Burning fossil fuels -- and the subsequent release of carbon dioxide -- is the primary cause of global warming and climate change. Burning fossil fuels, including burning them to generate purchased electricity, is also the primary source of GHG emissions at colleges and universities. It follows, then, that the first and foremost campus GHG emissions mitigation strategy is energy conservation and energy efficiency improvements to reduce the use of fossil fuels.

5.1.1 The Power of End-Use Energy Conservation

**Nothing is cleaner than the BTU or kilowatt hour of energy that you don’t need, don’t consume, and therefore that doesn’t need to be produced or generated. **

Energy production and consumption have social and environmental impacts. Energy conservation avoids these impacts. Prevention is better than a cure.

End-use energy conservation has great power because units of energy saved at the point of use can save many times that amount of energy when the inefficiencies of energy production and distribution are taken into account. As this illustration below (redrawn from an illustration from Rocky Mountain Institute) shows, turning off a pump that produces work equal to 9.5 units of energy saves 100 units of input energy at the power plant -- and it saves even more energy than that if we consider the energy it takes to produce and deliver fuel to that power plant.

Image courtesy of Rocky Mountain Institute

Suppose we need that pump to run but not at full speed. If we reduce the flow/speed of the pump by only 21%, the work the pump does decreases by 50% (i.e. 4.75 units of work energy output). This slight reduction can save 50 units of energy at the power plant! Since the pump in this illustration is running on electricity generated by burning coal, this example of end use conservation produces substantial reductions in carbon dioxide emissions – thus helping to put the brakes on climate change. Imagine the impact of turning off or turning down all those pumps, fans, lights, and other energy-using appliances on campus that don’t need to be on right now. Energy savings of this magnitude are wildly exciting to contemplate!

5.1.2 Energy Conservation Program Elements

Here are key components of an effective campus energy conservation program to reduce energy use and GHG emissions from campus operations:

• Strong Program Leadership

  • An energy officer to develop energy conservation measures and projects and catalyze the entire effort
  • Full support from facilities leadership, the chief business officer, and the president

• Enhanced Energy Awareness (see detail in the "Energy Awareness" section)

• Aggressive Energy Conservation Policies which address:

  • Heating and cooling season temperature settings
  • Building HVAC and fan operating schedules
  • Computer operations and "green computing"
  • Ban on all incandescent bulbs and halogen torchiere lamps (the latter is also a safety issue)
  • Energy purchasing (including buying green power)
  • Energy efficiency purchasing standards for various types of equipment -- hopefully going beyond Energy Star compliance
  • Improved space utilization to avoid new construction or heating/cooling of underused space
  • Energy efficiency standards for new construction
  • Restrictions on the use of portable space heaters
  • Energy practices in on-campus residence halls and student apartments
  • Residential appliance policies (e.g. load limits per room, ban refrigerators, TVs, microwaves, etc.)
  • Curtailment periods when campus use is minimal and energy shutdowns can be implemented

• Engaged Facilities Operations

  • An active facilities energy conservation committee which meets regularly and is encouraged and empowered by the physical plant director (and campus leadership) to push the envelope and aggressively pursue all conservation opportunities
  • Comprehensive implementation of no cost/low cost operational measures – e.g. temperature set-points, equipment run-times and building occupancy hours, etc. -- that push the envelope, i.e. risk complaints
  • Adequate facilities staffing levels – especially HVAC controls technicians, heating and power plant operators, mechanics, and electricians -- to operate the campus efficiently and readily implement energy conservation measures and projects in-house
  • Periodic re-commissioning of all existing buildings to optimize energy efficiency
  • Facilities staff performance appraisals that evaluate staff on commitment to energy conservation
  • Empowerment of highly motivated staff who are anxious to implement energy conservation measures
  • Rewarding of staff who identify conservation opportunities and implement conservation measures
  • Reconsideration of the timing of the academic calendar to better align it with periods of least energy cost operation, e.g. in cold regions this might involve shifting academic activity and campus occupancy away from the coldest months and implementing a partial campus shutdown during that period

• Energy Smart Capital Improvement Program

  • Tough energy efficiency standards for all renovations and capital improvement programs
  • Prioritization of projects which conserve energy and improve efficiency

