Delaying energy upgrades impacts college budgets | Centrica Business Solutions
Delaying energy upgrades impacts college budgets
  1. Home
  2. > Knowledge Center

Delaying energy upgrades impacts college budgets

Faced with declining public funds and tuition revenue, many colleges and universities have to do more with less.

The challenge many colleges and universities face is to reduce spending without shortchanging students, canceling programs, and demoralizing staff. Often having to do more with fewer resources, college business officers and facility managers play an increasingly important role as they look for innovative ways to reduce costs and hit their budget.

While it may seem counter-intuitive, forward-thinking colleges and universities across the U.S. are discovering that one of the most effective ways to reduce spending is to invest in energy efficiency upgrades for campus buildings – sooner rather than later. Addressing aging infrastructure and deferred maintenance backlogs enables colleges and universities to operate more efficiently and reduce energy consumption and costs – freeing up operational budget that can be reallocated toward student-oriented programs.

The cost of waiting

The opportunity to drive savings through more efficient energy consumption and reduced maintenance expenses is especially compelling for colleges and universities. Many campuses have outdated energy systems and buildings that are well past their prime – in fact, many campuses have 75% of their facilities in the range of 30 to 40 years old. Upgrades to aging, inefficient equipment reduce energy costs while enhancing learning environments, boosting student and staff productivity, and increasing sustainability.

While energy rates across the U.S. vary wildly, colleges and universities spend over $6 billion a year on energy costs across 5 billion square feet of space, according to the U.S. Department of Energy – and the U.S. Environmental Protection Agency estimates that 30% of this energy is wasted. Whichever way you slice it, energy costs can significantly drain the budget. While some assume that tight college budgets simply can’t accommodate energy efficiency projects, that’s not the case, as various financing mechanisms help colleges and universities overcome budget constraints. Delaying energy-saving infrastructure upgrades means continuing to pay utility companies for wasted energy when, in fact, colleges and universities have an opportunity to reduce operational costs and free up budget to improve student programs.

Common misconceptions that cause delay

Misconception 1: Upgrading is too time-consuming

Many colleges and universities know that they need to upgrade infrastructure to reduce energy costs, increase efficiencies, minimize waste, and reduce carbon emissions. One of the primary reasons these institutions delay energy efficiency upgrades is that they believe the process is inconvenient and time-consuming, taking their focus away from their students. This concern is especially relevant given that there is a reduction in higher education facilities staffing and, therefore, a lack of resource dedicated to efficiency upgrades.

There’s an easy solution – partnering with an energy service company (ESCO). An ESCO will perform a feasibility study and determine the best course of action. This feasibility study helps colleges and universities identify areas for energy and infrastructure improvement, scope what solutions and technologies to implement to maximize infrastructure, and define an implementation roadmap. The ESCO manages the implementation of the infrastructure improvements and provides ongoing support, optimization, and verification of energy savings.

Misconception 2: Doing nothing won’t cost anything

It can be easy to overlook high energy and maintenance costs as simply the cost of running a higher education institution. As such, university and college managers often reason that postponing the implementation of energy efficiency projects until budget dollars are available is the wisest financial decision.

Not so. Measuring the costs of delaying energy efficiency projects adds a critical element to the financial decision. The reality is that delaying energy efficiency upgrades – even for just one year – is often a costly course of action, due to the EPA estimation that 30% of energy is wasted in aging buildings. In just one year, money lost due to these inefficiencies frequently totals more than all the costs of financing energy-saving upgrades.

Waiting to implement the project also delays the point at which energy savings begin to accrue. When you consider the availability off-balance sheet financing options like a Sustainable Energy Services Agreement, or SESA, it would be wise not to delay increasing energy efficiency in aging, inefficient campus buildings.

Misconception 3: Better to wait until the interest rates drop

A common tendency among higher education governing boards is to either avoid sourcing financing altogether or wait until rates drop to the lowest possible level. Again, while it may seem counter-intuitive that paying interest on a loan is a wiser financial decision than paying no interest, basic logic applies. If the costs of financing energy-savings upgrades are less than the operating budget dollars saved from reduced utility and maintenance bills, then financing is the most cost-effective solution.

Whatever the reason for postponing energy efficiency upgrades, there are real costs associated with delays. Higher operating costs mean diminished services to the students and staff. Pursuing energy efficiency retrofits sooner rather than later will immediately reduce operating costs. It will also free up budget that can be redirected toward offerings that students care about, like mental health support, the curriculum, dining options, student programs, extracurriculars, scholarships, and landscaping. Energy savings can even translate to teacher salaries or IT support to expand online offerings, enabling you to hire talent and offer additional learning opportunities that attract students to your institution. They can also translate into marketing dollars for recruitment efforts.

Higher education brochure
Sustainable energy solutions for higher education institutions
The right partner and energy strategy mean a faster path to reach your net zero and budget goals. Download our brochure to learn how Centrica Business Solutions helps colleges and universities balance planet, profit, and resilience.

Getting started

Working with the right partner is essential to implementing successful infrastructure upgrades while remaining aligned to your strategic and financial goals. An ESCO, like Centrica Business Solutions, can help you navigate all available opportunities. As an integrator of sustainable energy solutions, Centrica Business Solutions works with higher education institutions like yours to remove complexity by delivering a full range of bundled, end-to-end energy solutions and services.

We work with you step by step to develop an implementation pathway that makes sense for your institution. Our full lifecycle support reduces complexity and helps you get projects done – we manage the implementation of your infrastructure improvements and provide ongoing support and optimization. We can help you overcome obstacles, get the right people involved, navigate all available opportunities and deploy sustainable, integrated energy solutions to conserve energy and reduce maintenance costs – so you can focus on serving your students.