Can Green Tech Save Cash?

Gone are the days when green campus initiatives were a balm to the soul and a drain on the wallet. Today's environmental initiatives are all about saving lots of green--in every sense of the word.

• By Keith Norbury
• 04/22/13

Illustration by Shaw Nielsen.

The environmental benefits of green campus projects--whether wind turbines or better insulation--are pretty clear. Unfortunately, in today's bleak budget landscape, everything must take a backseat to short-term fiscal reality. But can schools have their cake and eat it, too? Can environmental projects actually pad the bottom line? In short, yes.

But don't bolt solar panels to every flat surface just yet. Cutting-edge technology, such as solar arrays, may be sexy, but it's not where the biggest bang for the buck lies right now. The return on investment (ROI) for wind and solar projects also varies widely, depending on local climate, electricity rates, and scale. A $33 million solar project at Butte College in California, for example, is expected to recover its capital outlay within a decade, while a proposed $44,000 project at SUNY Oneonta in New York would take 44 years to recover its investment. That's longer than the 25-year warranty on the panels.

At this point, the fast road to environmentally friendly savings is lined with more pedestrian pavers: The most cost-effective energy projects are those that don't produce energy at all. They just save it.

Retrofitting Buildings
The first place to start is with campus buildings. According to the U.S. Green Building Council, buildings account for 41 percent of the country's energy usage and 38 percent of carbon dioxide emissions.

"If we look at something like a retrofit on a building, replacing lightbulbs, repairs on HVAC systems, and so forth, the returns on those investments can sometimes be stunningly quick," says Paul Rowland, executive director of the Association for the Advancement of Sustainability in Higher Education (AASHE). The ROI can be less than a year in some cases, he says, but generally within three or four years.

In recent years, Central Connecticut State University has undertaken many retro-commissioning projects to improve the efficiency of its centralized energy system. Recent upgrades to its energy center, originally built in 2005 for $38 million, cost around $270,000. According to Rob Gagne, a plant facilities engineer, the upgrades produce annual energy savings of $192,000, a payback period of just 1.4 years. And that doesn't include a $60,000 incentive from the Connecticut Energy Efficiency Fund.

"We typically don't go with an ROI past five years on certain things," explains Gagne. "We're looking for return on investment that's going to give us some quick payback with some decent incentives that we can show."

A building doesn't have to be old to warrant an environmental face-lift either. CCSU's energy center wasn't even a decade old before its most recent upgrade. In fact, newer buildings are often better candidates for improvements because they usually have building-automation systems.

"You can't just do a retro-commissioning project with a building that doesn't have any remote controls at all and remote monitoring," Gagne says. "It has to be a system where you can actually set up a persistent strategy."

When it comes to new construction, the temptation during lean budget years is to cut corners. Don't. The initial construction cost of a building is only about 11 percent of its lifetime cost, says David Umstot, vice chancellor of facilities management for the San Diego Community College District. The rest is spent on maintenance, energy, cleaning, repairs, and renovations.

"If you're making decisions on 11 percent of the budget on the front end that can really reduce the other 89 percent of your operating costs, you're way ahead of the game," Umstot explains.

His district has done some serious green building. Flush with $1.55 billion from voter-approved bond measures in 2002 and 2006, the district is on track to obtain 41 Leadership in Energy and Environmental Design certifications--25 Silver, 12 Gold, one Platinum, and three Certified--for its new buildings. The LEED buildings are expected to save $370,000 a year in energy costs.

The district is also preparing to roll out a smart metering initiative. "We are metering every building on our campuses for electrical consumption as well as natural gas and then chilled water and heating hot water," notes Umstot. "We can actually evaluate how each of the buildings is performing."

Once the program is running, Umstot expects the system to measure electricity by kilowatt-hour per square foot throughout the various campuses. This will help the district identify areas where it can curtail usage during peak pricing periods when rates reach $1 per kwh compared with the average of 16.5 cents. The first round of smart meters cost $1.3 million. "We anticipate the payback on that is going to be less than three years," says Umstot.

Elephant in the Room
In any discussion of energy costs, the data center is invariably the elephant in the room. With its racks of juice-sucking computer servers, it's a prime candidate for conservation measures. The National Snow and Ice Data Center at the University of Colorado Boulder, for example, achieved a 90 percent reduction in energy use during a retrofit that "included a new cooling system design, server virtualization, and a photovoltaic (PV) solar-powered uninterruptible power supply," according to the Uptime Institute, which awarded the data center a Green Enterprise IT Award in 2012.

While new university data centers are usually energy efficient, the same cannot be said for their predecessors. "The old stuff is just generally poorly maintained and an energy hog," says Mike Byrnes, chief operating officer for SourceOne, an energy-management consulting firm. Unfortunately, most universities have only one or a few electrical meters on an entire campus. "You may have a data center sucking up 50 percent of your energy budget and you'll never know it," adds Byrnes.