• Deliberate Targeting of Worst Offenders

  • Specific, aggressive, comprehensive targeting of the most energy intensive and energy wasteful buildings and energy systems, e.g.:
    • Electric heating
    • Large outside air ventilation systems (e.g. in lab buildings)
    • Fan systems which operate at full capacity when actual occupancy is mostly a lot less
    • Heating and power plants
    • Super-computers

• Energy Performance Contracting

  • Maximizing the scope, effectiveness, and benefits of performance contracting, i.e. large comprehensive, self-financed projects involving energy service companies (ESCOs). (See detail in the "Performance Contracting" section)

• Green Computing

  • Purchase of ENERGY STAR computers and monitors.
  • Requirement that computers have power management features engaged and are shut off when offices are closed. US EPA ENERGY STAR offers free software and technical assistance to help universities activate power management features across a network - see www.energystar.gov/lowcarbonit.
  • Operation of computer labs to match operating computers to customer load
  • Full cooperation of campus IT departments in the design and operation of networked and campus-wide computer systems
  • Highest standards of efficient design for super-computers

• Incentives for Energy Conservation

  • Innovative strategies to assign energy costs to campus energy users or cost centers to provide real dollar incentives for energy conservation for campus building occupants
  • Elimination of “split incentives” that discourage full cooperation with the energy conservation program
  • In multi-school college and university systems, a policy which allows all or part of the energy conservation dollar savings to remain with the school that achieved them

• Super Energy Efficient Planning and Green Design for New Construction

  • Avoid new construction or only build the most energy efficient buildings to eliminate or minimize future energy conservation retrofitting

• Documentation of Savings

  • Keep a log to document conservation projects and savings
  • Publicize, publicize, publicize!

For campus energy conservation program examples, see the Energy section of AASHE's resource center. This webpage includes links to numerous campus energy websites, energy plans and energy policies.

5.1.3 Energy Awareness

It is essential that everyone on campus pitch in. This can be accomplished by an effective energy awareness program or campaign that encourages individual and group action. Here are some energy awareness program considerations and ideas:

• You are striving for culture change – a real shift in the way members of the campus community think about energy and their role in and responsibility for saving energy on campus
• You are competing against a lot of other interests and activities on campus so you need to be both creative and persistent in getting the message out
• Use environmental themes to motivate -- especially climate change; explain that:
  • Climate change is real
  • Its happening right now and faster than we previously thought
  • The consequences will be dire if we do not act
  • Let’s act now before it’s too late!
• Take into account that not everyone on campus can do a lot to save energy – so target various constituencies with appropriate messages and aggressively target those who can do the most, namely:
  • Facilities management
  • Resident students
  • Building managers
  • Computer lab operators
  • Top leadership
• Develop a multi-faceted campaign using as many media as possible
  • Campus actions and events
  • Newspaper articles and columns
  • Classroom presentations (target large classes)
  • Websites
  • E-mail blasts
  • Creative signage
  • Contests and competitions
  • Facebook groups, instant messaging
  • Mascots
  • Crazy stunts
  • Etc. Etc. Etc.
• Make sure your facilities department is not overheating or overcooling buildings or allowing outdoor light fixtures to burn during the day, etc. because no one will pay attention to your energy conservation appeals if they see visible instances of energy waste on campus and don’t think facilities is doing its job
• Be sure that you have vigorous recycling and other environmental programs because green programs reinforce each other, and the campus community is much more likely to participate in energy conservation if they can also easily recycle, use 100% post consumer recycled paper, bicycle to campus, sit on pesticide free grounds, go for a hike in preserved green space, etc.
• Expand your awareness program through a building “conservation contacts network” with an environmental liaison in every office or department or an eco-reps program for on-campus residence halls and apartments
• Encourage conserving behavior at home as well as on campus since these behaviors will reinforce each other

How much can you accomplish via awareness raising? A great deal if it gets facilities staff to use the tools at their disposal to save energy. An awful lot if you inspire your school’s president to set an example and let others know he/she expects others to follow his/her lead.

But what about the general campus population? An effective energy awareness program might reduce energy consumption on campus by 5 or 10 % or more. A great student research project would be to take one or more buildings, launch an energy awareness campaign and measure energy use before and after, and determine from that experiment how to do energy awareness raising with maximum success and how much energy saving is possible with various methods.

AASHE maintains an extensive list of campus energy websites.

