About a year and a half ago, Ron Wilcox, the superintendent of
schools in Madison County, North Carolina, had a big problem.
Electricity bills for the district were 38 percent higher than budgeted.
Apparently the local utility had been burning oil to make power, and
oil prices were way up back then. Wilcox went to the county
commissioners to ask for more money and got it -- along with a lecture
about energy efficiency.
Since then, Wilcox has become an evangelist for efficiency and for
renewable energy, and so he was invited to speak today at the
2009
Energy Efficiency Forum in Washington sponsored by
Johnson Controls.
His little school system -- 2,600 students, one high school -- has an
energy-efficiency success story to tell, albeit one only indirectly
related to the forum’s topic: “How Stimulating is the Stimulus?”
First, some background: Madison County is a beautiful place,
according to Wilcox, but it’s a poor and rural country, dependent on
tobacco farming, which is in decline. The uptick in its energy bill
last year was $118,000. That’s a lot of money for local taxpayers who
finance about $2.6 million of the school’s budget, most of which comes
from state and federal sources.
So Wilcox was connected by a county official to Johnson Controls,
which studied the schools and found lots of waste. Wilcox told me: “We
were having teachers tell us they couldn’t get the air conditioning to
work. Sometimes the heating worked, sometimes it didn’t.” I don’t know
about you but I can still remember sitting in stuffy, overheated
classrooms back in my school days. That’s a real waste.
Johnson Controls, a $35-billion a year company that has a big
business in building efficiency, proposed what’s called an energy
performance contract. Here’s how it works: If the school district made
the recommended improvements, Johnson Controls would guarantee -- yes,
guarantee -- that it would save enough money on its energy bills to pay
all the costs of borrowing the money to renovate the schools, and still
have some savings left over. It’s pretty much a no-lose proposition for
the schools.
Madison County borrowed about $3.7 million from a bank. Johnson
Controls says that, after repaying the loan, the district would realize
$5.9 million in energy savings over 15 years. The company estimates
that “facility improvements and behavior modifications strategies”
(that sounds ominous, but it’s mostly about turning out lights and
regulating building temperatures) would reduce energy use by 36 percent
across six schools and three administrative buildings. Of course that’s
good for the environment, as well as for teachers and students. The
project’s reduced emissions will be equivalent to removing 8,250
passenger vehicles from the road, according to
this press release.
Once Wilcox got to thinking about energy, he didn’t stop. So he
turned to his
local utility company, which in partnership with the
Appalachian Regional Commission, came up with federal money to buy
three small windmills (about 2-3 kw each) for the county’s schools. The
utility company is also helping Madison County finance solar
photovoltaic panels on school roofs and solar hot water heating.
“We’re rural. We’re small. But it’s our goal to be the school system
in NC that leads the way with alternative energy,” Wilcox says.
One thing led to another, as it does in small towns. The owner of
the local landfill called to say that if the schools got serious about
saving and recycling all of their cardboard, he’d buy it from them.
“Last year, we made $16,000 by recycling,” Wilcox said. That money is
used to help the district’s low-income kids take school trips and
participate in more activities.
Madison County is also expanding its curriculum. “They’re going to
have a solar energy class in the high school,” says Felicia McDade, a
Johnson Controls executive who works with school districts across the
south to promote efficiency. It must be fun for the elementary school
kids to look out their window and see a wind turbine, although ideally
you’d want them paying rapt attention to the teacher.
What does all this have to do with the stimulus package? Well,
Wilcox is now getting creative about financing the improvements. It
turns out that the project may be eligible for something called
“Qualified Energy Conservation Bonds,” which can be used to fiannce
energy efficiency projects in public buildings. The stimulus package
provides $3.2 billion in bonds, and Madison County is getting in line.
These will lower his interest rate to close to zero, and make the
efficiency project an even better deal for the county. Of course they
won’t “stimulate” anything since the project was under way already.
In fact, these energy performance contracts have been around for
more than 20 years, and they are designed to work without government
subsidies. Johnson Controls has about $4.5 billion in performance
guarantees in place, all around the U.S.A., one of its execs told me.
The bigger question is why so many buildings, particularly in the
private sector, remain so inefficient. As Kevin Kampschroer, a
buildings expert with the General Services Administration, put it:
“Buildings in this country are operating with the same degree of energy
efficiency, on average, as they were 20 years ago. Why hasn’t it
changed?”
That’s complicated. One answer is that there’s a market disconnect
around commercial buildings -- owners and developers don’t have much
incentive to make capital improvements to the energy systems because
they don’t pay the electricity bills. Homeowners, meanwhile, are
famously indifferent to efficiency until prices get very high. And most
corporations demand a rapid payback, say, three to five years, before
they will invest in efficiency. This is one arena where government
works better than markets. People like Wilcox can think long term.
Then there’s the human factor. “It’s nice and fun and glitzy to
build a new building. I’ve done it,” said Kampshroer of the GSA. No one
gets excited about upgraded the HVAC system and installing more
insulation. But it’s smarter to invest in existing buildings, and to
make what we have last longer, than it is to build new.
A nice lesson from the students of Madison County.
For other coverage of the Energy Efficiency Forum, see Marc Gunther's posts about Google's PowerMeter project and speaker highlights.
Image courtesy of Progress-Energy.com
