Performance Contract Saves Energy and Money

Metro Nashville Public Schools (MNPS) has 14 million sq. ft., 5,000 classrooms, 187 structures, and 75,000 students. With rising energy costs and aging equipment, how were district administrators to save money on energy costs? With a little help from their friends, of course.

In 2004, Metropolitan Board of Public Education (MBPE) for the City of Nashville and Davidson County, TN, entered into a performance contract with the Nashville office of Buffalo Gove, IL-headquartered Siemens Building Technologies, Inc., to provide comprehensive energy, environmental, and operational improvements throughout the district’s schools.

Here’s the beauty of a performance contract: “The improvements have paid for themselves from the energy savings they’ve generated,” says Joe Edgens, MNPS executive director of Facilities & Operations.

The First Five Years
“We started with the lowest-hanging fruit for short payback time,” says Edgens, “This was lighting. We changed out lamps, ballasts, and fluorescent fixtures.”

“Retrofitting lighting almost always has a great payback,” confirms Kirk Whittington, Business Development - Energy Solutions for Siemens. “When you go from old to new technology, the savings are definitive and quantifiable.”

Then the team conducted energy audits of every school, starting with the largest schools. “This, in itself, can take several years,” says Edgens.

Using the audits, administrators, including architects and maintenance personnel, working with the contractor, compiled a list of projects to be completed at each school, the cost of each, and how much each would save. Edgens notes how critical it is to have the maintenance personnel involved: “They know where the problems are because they’ve been working with the mechanical systems for years.”

Whittington emphasizes that they always try to brainstorm with the customer to find everything that is needed in the school buildings. This is easier than it sounds, he says, because most administrators know their buildings — and thus, their needs — quite well. He calls the list a “cafeteria list” because, from it, administrators choose the projects they want to complete first.

“It’s a value judgment,” says Edgens about prioritizing the list. “Some things that need to be completed have very long payback times, so those projects wait.” Ultimately, the district decides everything, from what projects to implement when, to style and brand of equipment.

The list is reviewed and reprioritized every year and every phase, which is usually during the summer months. “They allot us X amount of dollars every year,” says Whittington, “and that number changes every year, so we work backward into that number. The number drives how much of the list we can actually complete that year.”

So, far the district has completed four phases, each ranging from $14M to $18M. Edgens notes that the fifth phase is all set to go once the capital funding is in place.

Capital funding is critical to the success of the performance contract. Here’s why. The cost of replacing equipment (such as boilers) is paid for by selling 20-year general obligation bonds, which are then paid back by the energy savings gained from the equipment upgrades, and which are generated by MBPE. Therefore, each phase is budget neutral.

As the initial five-year phase of the project nears completion, an impressive list of goals have been achieved, ones that are already yielding substantial energy savings and positive environmental effects. In fact, district wide, energy and resource reductions have generated more than $2.9M in total savings. Specifically, improvements to heating ventilation and air conditioning (HVAC) systems have been made to more than 30 schools, and lighting retrofits have been made at 110 schools.

Water conservation measures also have been instituted. “A little more than 50-million gallons of water were saved in this phase,” says Whittington. “Some of the changes have been pretty standard things like changing to low-flow urinals and installing sink aerators. Most of it is simply installing newer technology.”

Some of the new technology for water conservation success came from Flozone Services, Inc., a woman-owned company and a Siemens partner, which provided chemical-free water treatment to 62 systems in 58 schools, improving the efficiency of the HVAC systems, saving three million gallons of water, and lowering utility costs by $196,000 in its first six months of operation. “Their chemical-free HVAC energy management system saves a dramatic amount of water in the cooling tower,” says Whittington. “It’s a wonderful hidden treasure we’ve found in the last eight years that has been a great tool.”

In addition, more than 70 schools received building control upgrades and, in 15 schools, state-of-the-art building automation systems were installed. “We’re big on helping the school district with standardization in all of their building systems, including lighting, plumbing, HVAC systems, kitchen equipment, and more,” says Whittington. “We’re helping the district to not have a dozen different types of systems. It helps their maintenance personnel immensely. And it’s a huge plus that helps in the long run with efficiency and inventory.”

The Next Five Years
MBPE is on an energy-savings roll — and has just extended the performance contract another five years. “It won’t take that long to complete all the work in all the schools,” says Edgens. “So, we are sure we will finish everything that needs to be done.”

On the still-to-do list are more HVAC improvements. “Having to put Band-Aids on HVAC equipment until it can be replaced is an awful headache for maintenance personnel,” says Whittington. “Fortunately, MPBE is focused on changing out all the systems that need to be replaced.”

Edgens recognizes the difficulties his department endured during the first five years. “It has been extremely challenging to evaluate all the utilities recommendations — all the possibilities recommended for the best value. We have to consider what will save the most in utilities and manpower from not having to work on old, worn-out equipment. And not having to make repairs is especially effective for saving money from the general operating account.”

Enduring those difficulties has been well worth the rewards, and gives Edgens the motivation to push the team forward. “The natural resources we’re saving are tremendous,” he acknowledges, “especially when revenues are a challenge — and you have to save every dollar you can today.”

From a half-way-through-the-program perspective, Edgens advises administrators in other districts that working through a performance contract is a worthwhile endeavor. He recommends that you choose a firm you trust. “You need people who can evaluate the true value of recommendations,” he says, “to see how each benefits you in terms of saving natural resources and manpower in your maintenance department for equipment that’s more efficient and easier to work on.

“It has definitely been a massive project,” Edgens concludes. “But the school district is not only saving millions of dollars as a result of reducing energy consumption, the improvements to our schools are providing more comfortable learning environments for students, teachers, and everyone who works in or visits public schools in Nashville.”