5.1.4 Energy Conservation Measures

Standard techniques for conserving energy and improving energy efficiency in commercial or institutional buildings are well known to the vast majority of campus facilities managers. These strategies can be found in many places including in publications available through:

• ASHRAE
• Association of Energy Engineers
• APPA

Or on websites such as these maintained by the U.S. Department of Energy:

• Building Technologies Program Commercial Buildings website
• Energy Star's Building Upgrade Manual

Here is a list of some of some energy conservation measures that can be used in campus buildings:

• Building envelope improvement
  • Weather/infiltration sealing
  • Increased insulation
  • High performance window replacement
  • Low emissivity reflective window film (to reduce unwanted solar gain in the summer and increase the R-value of windows in the winter)
• Lighting
  • “Delamping,” i.e. permanently turning off/disconnecting unneeded light fixtures
  • “Relamping,” i.e. replacing inefficient light fixtures or lamps with high efficiency fixtures/lamps
    • Convert T-12 fixtures/lamps to T-8 or T-5
    • Relamp 32 watt T-8 lamps with 28 watt T-8
    • Eliminate incandescent bulbs
    • Convert all exit lighting to LEDs or switch to photoluminescent signs that require no electricity
    • Beware of retrofitting with indirect lighting – while classy looking it may require more fixtures and more wattage
  • Increase reliance on task lighting in order to decrease general illumination without adversely affecting productivity
  • Improve lighting controls
    • Occupancy sensors
    • Timers (stand alone or energy management system/EMS-interfaced)
    • Daylight harvesting sensors and controls including simple photocells
  • Convert outdoor lighting to high pressure sodium
  • Eliminate/reduce outdoor decorative lighting
  • Consider LEDs for general indoor and outdoor illumination (the technology is almost there)
  • Consider outdoor solar powered-LED light fixtures (this technology is also almost there)
  • Require white or off-white wall paints for maximum light reflectivity -- so adequate lighting levels can be achieved with minimum lighting wattage
  • When renovating spaces, design new lighting for less than 1.0 watts per square foot
• Boilers
  • Replace old boilers with new high efficiency boilers
  • Do not oversize replacement boilers
  • Retrofit boilers with variable flame burners
  • Consider multiple high efficiency modular boilers to improve efficiency by better matching hot water heating loads
  • Consider replacing boilers with cogenerators (which also produce electricity)
  • Control boiler output water temperature with outside air temp reset so boiler does not need to heat water hotter than necessary
  • Retrofit boilers with flue gas/stack heat recovery
• Chillers
  • Replace old chillers with new high efficiency chillers whose efficiency curve best matches your load profile
  • Do not over-size replacement chillers
  • Operate at peak efficiency (by adjusting water flow, load, condenser/evaporator water temps, etc.)
  • Replace old cooling towers with new high efficiency towers
• Air conditioning
  • Replace older AC equipment with maximum efficiency models
  • Discontinue use of inefficient window units
  • Reduce AC operating hours
  • Turn off reheats and stop controlling humidity levels during the cooling season
  • Clean cooling coils on a regular basis
  • Maximize use of “free cooling” with economizer cycle
  • Use open windows and passive cooling when mechanical air conditioning is not needed
  • Close windows when air conditioning is in operation
  • In dry climates consider evaporative cooling
  • In humid areas consider desiccant cooling
• Temperature control
  • Reduce temperature settings in winter
  • Increase temperature settings in summer
  • Maximize night, weekend and holiday temperature setbacks
  • Install tamper proof or remote thermostats
  • Control space temp remotely by EMS
  • If occupant controlled thermostats are required, then limit range of adjustment to ensure campus temperature policy compliance
• Motors, fans and pumps
  • Adjust operating schedule to minimize run hours (review and update periodically)
  • Replace old motors, pumps, and air handling units with high efficiency
  • Control motors serving fans and pumps with variable speed drives (VSDs)
  • Operate VSDs at maximum acceptable turn-down; vary by time of day and occupancy; also vary by season
  • Convert constant volume fan system to variable air volume
  • Reduce outside air volume during morning warm-up cycle and where/whenever possible through damper settings and demand control ventilation
  • Reduce needless pumping by eliminating three-way by-pass valves
• Laboratory Ventilation and Fume Hoods
  • Switch to a “green chemistry” teaching program that doesn’t require fume hoods
  • Turn off 100% outside air ventilating systems whenever possible, e.g. in teaching labs whenever classes are not in session; shut down or slow down related supply fans
  • Decommission/remove unneeded fume hoods and reduce fan system outside air volume
  • Eliminate unneeded fume hoods by using ventilated storage cabinets instead of hoods for chemical storage
  • Retrofit constant volume fume hood ventilation systems to variable air volume
  • Retrofit conventional fume hoods with low-flow hoods and reduce outside air volumes
  • Retrofit these systems with heat recovery
• Heat recovery
  • Run around loops
  • Heat wheels
  • Heat pipes
  • Desiccant wheels
  • Air-to-air heat exchangers
• Swimming pools/natatoriums
  • Pool covers (these significantly reduce the evaporation of pool water -- reducing pool heating boiler load as well as outside air ventilation and space heating requirements; they save chemical water treatment too)
  • High efficiency boilers for pool water heating
  • Limit natatorium ventilation to that required to meet code
  • If code ventilation requirements seem excessive in a particular application, consider applying for a code variance to reduce ventilation consistent with safety and proper humidity control
  • Install heat recovery
• Energy Management Systems (EMS)
  • Switch to direct digital control (DDC) systems
  • Purchase EMS systems which are easy to program (so programming capabilities will be fully utilized by facilities staff)
  • Utilize and optimize use of EMS energy conservation programs, e.g.
    • Optimal start/stop
    • Night setback
    • Demand shedding
    • Remote programmed lighting control
• Fuel Switching
  • Consider converting electric space and water heating to natural gas
• Information feedback systems
  • Accessible display units that show energy use and savings can have dramatic results in energy use behaviors

