In November 2011, Schneider Electric completed a $3 million energy savings performance contract (ESPC) retrofit project for the Biloxi Public Schools in Biloxi, MS. As a result, the school district, which serves over 5,100 students from kindergarten through grade 12, has seen its utility costs reduced by 15%, resulting in annual savings of close to $250,000. As part of the project Schneider Electric implemented energy conservation measures across 10 school facilities, comprising over 1 million square feet of space.
Some of the measures included in the ESPC, which has a 15 year term, include: Installation of a smart building automation system for real-time monitoring and management of energy use; c omprehensive lighting retrofits to improve the light quality, brightness, and efficiency ; water efficiency upgrades to reduce waste throughout the school year; installation of a new HVAC system at the administration building; enhancements to the chilled water plant at the high school ; and installation of new plumbing fixtures at the junior high school.
To learn more about this project and the decision making process, TFM spoke with the Biloxi Public School District business manager, Shane Switzer, recently.
TFM: In the lead up to the decision to enter into an energy savings performance contract (ESPC), what were some of the issues facing Biloxi school buildings in terms of operations and costs?
Switzer: In late 2008/early 2009 we were motivated to pursue an energy savings program as a result of growing anticipation of budgetary pressures including the following factors.
- Reduced state and local revenues as a result of the economic downturn
- Reduced enrollment as a result of hurricane Katrina
- We were spending more on energy per square footage in the three or four newest buildings and wanted to determine why and how to fix it
TFM: How did you come to work with Schneider Electric for this endeavor?
Switzer: In early 2009, our school district began evaluating options for an energy savings program. We initiated evaluations from a firm offering a behavioral approach to energy savings, which focused on changing human behavior toward energy consumption rather than the building itself, as well as firms offering performance contracting, which saves energy through physical upgrades to the facilities.
Schneider Electric performed a preliminary energy analysis free of charge to determine the estimated scope and financial impact of the project – enabling our district to compare deliverables from each firm we were engaged with. As a result, we decided to start by implementing major infrastructure improvements through a performance contract to make the greatest initial impact, and then follow up with a behavioral approach to enhance savings and facilitate staff and student buy-in to our district’s green initiatives. Once this decision was made, we issued a formal Request for Qualifications (RFQ) to select an energy services company (ESCO) to perform a performance contract. We selected Schneider Electric because of their experience in successfully completing comparable projects in the past. One thing that set the company apart from the rest was their vast expertise and the longevity of their staff to be assigned to our project.
TFM: How much did you know about ESPCs before deciding to move ahead with the project?
Switzer: When we first began looking for ways to save energy costs, my knowledge of available options was not vast. I was not familiar with performance contracting, nor did I know that our state had a separate division that assisted with energy savings projects. That all has changed. In order to feel comfortable in making any suggestions to the school board, we put in many hours of research. The knowledge that we gained from talking to different groups, the state, and previous customers gave us a better understanding of the process and ultimately helped make a solid decision for our district’s project.
TFM: Did you have any reservations?
Switzer: Yes. We’ve never done anything like this before and had a lot to learn before feeling comfortable. Schneider Electric educated us along the way, guiding us through the process, helping us figure out what to look for and putting us in touch with the Mississippi Development Authority (MDA) to serve as a neutral resource for us.
TFM: How did you decide what energy saving measures would be implemented? How are the savings (energy and costs) being tracked?
Switzer: We analyzed scope items, which included lighting and plumbing; retrofits; and HVAC control systems, from a financial standpoint, favoring those that yielded the greatest savings and payback. My facility manager evaluated the scope based on functionality, impact on maintenance, and impact on comfort.
We ended up coming up with a solution that would make a substantial impact in our facilities, creating a more conducive learning environment while improving the performance and functionality of our buildings. Some of those implementations include: district-wide lighting retrofits, a district-wide integrated energy management system, mechanical renovations to the chiller plants at Biloxi High School, and new HVAC at the administration office.
Initially, our facility team was skeptical about installing an energy management system, because it had a bad experience with this in the past. However, the Schneider Electric team worked hand in hand with us to develop a solid design for the system that would fit our processes and included in-depth initial and ongoing training to empower our team with the knowledge to maneuver through the system. Now, they are big advocates of the integrated energy management system, and use it to effectively manage energy in our buildings to achieve budgetary savings.
