensive energy planning
There are a variety of methods to finance an energy-management initiative, but only one practical solution to the energy crisis: comprehensive energy planning. A comprehensive energy planning approach that uses both short-term solutions and long-term planning can save a school, college or university 30 percent to 50 percent on the costs of power and operation.
Short-term solutions are simple, the cost is relatively low, and the projects are completed very quickly, generating almost immediate savings. A few examples:
- Reduce usage
Initiate operating improvements, such as putting control devices on lighting and HVAC equipment.
- Carry out “easy” demand reductions
Reduce lighting demand by retrofitting fixtures with energy-efficient lamps, and reduce HVAC operating costs by reducing a building's operating hours.
- Improve system reliability and efficiency
Use existing backup generators for load shedding during peak hours to reduce cost of total electricity.
- Negotiate utility rate changes
Long-term utility contract negotiations can reduce rates.
- Use load aggregation to increase purchasing power
Negotiate rates with the utility based on total power — 25 megawatts — versus 25 meters at 1 megawatt each. This especially is effective for systems with a number of campuses or off-campus facilities.
But short-term fixes by themselves are insufficient. A comprehensive solution requires master planning for phased upgrades to energy infrastructures — a plan that meets the unique needs of the university.
Long-term planning should address a range of long-term issues:
- Cogeneration/on-site generation
Implement new infrastructures that increase reliability, reduce costs and reduce dependence on utility companies.
- Alternative energy sources
Renewable energy (solar, wind) also may be tapped to reduce costs and dependence on utilities.
- Building envelopes
Retrofit existing facilities with improved insulation, energy-efficient windows and roofing systems.
- “Hard” demand reductions
Phase in comprehensive retrofits of the lighting and HVAC systems, using approaches such as “daylight harvesting” (dimmers, ballasts and controls to take advantage of natural light) and energy-efficient, computer-monitored and controlled HVAC systems.
- Equipment replacement
Install new energy-efficient equipment to replace non-HVAC energy wasters — anything from old appliances in residence halls to equipment in technical research laboratories.
- Peak-shaving technologies
Use technologies that take advantage of off-peak savings; for example, thermal energy storage, which chills and stores water at night, when rates are lower.
- Power quality
Electrical-distribution-system upgrades should be used to increase the power factor (percentage of power used of the total amount coming to the campus) to 95 percent.
Rising costs, soaring demand, increasing needs for reliable, clean power — the challenges to American schools, colleges, and universities are great. But a solution is at hand.
With comprehensive energy management planning, a school or university can develop a new infrastructure that increases reliability and reduces power and operating costs. In many cases the initiatives outlined above will pay for themselves in a reasonable timeframe, making the decision to move ahead with the needed capital outlay that much more palatable within an institution's overall budgetary framework.
Hashempour is a vice president of Syska & Hennessy, Los Angeles, an engineering and construction firm that provides technical solutions in such areas as mechanical/electrical design, facilities management, energy management, technology consulting/engineering, project financing, and turnkey design/build services. The firm worked on the California State University at San Bernardino and University of California — Los Angeles projects.
The minimum percentage, “Three Nines,” reliability standard for energy in many schools and universities.
30 TO 50
The percentage of energy cost savings a school or university may realize through comprehensive energy planning.
Percentage of total energy use attributed to lighting.
Projected megawatts of new energy generating capacity to be needed by the year 2020, according to the U.S. Department of Energy.