Evaluating opportunities for natural gas-fired cogeneration and fuel switching from electric heating to natural gas requires a different mind-set when your ultimate goal is a reduction in carbon footprint (as opposed to simply reduced energy costs). While cogen and fuel switching are typically regarded as methods for improving overall efficiency (including thermal losses at utility power plants), on your campus these measures could decrease or increase your carbon footprint depending on the carbon intensity of your purchased electricity -- so it bears analysis.

Participating in the LEED for Existing Buildings (LEED EB) program may be an effective vehicle for moving your campus in more energy efficient directions – though be aware that not all LEED EB credits achieve energy or carbon reductions. For reducing GHG emissions, the most important credits in LEED EB are energy efficiency (EA Credit 1), building commissioning (Credits 2.1, 2.2, and 2.3), and renewable energy (EA Credit 4).

5.1.5 Performance Contracting

Energy performance contracting may be a critically important tool in your energy conservation bag of tricks. A good performance contract can allow your campus to do a decade or more’s worth of conservation in just a few years. Typically, these projects involve hiring an energy service company or ESCO, require little or no upfront money, and pay for themselves out of savings. Here are some guidelines for a good project:

• Be diligent and careful in selecting an ESCO – the success or failure of your project depends on it
  • Choose an ESCO with ample experience on college and university campuses and a long list of satisfied customers
  • Choose an ESCO which is selling professional services and not representing a manufacturer and selling specific products
  • Pay careful attention to the people a prospective ESCO says it will assign to your project because one of the best guarantees of a good project is the caliber of the individuals assigned to the project team – be sure they know what they are doing, are easy to work with, and are very, very customer service-oriented
  • If your decision to hire an ESCO is based on certain personnel being assigned to your project, obtain contractual guarantees that these key staff people will not be shifted to other jobs
  • Insist on references for the team bidding on your project and not for another team within the ESCO or a previous iteration of the company
  • Select an ESCO that will allow you maximum flexibility in contract terms
  • Select an ESCO that welcomes campus participation in project design and construction
  • Select an ESCO that will provide full transparency of all fees and overhead and profit mark-ups (and of course avoid excessive fees/mark-ups but recognize that higher ones are associated with the performance contracting industry compared to the fee structure of a conventional architecture and engineering firm)
  • To help you evaluate and choose an ESCO, consider hiring an independent expert consultant who is loyal only to you (“the owner”) and understands how the performance contracting game is played
• Projects should be comprehensive and thus incorporate a great number of varied energy conservation measures including quick payback projects that leverage or help pay for longer payback projects.
• Consider including solar and other renewable energy projects in your performance contract and have the energy conservation measures pay for them
• Make sure your school borrows the money to pay for the project so you can get the best rate vs. being required to use the ESCO’s financing (which will probably include a mark-up)
• While you want to avoid high mark-ups, be careful about trimming them too far; you want the project to be “win-win” and have enough money in it for the ESCO to allow the ESCO to dig deep, carefully study all your campus buildings, and consider all viable energy conservation measures – and not simply cherry pick the easy stuff
• Consider doing your project on a “cost plus” instead of “fixed cost” basis so that you do not pay more than you have to -- though be aware that the former approach shifts some risk to you and will involve more facilities staff time as you will be involved in all decision-making
• Avoid guaranteed savings and shared savings provisions because you have to pay extra for them and may end up squabbling later with the ESCO over whether the guarantee has been met and whether the savings split is fair; a better approach to “guarantee” savings may be to verify that all the savings calculations for proposed measures are conservative and accurate, build into your project enough metering so you will know if it performed as advertised, and let the ESCO know you will publicize inadequate performance if that occurs.

