Feeling the Squeeze

June 1, 2001
Rising facility costs have school facility managers taking a closer look at performance contracting to help reduce waste and save money.

In April, California Gov. Gray Davis came to Escondido to honor the students of Rock Springs Elementary School for their energy conservation efforts.

By making sure lights are turned off in unused classrooms and other areas of the building, students have helped save $4,000 on energy bills since November.

The savings are commendable, but that one school's efforts represent a mere drop in the bucket in the context of California's energy crisis. The state has endured electrical shortages, rolling blackouts and huge utility rate increases of as much as 40 percent; and California's 8,000 schools and 1,000 school-district offices have not been immune.

To cover the unexpected spike in energy costs, many institutions have had to tap into reserve funds. One official has estimated that the energy crisis will force California schools to spend as much as $200 million more this year than expected.

The severe power crunch has provided schools in California and elsewhere with ample reason to find ways to heat, cool and illuminate their buildings more efficiently.

“Energy bills are a large part of a school district's annual operating expenses,” says Delaine Eastin, California's superintendent of public instruction. “It is critical that we ensure funds intended for student learning are not diverted to cover energy costs.”

To upgrade infrastructure and equipment, and reduce energy waste, many education institutions have turned to performance contracting. Companies agree to provide schools with equipment and infrastructure upgrades that improve energy efficiency and operations. The company is paid based on how much energy or money is saved from the upgrades.


Some schools already have improved their energy efficiency, but the skyrocketing costs have them looking at their facilities more closely.

In the mid-1990s, the Sunnyvale School District in Santa Clara County, Calif., improved the efficiency of its buildings by entering into a performance contract to improve 10 buildings.

The contractor upgraded lighting, energy management systems, furnaces, boilers, heat pumps, air-handling units and thermostats. The district was guaranteed a savings of more than $1.3 million over 10 years.

Now, the costs of the energy crisis have officials exploring other ways to save. The district is looking at solar energy — installing photovoltaic cells on the roofs of its facilities to absorb the sun's power.

“We're trying to defray some of these energy costs,” says Mario Galeano, a consultant serving as a project manager in Sunnyvale's operations division. “It is a fixed budget, and the cost fluctuations can cut away at the reserves.”

Before utility rates soared, photovoltaic cells wouldn't have been economical for Sunnyvale, Galeano says. The electric utility could provide a kilowatt-hour of energy for less. But now, solar might make sense for Sunnyvale.

The solar panels could provide up to 40 percent of the energy needed for the district's facilities. The savings generated by the conversion could pay for the equipment upgrades in eight to 12 years, and the panels last as long as 30 years, Galeano says.

“It would be a steady, non-fluctuating source,” he says.

Already experiencing a budget crunch, the district wouldn't be able to pay for photovoltaic cells unless it entered into a performance contract.


School administrators outside the Golden State may not believe the energy nightmare will come their way. But some experts warn that the power shortage could make its way east.

In the Appleton Area School District in Wisconsin, facilities director Robert Zuehlsdorf doesn't fear a crisis like California's: The area has some of the lowest utility rates in the nation. But even Appleton was affected over the winter by large hikes in natural gas costs and power curtailments.

So the district entered into a lease-purchase arrangement with a performance-contracting company. The project is a part of Wisconsin's Energy Efficiency Performance Program, which pays incentives to companies that guarantee energy savings.

“We weren't that bad off with our buildings,” says Zuehlsdorf. “We had done some equipment replacements four or five years ago.”

The upgrades include direct digital controls for air-handling units, space heating, chilled-water pumps, boilers and chillers; installation of lighting controls; and higher-efficiency windows.

Zuehlsdorf says the changes will help Appleton manage its utility costs more effectively.

SIDEBAR: Responding to crisis

In light of the energy crisis in California, the state's Office of Public School Construction has provided school districts with a guide to help them reduce their power consumption and cut their energy bills.

The “Cookbook for Energy Conservation Measures” includes several tips for long-term savings. “To incorporate energy conservation products or materials into a facility will generally increase the cost of construction, but the energy savings that result will offset some or all of the higher construction costs,” according to the cookbook.

To improve the energy efficiency of facilities, school districts and colleges can enter into a performance contract with an energy service company to acquire the equipment and facility upgrades needed to realize savings. Among the recommendations:

  • Improve insulation. “The investment in insulating products can usually be restored through energy savings in a short period of time,” the guide states.

  • Upgrade windows and doors. “Energy Star-labeled windows and doors…are twice as efficient as the average windows manufactured just 10 years ago…and can cut heating and cooling costs by up to 15 percent,” the guide says. “Low-transmission tinted glass or glass with insulated spandrel panels is another method that would reduce energy usage.”

  • Replace water heaters. “Gas heaters more than 10 years old probably have an efficiency rating of no higher than 50 percent,” the guide says. “Energy Star furnaces have a 90 rating or greater.”

  • Modify landscaping. “Planting deciduous varieties of trees…on the south and on the west will help keep buildings cool in the summer and allow sun to shine in the windows in the winter,” says the guide. “Shade trees will save you up to 40 percent on your summer cooling costs when the trees mature.”

  • Use solar power. This includes solar water heaters and photovoltaic cells “that would allow districts to produce all the energy they need…and eliminate dependency on municipal sources,” the guide says. In addition, schools that are closed in the summer might be able sell the energy collected through photovoltaic cells back to its utility.

  • Use wind power. Wind turbine technology uses a rotor to capture the wind and produce electrical output.

  • Use geothermal power. “Geothermal systems are praised for not burning fossil fuels, running on a small amount of electricity and drastically reducing monthly utility bills,” the guide says.

The cookbook also lists several short-term steps to conserve power. Using daylight instead of electricity to illuminate a building; installing a programmable thermostat to control temperatures more precisely; weatherproofing windows and doors; sealing and insulating ductwork and pipes; and upgrading to energy-efficient lighting such as fluorescent fixtures and bulbs all can make a significant impact on a school's utility bill.

Kennedy is staff writer for AS&U. He can be reached at[email protected].

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