Any talk of a data center upgrade, though, should also contemplate outsourcing the entire operation to the cloud. From a budget standpoint, it's likely to be a winner. From an environmental standpoint, ensure that you're not simply off-loading your school's carbon emissions onto someone else. While the giant data centers operated by the major cloud-service providers achieve energy efficiencies beyond the scope of most schools, the sources of their electricity--coal, nuclear, or renewables--may differ from provider to provider, and from center to center. (For more information, see "How Much of the Cloud Is Dirty Smoke?")

Securing Green Power
While conservation measures provide the quickest way to go green and save money, the long-term ROI on renewable energy sources is looking encouraging, too, and should be considered as part of a college's overall strategy.

Schools don't have to launch their own green infrastructure projects either: Many utilities nationwide offer one or more green power options, allowing customers to specify where their electricity comes from. While conventional electric power is still cheaper than green power, the rates fluctuate with the price of fuel. The biggest benefit of renewables like solar and wind is that universities can enter into long-term deals that hedge against future price hikes, because wind and solar aren't subject to the same market fluctuations. "The critical issue is going long and locking in your prices," advises Blaine Collison, director of the Environmental Protection Agency's Green Power Partnership.

In the past few years, the cost-benefit calculation has improved to the point where many schools are starting to produce their own green energy. "Many campuses are installing…PV solar electric arrays," notes the website for AASHE. "While rarely as cost-effective as energy conservation, PV becomes more cost-effective when conventional electric rates are high and ample incentives are offered by state government or local utilities."

Butte College, for example, expects to save as much as $100 million on its electric bills over the next 30 years. It received $6.5 million in rebates on the 25,000 solar panels that it installed during a three-phase project from 2005 to 2011. Even without the rebates, which lowered the cost to $27.3 million, the system would have paid for itself in a decade. It now generates 102 percent of the college's electricity usage, making it "grid positive."

In a further incentive to go green, the price of solar panels has been dropping in recent years, as a glut of panels hit the market and the technology improves.

Wind is the other renewable energy source that receives a lot of coverage. While few institutions have the space to house wind turbines on campus, those that do are seeing excellent returns on their investment. A 1.65-megawatt wind turbine erected by Carleton College (MN) in 2004, for example, provides 40 percent of the school's electricity needs. The University of Minnesota, Morris also has wind turbines on campus, while Western Washington University's wind initiative has made the school grid positive.

According to the EPA's Collison, there is "a dynamite case" for university wind projects "just on a straight-up financial case." But it makes no sense for universities to build their own wind farms, because federal subsidies for wind energy come in the form of tax breaks, and universities and colleges typically don't pay taxes. "If you're an institution of higher education and you've put up your own money, you have left 30 percent of the potential economic value of the project on the table," counsels Collison.

Even if renewable energies are not a feasible choice, it's possible to save money and reduce emissions simply by switching fuel sources or installing more efficient systems. CCSU recently installed a 1.4-megawatt natural-gas fuel-cell system that will result in savings of $100,000 annually. And when New York University commissioned a new gas-fired co-generation system to replace an aging plant, it nearly doubled its electrical capacity to 13,400 kW, providing enough juice to power 18 additional buildings. According to SourceOne's Byrnes, whose firm worked on the project, the school will save almost $6 million in annual energy costs, allowing it to recoup its capital investment in five to seven years.

Financing Green Power
The availability of tax credits may ultimately determine whether tax-exempt schools undertake green infrastructure projects on their own as capital expenditures, or farm them out to a third party. Third-party options include power purchase agreements, where a school contracts with a utility to buy power from renewable sources, and energy service performance contracts. Under an ESPC, a school pays a third party to build--and even operate--a project on its behalf.

"An investment bank or an energy service company such as Siemens or Honeywell will actually put up the capital to invest in the energy-efficiency upgrades," explains Joe Indvik, a climate and energy consultant for ICF International, an energy- and environmental-consulting company. The downside, he adds, is that the contractor owns the upgrades and will keep a portion--sometimes a substantial chunk--of the energy savings, depending on the deal.

So how does an institution ensure that its green infrastructure projects deliver, both environmentally and fiscally, on their potential? One way is to "hire a good commissioning agent who's separate from the rest of the construction and development team," says Byrnes.

According to AASHE's Rowland, a complete audit is most important when embarking on any kind of green building project. He also advises lawyering up, "to make sure that there are consequences if people aren't doing what they're supposed to be doing."

But the idea of an audit rings alarm bells for Nick Keller, director of energy efficiency for SourceOne. In his view, energy audits have gotten a bad rap "especially with facilities guys who they think they're going to get beat up on it." Instead, Keller prefers to see schools create an energy master plan. "There's no black box that you can put into a university or in a building that will tell you what makes sense for you or your facility," he adds.

Just Do It
If green building projects are so good for the bottom line, why isn't every school piling on? "Oh, don't make me scream," laughs Rowland, who understands the savings to be gained but believes lack of information is one of the biggest obstacles facing colleges.

"To those people who aren't doing anything, it's time to do it," he advises. "It's silly to let money keep going out through the windows, the cracks, the doors, and the walls. It's time to retrofit. It's time to look at how can you can engage with alternative energy technologies, because not doing so is irresponsible."

What's more, Rowland predicts some sort of carbon tax within five years. "When the carbon tax comes, you'll be really sorry you didn't do energy-conservation measures years ago."