Small campuses may be less attractive for ESCOs and increase the likelihood that projects may require some financial commitment to help a project get started. Check on state or utility incentives to help get funding for audits that are often the first step.

5.1.6 Aiming for “Deep Conservation”

In order to achieve significant GHG emissions reductions colleges and universities must think differently about energy conservation on their campuses. What is needed is not just an efficient campus but a super-efficient one. That means not just doing conservation but doing what might be called “deep conservation.” Even campuses that have already done extensive energy retrofitting and have model energy conservation programs need to do more. Resting on one’s laurels should not be an option.

Your school may be a leader and have already reduced energy consumption in buildings by as much as 30% but that is not enough. To meet the challenge of climate change you will need to redouble your efforts – and try to reduce energy consumption by another 10%, 20% or more.

To identify advanced strategies, techniques, and products for achieving deep conservation, your campus facilities unit may want to team up with interested faculty and students as well as an expert consultant or two and focus on one or more campus buildings in order to determine what is possible. Is a 40 or 50% cut in energy use possible and still have a livable, functional academic building? While constructing very low energy new buildings may be possible, the biggest, most important challenge for most institutions is figuring out how to significantly reduce the energy used by existing buildings. A campus climate commitment like the ACUPCC is your excuse to give it a try.

Of course, at some point our efforts will bang up against the limits of what can be done in existing buildings and there will be no more practical retrofitting options to exploit. In most cases, however, we are far from that circumstance.

5.1.7 Key Role of Facilities Management in Energy Conservation

Energy conservation on campus is everyone’s responsibility and a good program will get the whole campus community involved. Nonetheless, facilities management plays a key energy conservation role since maintenance staff control those pieces of equipment that use and can save the most energy. For this reason, effective energy conservation on campus requires a 100% commitment by facilities management.

Not only can facilities staff do the most to save energy, they need to set a solid example or others on campus will never get on the conservation bandwagon and help out where they can. An inspired facilities organization will inspire others. A lackluster facilities organization will turn everyone off.

To do their job, facilities management needs adequate resources and staffing including an energy officer whose job is to identify and carry out projects, get others to do the same, and generally catalyze as much energy conservation activity as possible.

While the role of facilities in achieving energy savings is highlighted here, it is also true that facilities managers and staff are essential for achieving other types of GHG emissions reductions including those which result from the installation of on-site renewables, green power purchasing, and energy efficient green design for new construction.

Facilities staff cannot do their job unless they are supported and empowered by top campus leadership. Without that support, they will be constantly looking over their shoulders anticipating criticism if they go too far in saving energy and cause someone to be inconvenienced. For example, when faculty, staff or students complain that a space previously overheated beyond the policy is no longer as comfortable, facilities staff must be supported for having remedied a wasteful practice. Exceptions to the rule must be rare and based on unusual and valid circumstances. Obviously, campus leadership also must set an example and not ask to be an exception to the policy.

