Article by Lawrence Eighmy, The Stone House Group
This article originally appeared in the May/June 2015 Net Assets magazine
Photo courtesy of The Hotchkiss School.
In recent years, many independent schools have struggled to reconcile energy budgets with actual energy costs. With variables such as commodity costs, consumption and weather at play, it can be difficult to predict institutional energy usage or hold staff accountable for budget overages. However, there are tried and true strategies that schools can implement to manage and reduce energy costs. Low energy consumption obviously has a direct impact on energy costs, but at a deeper level, good energy performers typically have efficiently managed facilities and low levels of maintenance. The Stonehouse Group received suggestions from John Tuke, CFO at The Hotchkiss School, to assemble a list of ourmost successful energy management strategies. Some of these that follow are taken directly from Hotchkiss, where we have served as energy manager and advisor since 2001.
1. Connect Sustainability and Mission
When a school’s mission includes environmental stewardship, its facilities become part of the learning environment. The Hotchkiss School’s mission statement expresses hope that “graduates will leave Hotchkiss with a commitment to service to others and to environmental stewardship, and with greater understanding of themselves and of their responsibilities in a global society.”
In practice, The Hotchkiss School differentiates itself from many other independent schools by thinking strategically about sustainability. In 2011, we helped the school develop a “Climate Action Plan” to establish greenhouse gas emissions targets and the goal of eventually achieving net climate neutrality, or the point where all carbon emissions are reduced through, or offset by, renewables. The foundation of this plan already existed in the school’s Energy Management Program. Combined, this commitment to environmental stewardship helps ensure that the school’s students live and learn on a campus that helps to prepare them for a bright future. (Hotchkiss in many ways is following the American College and University Presidents’ Climate Commitment, which provides a template for moving toward climate neutrality.)
2. Understand the Three Cs of Your Campus
As Peter Drucker famously said, “If you can’t measure it, you can’t manage it.” We recommend that independent schools maintain an energy database that tracks the “3 Cs” of their campus: energy Consumption, energy Cost and Carbon emissions. At The Hotchkiss School, our early energy databases tracked electricity and fossil fuels for monthly and annual variations in cost and consumption. As concern grew over greenhouse gas emissions, this effort was extended to understanding how much of the school’s carbon footprint can be attributed to the 3 Cs of Your Campus energy consumption.
Energy databases that factor in weather data, calculate month-to-month comparisons and identify changes in year-to-year trends help independent school business officers and facilities managers better understand how their campus consumes energy. Advanced campuses install sub-metering equipment to capture consumption and cost data for individual buildings, and hold monthly meetings with the designated campus energy manager. Consumption anomalies should prompt a closer look at equipment operation and scheduling; cost anomalies should prompt an understanding of changes in utility tariffs and rate structures (i.e., increased penalties for peak electric demand).
3. Develop a Comprehensive Procurement Strategy
Most states now have deregulated utility environments, prompting many independent schools to take advantage of the option to purchase electricity and natural gas from third-party suppliers, as well as to explore methods such as aggregating with other institutions, partnering with brokers and issuing RFPs for pricing. At this time, we believe the most effective energy procurement strategies involve hedging, identifying price floors and ceilings, and purchasing layers of energy needs through online reverse auctions.
By developing a procurement strategy, schools can control the “energy unit cost” variable. Energy markets have become extremely complex and volatile, similar to the stock market. Catastrophic events such as back-to-back Hurricanes Katrina and Rita drove gas pricing to 10-year highs, at almost $14/DTH. In April 2012, gas prices bottomed at around $2.80/DTH, but they spiked again in December 2013 to $5.90/DTH, an increase of 111 percent. Given this unpredictability, independent schools benefit from partnering with experts that deal with energy markets daily and understand market fundamentals that cause prices to fluctuate.
At Hotchkiss, The Stone House Group uses a third-party proprietary online reverse auction platform to track energy and ensure that the school is able to go to market when the conditions are favorable. The corollary is that the data are always available and measuring is easier. Today, the school’s energy unit costs are below its previous rates. More importantly, future exposure is mitigated through layered purchases.
4. Reduce Heating and Cooling Loads with Facilities Improvements
By reducing its buildings’ energy loads, a school can avoid using more energy than needed. New construction and deep-cutting renovations are optimal times to evaluate the energy required to operate facilities.
At independent schools, energy is primarily used for heating, cooling, lighting, ventilation, cooking and domestic water heating. These uses are intertwined, therefore changing one often impacts others. For a given building, the main drivers of heating and cooling loads are the building envelope (generally, exterior walls, windows and doors), ventilation and internal loads. Insulation levels, measured as an “R-value,” indicate how much heat a building will gain (summer) or lose (winter). Ventilation requirements are dictated by the local building code and are based on the level of activity in a particular space; for instance, an aerobics studio will require more ventilation per person than an auditorium, but an auditorium will be more densely packed with people. Internal loads are typically things that give off heat inside a building, such as people, lighting, computers and cooking equipment.
