Performance Contracts Key to Embracing Energy Efficiency in Buildings

May 22, 2007 – Vol.12 No.9

PERFORMANCE CONTRACTS KEY TO EMBRACING ENERGY EFFICIENCY IN BUILDINGS.

Rising greenhouse gases and rising energy costs; there’s no end in sight.

Still it’s hard to get people to act. It’s hard to get people to change their patterns of energy consumption even if it’s in their own best interest to do so.

Business and industry, too, are having trouble making the transition from a low cost, high consumption energy world to a high cost, low consumption one. However, there’s a legal tool available that will encourage them to do so: the Energy Savings Performance Contract - energy savings guaranteed in writing.

The Clinton Climate Initiative (CCI), a project of the Clinton Foundation, has launched its Energy Efficiency Building Retrofit Program, a partnership of city governments and private sector firms with a goal to reduce energy consumption by 20-50 percent in city and privately-owned buildings in 15 cities around the world: Bangkok, Berlin, Chicago, Houston, Johannesburg, Karachi, London, Melbourne, Mexico City, New York, Sao Paulo, Rome, Seoul, Tokyo and Toronto.

In the program city partners will be able to make the building energy improvements with no initial capital outlay. Loans to cover the cost of audits and retrofit projects will be repaid, with interest, with the dollar value of energy saved. Deutsche Bank, ABN Amro, Citigroup, JPMorgan and UBS have each made $1 billion available for funding and are partners in the program.

The success of the program - as well as in repaying the loans - revolves around the performance contract. Energy technology installations and improvements by retrofitting companies will cut energy consumption compared with past, average building energy performance. Building owners will know before work is started how much they can expect to save both in energy and in cash. In the end they’ll be cutting greenhouse gas emissions as well. All of this will be in writing in a signed contract.

One of the retrofitters will be another program partner, Johnson Controls. The company has already gained considerable experience in implementing building energy efficiency improvements as well as employing renewable energy.

--- For the Minas Basin Pulp & Power Co. in Hantsport, Nova Scotia, Johnson Controls installed a system that recovers and reuses heat from a number of sources throughout its facility to save 25 percent on energy costs.

--- At the Schlitz Audubon Nature Center in Milwaukee, Wisconsin the company’s Metasys (tm) building energy management system was installed. When a window is open in an area monitored by Metasys it shuts down that heating zone. The heating and cooling is geothermal with 90 groundwater wells. The company, too, installed a 10 kilowatt solar system which provides a significant portion of the building’s power.

--- At the Norwalk Hospital in Norwalk Connecticut, Johnson Controls made energy improvements, upgraded existing chillers (an ice machine used to cool air) and installed a new chiller for the operating room, all of which is performance guaranteed and will save nearly $1.2 million annually for 10 years.

--- At the Marine Air Ground Task Force Training Command in Twentynine Palms, California, the company upgraded chillers, added a seven-megawatt dual fuel cogeneration system and made additional energy improvements to save the base $1.1 million each year: all under an Energy Savings Performance Contract.

--- Wind energy was the solution for Erie Community Unit School District No. 1 Erie, Illinois. A 1.2 megawatt wind turbine was installed with assistance of Johnson Controls that saves the school district 87 percent in energy each year which will tally up to $5.5 million in total energy savings over 30 years. The turbine was paid for with $720,000 from the Illinois Clean Energy Community Foundation.

Johnson Controls has also just completed its Energy Efficiency Indicator which finds that 60 percent of North American businesses plan to invest in energy efficient building improvements over the next year. Most, 79 percent of the 1250 executives surveyed, expect energy prices to increase significantly over the next 12 months.

Their motivation is purely economic. Nearly half said energy efficiency improvements were mostly for cost savings. Only 13 percent said the environment was the motivator behind the quest for saving energy.

For the report visit http://johnsoncontrolseei.web180.com

Other companies conducting and performing audits and energy efficiency improvements for the Energy Efficiency Building Retrofit Program are Honeywell, Siemens and Trane.

Visit Johnson Controls at http://www.johnsoncontrols.com/ the Clinton Foundation at http://www.clintonfoundation.org/index.htm