TFM: How did you identify available funding, and what type of effort did your team need to spend in applying for this funding?
Switzer: From my standpoint, this project made a tremendous financial impact. Not only will this project save us over $244,000 annually, but Schneider Electric also helped us secure attractive upfront funding structures, enabling us to use those savings to fund over $3 million in upgrades and put an additional $1 million back into our budget over the 15 year partnership, guaranteed.
Schneider Electric also helped us secure a $749,000 ARRA grant from Mississippi Development Authority and a low interest (0.08%) Qualified School Construction Bond by partnering with our financial consultants, Crews and Associates.
TFM: Have you received any feedback or additional interest from faculty, students, or other community members?
Switzer: Yes. Schneider Electric helped us build a green initiative around this program to facilitate and encourage participation from students and staff. Once the project was fully implemented in October 2011, the company collaborated with our public relations contact to plan an event to officially cut the ribbon on our project and launch our green teams (which lead green activities, competitions, and conduct educational outreach to help our students participate in and promote sustainable behavior).
We received a lot of positive attention and reaction from the ribbon cutting event, appearing on the local news for the early morning show and evening show. We also had positive articles posted in the local newspapers and our website. All of this helped us demonstrate to taxpayers how these improvements would enhance the learning environment, save tax dollars, and inspire our students.
Tammy Fulop, vice president of sales, Energy Solutions for Schneider Electric also contributed insight into the project.
TFM: Please describe the steps taken as your experts determine if an organization is a suitable candidate for an ESPC.
Fulop: In preliminary meetings with organizations looking to embark on an ESPC, we work very closely with the organization in a series of preliminary meetings and planning discussions to understand the individual goals they’re trying to fulfill by engaging in a performance contract. Keeping these objectives at top of mind, Schneider Electric then conducts a preliminary energy analysis, where the existing energy infrastructure in the building and utility usage history is closely evaluated to determine areas where the organization could most effectively achieve energy savings and payback. At the conclusion of the energy audit, we provide the client with the estimated savings potential and recommended energy conservation measures that are in line and customized to their overall objectives.
TFM: Once the ESPC was decided upon, how did Schneider Electric evaluate the best course of action (energy improvements) for Biloxi Public Schools?
Fulop: Schneider Electric collaborated with the Biloxi Public Schools staff to identify scope items that would maximize savings and achieve the goals of enhancing the learning environment. The main areas we focused on included retrofits to lighting (district-wide), installation of an integrated energy management system, mechanical renovations to the chiller plants at Biloxi High School, and new HVAC at the administration office. These energy conservation measures yielded the greatest overall savings for the district, as well longer term payback.
In addition, we developed a plan to implement the majority of these scope items over the summer break and over the nights and weekends once school was in session. This aggressive timeline minimized disruptions to students and staff.
TFM: As the energy service company, what is Schneider Electric’s role before, during and after the ESPC implementation of this project?
Fulop: Before – Educating the client and guiding them through the process. The goal is to provide information necessary to help potential clients determine if this is an ideal fit for their organization and how to structure their project to achieve their desired results.
During – Schneider Electric delivers a turnkey project. We handle all of the engineering, design, development, and construction of the project, ensuring that it is designed and installed to achieve long-term success.
After – Once construction is complete, our Performance Assurance Support Services (PASS) group will take over. This group facilitates in-depth training, support services, and managing the savings guarantee through measurement and verification of savings. In the event there is an annual savings shortfall, Schneider Electric will reimburse the client in the amount of the shortfall.
I’ve seen PC go well, even organizations doing repeat business! I would recommend it. I’ve seen the bad, definitely, but I’ve also seen the good. A great alternative to low-bid fiascos by unqualified techs! Nice work Biloxi. The taxpayers thank you.
The beginning of a performance contract always sounds like a win-win scenario. I have no hesitation in submitting that a follow-up article 15 years from now will document a win-lose situation of epic proportions.
Sir, obviously you have had a poor experience…Better to know the facts than to make blanket assumptions about a contract structure. Having been around the industry for over a decade, there are right ways and wrong ways to do Performance Contracting. I’m sorry you have only seen the wrong ways. Better luck finding a more qualified company next time.
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