Opportunities for load reduction abound and include improved insulation, higher-performance windows and lighting upgrades (see strategy 7 for more on end-use technologies). However accomplished, load reduction is a prudent investment because it generates persistent savings throughout the life of the facility.
5. Develop Campus-Wide Generation Strategies
For independent schools, “generation” in the context of building utilities refers to generating not only electricity but also heating and cooling to meet the needs of buildings. In establishing a heating and cooling master plan, it can often be helpful to first tackle the question of centralized versus decentralized plants.
Centralized (consolidated) plants involve larger pieces of equipment—boilers, chillers, pumps, etc.—and distribution piping to the buildings served. Decentralized (dispersed) plants put smaller heating and cooling equipment in each building and do not require a large network of plant-to-building distribution piping. Centralization offers many advantages. The first discernible benefit is the fact that consolidated plants have fewer points of failure. There are far fewer pieces of equipment to maintain, and larger equipment is typically built to a higher quality with a longer life expectancy. Secondly, large boilers and chillers cost less per unit capacity than the smaller equipment used in dispersed plants. Additionally, serving multiple building types with varied use profiles allows the centralized plant to be downsized because of load “diversity.” Finally, many schools require each building to have one or more spare boilers, chillers or pumps in the event of a system failure. Centralized plants allow for the consolidation of all redundant standby equipment, rather than one of each type per building.
The central heating plant at Hotchkiss is an example. In 2005, The Stone House Group performed a Facilities Condition Assessment (FCA) that predicted much of the campus’s distributed heating equipment would need replacement within the next 10 years. Later, when the school established its goal of carbon neutrality by 2020, it revisited the FCA and called on The Stone House Group to provide a Climate Action Plan that included completion of both an Energy Capital Investment Plan and Utility Master Plan to focus on campus infrastructure and tie such improvements to energy conservation. Working with a mechanical design engineer, Hotchkiss evaluated several different solutions (consolidated and distributed), along with operational and emissions feedback. Ultimately the best solution emerged as a centralized biomass boiler plant (burns woodchips) about ⅓ mile from the campus core. Construction of the plant and distribution piping was completed in 2012. Over the first four heating seasons, Hotchkiss has averaged approximately $300,000 a year in annual savings. The boiler plant is a showcase of the school’s sustainability initiatives and the site of frequent tours.
6. Plan Heating and Cooling Distribution Strategies
By now a theme should be emerging: To reduce energy costs, reduce building loads and provide only what is needed to meet them. It is wasteful to use water at 180°F to heat a building to 70°F. Similarly, it is wasteful to use 42°F water to cool a building to 75°F. Boilers and chillers run much more efficiently when they do not have to produce extreme temperatures.
From a distribution standpoint, this means provide only the amount needed, only when required. More to the point, nothing reduces energy costs better than “off.” More tips:
Install variable speed drives (VSDs) on pumps and fans to slow them down when they do not need to run at full speed. While intuition says running a pump or fan at 80 percent speed uses 80 percent power, in reality there is a cubic relationship between speed and power. A pump running at 50 percent speed actually uses less than 15 percent of the full-speed power (1/23 = ⅛ = 12.5 percent).
For a healthy indoor environment, only provide as much ventilation as necessary to the spaces requiring it, and only when needed. Fully ventilating an almost-empty building does not improve anyone’s well-being and can be costly over the long term.
Ensure that new equipment is capable of modulating its output. With on/off cooling systems, a building’s inhabitants are often cold when the system is dumping frigid air and comfortable only when it has stopped, at which point the cycle repeats. Modulating systems can greatly improve thermal comfort and reduce occupant complaints.
7. Limit Energy Consumption with End-Use Controls
Only now do we begin to consider end-use equipment. The bare minimum tool at this time is a building automation system (BAS), used to control and monitor systems. (Other terms are building management system [BMS] and automated temperature control [ATC].) Minimally, a BAS should govern heating and cooling equipment; more comprehensive management of end-use systems includes lighting and ventilation as well. A BAS allows the centralized scheduling of temperature setpoints, equipment monitoring and system troubleshooting.
To fully maximize the energy- and cost-saving potential of a BAS, a school can implement technologies such as demand control ventilation (also known as carbon dioxide sensors) on appropriate air handler systems and lighting control in relevant spaces. Lighting use can also be honed with readily available technologies such as vacancy sensing and daylight harvesting.
For boarding schools in particular, it can be a challenge to provide and manage energy in student dormitories and faculty and staff housing. Because the school nearly always pays the utility bill, it seems reasonable to clarify expectations. For example, if faculty and staff go away over winter break, the school should not have to pay to heat their homes to 70°F for 10 days or more. We find being able to change temperature setpoints from a central location—that is, without needing to enter each residence—often overcomes the single biggest hurdle facing operations staff.
