| University of
Hawaii at Hilo and Hawaii Community College Hawaii In the public sector, financing energy efficiency retrofits of facilities is especially problematic because education, health, and safety are top priorities for capital improvement expenditures. The Hawaii Department of Business, Economic Development, & Tourism (DBEDT) encourages government facilities to install energy efficiency improvements, using performance contracting as a method of financing. Performance contracting is an arrangement in which a private company finances and installs building improvements and then relies on future energy savings for payment. Since the contractor guarantees energy savings, the risk of energy savings performance is transferred from the public sector facility to the private company. All project costs -- the energy audit, up-front engineering, and construction -- are financed, which removes funding as a barrier to government agencies. Shortages of technical and managerial resources are also mitigated, since performance contracting services include design, installation, project management, measurement and verification of savings, and long-term maintenance. In response to declining maintenance budgets, increasing utility bills, and the substantial capital investment needed to retrofit University of Hawaii at Hilo and Hawaii Community College (UHH), in July 1994, UHH issued a Request for Proposals for energy performance contracting services. Through this competitive process, Johnson Controls, Inc. (JCI) was selected to provide a comprehensive energy study, acquire and install equipment, and maintain and repair energy saving measures and related equipment. The goal was to maximize all possible energy savings in order to upgrade facilities while meeting its needs for maintenance services. Under its contract, JCI provided UHH with $2.9 million in capital improvements for the retrofit of 50 buildings. In addition, UHH received an on-going comprehensive maintenance plan that upgrades and returns existing equipment to maintainable condition along with an ongoing preventative and predictive maintenance program valued at $200,000 per year. The project's projected energy and other cost savings will exceed $6.6 million over the 10-year contract term. In order to repay the up-front capital investment provided by JCI, UHH makes regular payments based on the energy savings guaranteed by JCI. During the period from the project start through June 30, 1999, the University realized more than $1.4 million in savings on utility bills, approximately $80,000 over the amount guaranteed. The project also enabled Hawaiian Electric Light Company, Inc., under its Demand-Side Management Incentives program, to provide more than $122,400 in rebates to the University. In February 2000, DBEDT conducted an opinion survey on performance contracting. The survey had a 61% response rate. Results clearly demonstrate that performance contracting is of public economic benefit, and indicate a high level of satisfaction with the process, equipment performance and maintenance service. Lessons learned include the need for an on-site project champion, teamwork, and communications at all levels throughout the project. DBEDT met its project goals, demonstrating the value of performance contracting and developing guidelines and pro-forma documents that could be used by other facilities which duplicate the process.
|
||