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Performance contract saves university $1.5 million annually

Schneider Electric improves campus facilities while guaranteeing reduced energy costs.
University Business, June 2012

For many colleges and universities, funding facilities improvements can be a challenge. One leading institution in North Carolina, however, found a way not only to fund renovation projects and cut energy use, but actually to save money in the process.

Established in 1887, North Carolina State University (NCSU) has earned a national reputation as a leader in education and research, and gained global recognition in science, technology, engineering, and mathematics. Located in the state capital of Raleigh, NCSU has a student enrollment of 34,000 and over 2,000 faculty members.

By 2008, however, the university faced a difficult situation. Facilities staff had identified a large number of much-needed repair and renovation projects focused on energy efficiency across campus, but with an economic recession beginning, the future availability of funding was uncertain. What's more, the circumstances were only projected to get worse, as NCSU's annual utility bills ran more than $30 million and both energy demand and costs were continuing to rise.

After sending requests for proposals to more than a dozen energy service companies, university officials decided to sign a performance contract with Schneider Electric to finance their facility upgrades, beginning in 2010. This was the first time that NCSU had entered into a performance contract to finance a construction or renovation project.

The contract included energy auditing, system design, construction and commissioning, all paid for by guaranteed future energy savings. "Through performance contracting, we're able to take on these projects immediately without incurring cost to the taxpayer or the students," says Kevin McNaughton, associate vice chancellor for facilities. In the event that NCSU did not realize the projected savings, Schneider Electric would pay the difference.

The $20 million performance contract targeted 13 university facilities totaling 1.6 million square feet as most in need of improvement, and it identified 89 separate energy conservation measures.

Upgrades included installing direct digital controls of facility systems, as well as LED lighting with occupancy sensors, new HVAC systems and solar-thermal heating panels. New utility meters were added to accurately track energy use in real time at each building. Solar panels were installed on the roof of the campus gymnasium as part of a new solar-thermal system to heat water for the building, which includes two swimming pools, totaling 1 million gallons of water. Schneider Electric also improved the operating efficiency of fume hoods in the physical science facility, and it improved building insulation where needed.

Schneider Electric's Performance Assurance Support Services provide remote ongoing monitoring and technical support, along with complete reporting and analysis of energy use to guarantee continued energy savings and project performance.

Energy savings from all of these improvements are projected to be $1.5 million annually, and will help the university to meet new state energy and water efficiency standards for public higher education facilities. The HVAC system upgrades also improved air quality and comfort levels in each of the targeted buildings. NCSU officials expect that the savings generated will actually exceed the initial cost of the performance contract, and plan on continuing to upgrade heating, cooling and lighting systems over time using funding created from the new energy savings.

Over the next 15 years, the performance contract NCSU signed with Schneider Electric will reduce the university's carbon footprint by 37 percent, and achieve the equivalent of removing 43,158 cars from the roads and planting 80,376 acres of trees.

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