5.1.8 Evaluating Energy Conservation Projects

As we consider deep conservation we must address barriers that stand in the way. Among these are inadequate leadership, funding, expertise, and organizational capacity as well as reliance on project evaluative tools and standards that emphasize short paybacks while dismissing longer payback measures. Deciding what evaluative tools, standards, and methods to use is important since your comparative evaluation of projects will help you decide which projects to do and when to schedule them. Deep cuts in GHG emissions require a different approach to project evaluation. (See the chapter on "Project Evaluation and Ranking" for more discussion of this topic)

Problems with Simple Payback

Prospective energy conservation projects are typically evaluated in terms of simple payback, i.e. installed cost divided by the annual savings -- where paybacks of 4 or 5 years are often considered attractive and acceptable. The simple payback approach is perhaps too simple and may rule out desirable projects that have longer simple paybacks or other benefits. These projects are essential to meeting your emissions reduction goals.

Simple payback analysis *fails *to consider:

• Energy price inflation -- thus it under-estimates the cost savings potential of projects; moreover, as carbon taxes and peak oil kick in, the price of conventional energy resources will rise even quicker – thus magnifying the inadequacy of simple payback
• The lifespan of a project -- thus it does not take into consideration the fact that projects which last longer will produce more savings after paying for themselves
• Other costs and benefits that are relevant to sound decision-making, e.g. maintenance saving or costs, impact on health or comfort, pedagogic value, etc.

How can problems with simple payback be remedied? One possibility is switching from simple payback to slightly more sophisticated payback calculations that factor in anticipated energy price inflation. Some “crystal-balling” is required here but reasonable assumptions about future energy prices can be made. Another possibility is extending your acceptable payback threshold to 10, 15 or 20 years – taking care not to extend it past the lifetime of proposed energy measures or projects. A more sophisticated approach is life cycle cost analysis.

Lifecycle Cost Analysis

Lifecycle cost analysis examines and weighs the costs of a measure over its lifespan. It can be used to compare the costs of an existing system over a retrofit one – thus demonstrating the benefits of a retrofit measure in a more comprehensive way than simple payback. It can also be used to compare two or more retrofit options.

A description of lifecycle cost analysis is available in the Whole Building Design Guide which notes that this type of analysis considers these costs/benefits:

• Initial Costs—Purchase, Acquisition, Construction Costs
• Fuel Costs
• Operation, Maintenance, and Repair Costs
• Replacement Costs
• Residual Values—Resale or Salvage Values or Disposal Costs
• Finance Charges—Loan Interest Payments
• Non-Monetary Benefits or Costs

The last category of benefits and costs shown above allows life cycle cost analysis to consider a wide range of other factors. For example, a lighting retrofit might save energy and energy dollars *plus *improve safety – where the latter improvement is very important but not easily quantified or stated in dollars. Similarly, an HVAC retrofit might save energy and energy dollars *plus *improve comfort and indoor air quality -- which makes people happier, healthier and perhaps more productive, important factors not easily quantified or monetized.

With lifecycle cost analysis you can also consider altruistic factors, i.e. societal or environmental impacts that wouldn’t otherwise figure into your cost vs. savings calculation. An example might be the impact of a measure on climate, local air pollution, noise, or on the fate of mountain tops in West Virginia that are now subject to destruction by coal mining.

**Factoring in the Avoided Cost of Unneeded RECs or Carbon Offsets **

Colleges and universities that are committed to climate neutrality or sharp cuts in GHG emissions may eventually choose to mitigate remaining fossil fuel use and GHG emissions with purchases of green power or carbon offsets. It makes sense, then, especially for ACUPCC institutions, to credit energy conservation measures with the savings associated with those anticipated avoided purchases. This can be done in a lifecycle analysis. It can also be done in a modified payback analysis – though in both cases you will need to use an assumed cost for the value of the avoided REC or carbon offset. (REC is shorthand for renewable energy credit or certificate, which is generally what one purchases when obtaining green power; see the "Buy Green Power" section for more on this topic)

While it is not possible to know the exact future cost of these instruments, you can estimate those costs by checking with existing vendors to identify a price to use in your calculations. For example, RECs on the national market generally cost 1 to 3 cents per kilowatt hour. TerraPass and the Carbon Fund are currently selling carbon offsets at $10 per ton of carbon dioxide emissions. While using these numbers may be misleading because the markets for both RECs and offsets will evolve (and prices will change), the principle still holds true, namely, that energy conservation can reduce the need to buy RECs or offsets and those avoided future purchases mean avoided future costs. If your school will not be purchasing RECs or carbon offsets for a few years, you can allow for that by excluding their avoided costs in your savings and payback calculations until the year you think they would kick in.

