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Six Ways Energy Performance Contracting Benefits U.S. Schools

Energy costs are second only to salaries in many school districts. The Department of Energy reports that smarter energy management can cut energy costs for K-12 schools by 25%.

Cash strapped public schools throughout the United States educate millions of students annually on shoe-string budgets. Every penny that can be is earmarked for student programs. This means that there's little left for anything else — like upgrading facilities. Unfortunately, 53% of U.S. schools need to make infrastructure upgrades just to provide 'good' conditions for students and staff, according to the American Society of Civil Engineers (ASCE).

Energy costs are second only to salaries in many school districts. The Department of Energy reports that smarter energy management can cut energy costs for K-12 schools by 25%.  Those savings could be used to where they're most needed: teacher pay and student programs.

School districts want to do what they do best: prepare generations of children to be successful in life -- but that's tough to do with failing energy systems. The vast majority of U.S. schools understand that improving energy efficiency and sustainability will have lasting benefits for their students, their communities, and the environment. But, while boosting energy efficiency and improving learning environments is clearly a key goal, many school districts lack both the funds and expertise required to implement needed facility upgrades.

So what's the solution?

Energy Performance Contracting (EPC). An EPC is a solutions-driven agreement between a school district and an energy services company (ESCO) to identify, design, and install energy-related infrastructure upgrades. Most importantly, an EPC provides an innovative financing option that allows school districts to use the cost savings achieved through infrastructure upgrades to repay the cost of installing those measures. No upfront capital is required. Energy savings are guaranteed by the ESCO that designed and implemented the project. If the savings don't hit the mark, the ESCO must make up the difference, removing any risk to a district using an Energy Performance Contract to upgrade school facilities.

The immediate benefits of using an EPC include:

1. Budget Boost:

  • Although the primary objective of an ESPC project is to reduce energy consumption, cost-saving is just as important for most school districts. Under an EPC agreement, the ESCO guarantees the savings on an annual basis. A recent study conducted by the Department of Energy reveals that EPCs are proven to provide greater, more persistent savings than traditionally funded projects -- delivering average savings of 108% of the guarantee.
  • Depending on project scope, utility bill expenditures can be reduced by 25% or more by upgrading facility infrastructure. An ESC provides an immediate budget boost as schools retain a portion of their energy, water, and maintenance savings. The savings can then be reallocated to where they'll do the most good: improving teacher's salaries, adding new student programs, purchasing needed educational materials or investing in additional facility upgrades, etc.
  • It should also be noted that the savings continue after the term of the contract.

2. Simplified Procurement:

  • Getting approval from local voters to spend tax dollars on energy-related improvements can be a challenge. An EPC eliminates the hassles and delays associated with a low bid procurement process and replaces it with the best value solution. Using an EPC allows schools to achieve their education and sustainability goals without raising taxes or draining the budget. 

3. Reduced maintenance expenditures:

  • Energy use reductions are usually the largest source of the cost savings, but savings can also come from reduced demand, reduced water consumption and reduced operations and maintenance costs. 

Additional benefits of upgrading school facilities include:

4. Increased productivity and performance

5. Improved occupant comfort and health

  • Energy efficiency improvements have a direct and positive effect on student well-being. Installing energy recovery ventilation equipment, for example, can reduce air contaminants from outdoors while significantly reducing heating, ventilation, and air conditioning (HVAC) costs. Hot and cold spots, drafty windows, and inadequate lighting –  have a negative impact on student comfort, health, and attendance. A recent Carnegie Mellon study on building performance found that improved air quality in buildings reduced illness by 40% on average.

6. Increase security and safety

  • Improving energy efficiency in K-12 school buildings significantly improves school security and student safety. Energy-efficient exterior lighting can enhance security while reducing energy costs by providing effective and even light distribution.

The most effective way to reduce school district energy costs is to use an EPC to implement a portfolio-wide approach -- upgrading facilities in all district buildings.