Keep in mind that increasing the complexity of a campus’s systems can stretch the capabilities of operations staff accustomed to doing things a particular way. Periodic maintenance is most successfully achieved through a process called retro-commissioning (if the system has never before been commissioned), or re-commissioning (if has been commissioned previously). Both are abbreviated RCx, so the distinction is often blurred. Most often, this systematic process sets out to bring systems back in line with their original control methodologies. A school can save 10 to 20 percent on energy costs by engaging a commissioning agent (CxA) for a comprehensive RCx effort every three to five years, or at more frequent intervals in some cases. Ultimately, this approach leads to ongoing commissioning.
Again, we can highlight The Hotchkiss School. Over the course of several years, The Stone House Group has commissioned to some degree all but two facilities larger than 10,000 square feet.
8. Involve the Community
While most energy-efficiency improvements are rather straightforward, changing the behaviors of students, faculty and staff to conserve energy can be much more difficult. Business officers and facilities managers should lead conservation efforts at independent schools by:
- Championing previous success
- Developing heating and cooling temperature policies
- Identifying opportunities to conserve energy (winter break, spring break, long weekends)
- Guiding “sustainability clubs”
that elevate the importance of conserving energy
- Publishing current and historical energy data to encourage transparency
The Hotchkiss School has taken community involvement to the next level by completing each of the initiatives above, as well as by inviting the community on tours of its central biomass heating facility. These tours help ensure that the plant is not only a facilities management space, but also an extension of the classroom.
9. Capture Incentives and Evaluate Financing Options
At least 30 states have renewable portfolio standards (RPS) and/or energy efficiency targets that mandate both the amount of energy that must come from renewable resources and the amount of energy efficiency savings that utility companies must incentivize. To the latter point, many utility companies have either an “RPS Charge” or “Societal Benefits Charge” that funds investment in renewables and energy efficiency. Independent schools take advantage of such rebates through utility programs that provide incentives for steps ranging from replacing old equipment with more efficient models to comprehensive “whole building” energy improvements.
In addition, some energy incentive programs offer alternative financing structures that enable schools to make energy improvements without capital investments. In the past, The Hotchkiss School has borrowed funds from endowment to complete energy conservation projects and repaid the endowment fund with interest—an approach sometimes known as a “revolving loan fund” or “green energy fund.” Additionally, the school has borrowed from a local bank to implement LED retrofits, based on estimated energy savings. Regardless of ability to fund energy conservation projects internally, all independent schools should evaluate the potential for incentives as well as financing options prior to upgrading facilities.
10. Understand Your Campus's Potential for Renewable Energy
Renewable energy projects can achieve or beat grid parity pricing through a combination of tax credits, renewable energy credits (RECs), grants and high-efficiency technology. Many schools have taken advantage of these benefits to install solar arrays, wind turbines, geothermal heating and cooling systems, and biomass heating systems on their campuses. However, recent history has proven that the market for renewable energy projects can change swiftly. In Pennsylvania, New Jersey and Connecticut, for instance, changes in legislation have produced booms as well as busts in this market. Independent schools that are not prepared to move forward with renewable energy projects may “miss out” on opportunities with short decision-making timelines.
Being prepared means that a school has:
Evaluated its potential for renewable energy:
- Are there locations where solar panels can be installed on roofs, on the ground or as parking canopies?
- If natural gas is not available and the school is heated with oil, are biomass fuel deliveries practical?
- Is it feasible to introduce a biomass heating fuel on campus: wood chips, straw pellets or corn husks?
- Will local codes allow for wind turbine installation on campus?
- Is there potential to dig either vertical or horizontal wells for geothermal heating and cooling?
- Identified potential for REC or
- Identified donors who may be interested in funding renewable energy projects or partnering with the school to capture tax credits
- Identified potential project partners to design, install and finance systems
- Educated the board about the potential for cost-beneficial renewable energy on campus
- Identified the right financial conditions that would allow the school to pursue a renewable energy project
A successful campus-wide energy management approach requires thorough planning, a high-level commitment and constant verification. Independent schools that do this most successfully have a deep commitment to sustainability and view their facilities as part of a living-learning laboratory.
Independent schools should work with their facilities management staffs to take the first steps in collecting energy data and reviewing procurement contracts, while also developing campus-wide energy generation and distribution strategies. In the 15 years since The Hotchkiss School began work on its highly evolved energy management program, the school has reduced its energy consumption, energy costs and greenhouse gas emissions while reducing deferred maintenance and integrating best practices into the classroom. By following the steps outlined in this article, business managers will be in a strong position to develop successful energy management strategies at their schools.