Incidentally, factoring in REC and carbon offset savings into lifecycle or payback analyses can and should also be done when financially evaluating a prospective PV or other type of on-campus renewable energy project – since those projects also reduce the amount of RECs or carbon offsets your school may need to purchase.

Note: the ACUPCC Carbon Offset Protocol provides additional guidance on offset purchasing; also see the "Carbon Offsets" section of this manual.

**Comparing Measures Based on CO2 Reduction Efficacy **

It also makes sense to evaluate prospective energy conservation measures in terms of their relative efficiency or efficacy in producing GHG emissions reductions. To do this, projects can be compared in terms of a cost/offset ratio or how much it costs to produce a metric ton reduction of carbon dioxide emissions ($/MTCO2e/yr). This analysis can be done in terms of net present value to take into account the time value of money.

Care, however, should be taken not to focus initially only on those measures which have the most attractive cost/offset ratio because such an approach may make it more difficult to complete the less attractive measures at a later date. The same logic applies when comparing projects on the basis of payback.

See the chapter on "Project Evaluation and Ranking" for further discussion on using cost/offset ratios to compare and prioritize projects.

5.1.9 Avoid the Short Payback Trap

It is often assumed that it makes most sense to start with energy conservation measures that are easiest to do and have the shortest simple paybacks, i.e. the proverbial “low-hanging fruit.” The problem with this approach is that if you harvest all the low hanging fruit first, then all you have left is the high hanging fruit – and reaching that fruit can be pretty difficult since it has longer paybacks and thus appears to be financially unattractive.

The short payback or low hanging fruit trap can be avoided by combining the most cost-effective energy conservation measures with less cost-effective measures. This is typically done in comprehensive energy conservation performance contracts. Lighting retrofits may have short paybacks while more capital-intensive retrofits like installing heat recovery systems or new boilers or chillers may not. If both types of measures are combined in the same project, the end result can be a relatively attractive combined payback and thus an overall project which is relatively easy to financially justify. This approach allows short payback measures to leverage or in essence finance long payback measures.

The strategy of combining short and long payback projects can also be used to finance renewable energy projects like photovoltaic arrays that may have a very long and financially unattractive payback even after taking advantage of incentives that bring down project costs. In a large multi-million dollar comprehensive energy conservation project, conservation measures that payback relatively quickly can be used to leverage a PV array that may payback in 25 or more years. Moreover, while the cost of a large PV array may be substantial if viewed in isolation, even a $500,000 system may shrink to insignificance when viewed in the context of a large multi-million dollar comprehensive energy performance contract.

The second way to avoid the short payback trap is to create a revolving fund that is funded by energy savings that are then available to fund later projects that have longer paybacks.

5.1.10 Revolving Funds

A revolving fund works by placing all or some of the savings produced by energy conservation projects and measures into an account that is then used to fund other projects. This same account could be the repository for an annual budgetary allocation from your administration to help finance your energy conservation projects. It could also be the place where energy incentive monies are deposited.

Since conservation is so important and funds for projects are generally limited, it will be necessary to protect the revolving fund from being raided for purposes other than conservation. A clear understanding of how this fund may be used is essential. For projects which are a mix of capital improvement and energy conservation, only the premium cost associated with maximizing efficiency should be charged to the fund. The revolving fund’s manager should establish a set of criteria for evaluating eligible projects so that only the best projects which would otherwise not be done get funded from this source.

Another challenge in establishing and maintaining a revolving fund is turning “avoided costs” into real dollars when a budget crunch comes. When an energy conservation measure is employed, it does not produce a pot of money. Instead it produces savings or avoided utility budget costs. To fund your revolving fund, you may need an agreement with your chief budget officer that allows you to identify and transfer energy savings from the surplus in your utility budget caused by conservation measures. This may work well until energy prices unexpectedly rise or if campus energy consumption is greater than anticipated because of an especially cold winter, for example, causing your utility budget to go into deficit mode -- even though the conservation projects you implemented are nonetheless producing savings. Thus, when utility budgets go into the red, transferring savings into your revolving fund may be “politically” more difficult to accomplish. This problem can be solved by anticipating these circumstances and having an agreement in place to transfer savings irrespective of the condition of the budget.

For additional information about revolving funds, see Creating a Campus Sustainability Revolving Loan Fund: A Guide for Students.