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Case study: Performance contract cuts costs

As educational facilities age, the costs of maintaining and upgrading energy-consuming equipment increase exponentially. Maintenance and repair of deteriorating equipment become more costly over time, especially when compared with buying modern, energy-efficient equipment.

Performance contracting allows schools and colleges to carry out campuswide improvements in energy efficiency without incurring any upfront costs or debt. The savings realized go to repay the costs of new energy-efficient equipment over a defined period, typically 10 to 15 years.

One university that has used an energy savings performance contract successfully is Louisiana State University (LSU) in Baton Rouge. Officials at LSU wanted to overhaul the heating and cooling systems of 100 buildings. With major energy-efficiency retrofits through a performance contract with Sempra Energy Solutions, the university projected yearly savings of more than $4.3 million.

The project required devising a thermal cogeneration system with a jet engine as the single energy source to produce two forms of energy - steam and chilled water. The campus' 100 buildings were linked to this central chilled-water and steam plant. New equipment was installed, including a 5,000-horsepower gas-fired turbine, 22 new pumps and variable speed drives, a computerized energy-control system and more.

LSU achieved annual energy savings of more than $4.6 million - $300,000 more than the projected savings. Over 10 years, the savings easily will cover the entire project's cost of $18.7 million.

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