Investing in sustainable schools with no upfront costs

Districts turns to "energy savings performance contracts"
By: | Issue: July, 2015
June 22, 2015

New partnerships between districts and energy service companies provide much-needed funding for school sustainability upgrades that can range from installing efficient lighting to renovating entire buildings.

Energy savings performance contracts (ESPCs) allow school leaders and other public agencies to complete energy-savings projects without upfront capital costs.

First, the energy service company, or a commercial or nonprofit that provides a broad range of energy solutions, conducts a comprehensive audit of the school facility to identify improvements. The company arranges funding for the project it develops in consultation with the school.

The company guarantees that the energy cost savings will pay for the project over the contract term, of up to 25 years. After the contract ends, all additional savings go to the school.

Building interest

The first ESPCs were awarded in 1998, but K12 interest in these contracts has risen in recent years due to an increased pressure for schools to save on energy costs, experts say.

“Districts throughout the country have deferred a lot of capital improvements for lack of funds,” says Mark Hansberger, director of facilities at Hacienda La Puente USD in California. The ESPC provided another, better option, he adds.

Last year, Hacienda La Puente USD, an urban district of 20,000 students located 10 miles east of Los Angeles, embarked on a five-year, $5.3 million ESPC with Schneider Electric.

The district previously spent $4 million per year on electricity, with more than half of the costs generated by six outdated buildings, Hansberger says. But in June, energy upgrades in those buildingsÑfour high schools, a district office and an adult education centersÑwere completed.

Fast Fact

In May, the six largest school districts in the nationÑNew York City, Los Angeles, Chicago, Miami-Dade, Dallas and OrlandoÑbegan replacing 225 million polystyrene trays used in cafeterias each year with compostable plates.

Source: The Urban School Food Alliance

The district updated exterior lighting at the four high schools, which had not been replaced since the schools were built in the 1950s and 1960s. New interior lighting with higher-quality fluorescents now illuminates the hallways and classrooms, and revamped air conditioning and heating controls are in place after years of problems regulating classroom temperatures. The high school upgrades should save the district $520,000 per year.

Overall, if district leaders do take part in the ESPC process, administrators should explain the partnerships to community and school board members early on by providing examples of other districts that have used the contract successfully, Hansberger says.

“It’s such a change from the design-bid-build model that people struggle to understand,” Hansberger says. “There were some real skeptics of the process in our district before we started, but now everyone is on board after seeing how well it works.”