Pete van der Have is director of plant operations at the University of Utah, Salt Lake City, Utah. He is a Past APPA President and can be reached at firstname.lastname@example.org.
At times, I still toss in my sleep wondering if we've placed our university and our plant operations department at excessive risk. We've obligated our institution to 20+ years of debt service at a time when our budget is already tearing at the seams. But then, when I fully awaken, I realize we've done something for our campus-something huge that we could not have accomplished any other way.
Setting the stage…
In 1997, there were several issues brewing at the University of Utah that we could easily force to be interrelated.
We had approximately 1.3 million gsf of space where we used thousands of T12 fluorescent lights, inadequate building controls, fixed air systems, highly inefficient chillers and motors, and other such energy wasters. Since much of this space was in full operation around the clock, the financial impact was significant, even if previously unnoticed. Although energy in our area was then (and still is) moderately inexpensive when contrasted against other parts of the country (and the world), those conditions still created an avoidable drain on our budgets.
About that period of time, I had the wonderful opportunity of visiting various programs where the focus was energy management. Some dealt with the issue from a utility company perspective, others from the perspective of an energy service company (ESCO), a few were presented by independent consultants, and others by institutions who had performed certain retrofits. Although initially skeptical, I began to wonder if we were potentially missing out on an opportunity to resolve most if not all of the issues listed above. Upon every chance offered, I brought the subject up to peers, consultants, and senior administrators. To my surprise, no one told me to drop it. So I didn't!
Happiness is having a dream, but success is bringing a dream to reality…
We had a vision, if not a hallucination. We dreamed of a brand new chiller plant, located outside of the existing buildings, remote but still in close proximity. This should be a plant that could handle all of the existing load on this part of campus. It should be able to accommodate all future growth. It should be designed in such a way as to represent any mechanical engineer's wildest dream-to become a model for the industry.
Most importantly, its realization could not be predicated on any allocations from the state legislature, since that resource did not appear to exist. Instead, it had to be fully financed through the implementation of energy saving retrofits, but could not rely on any operation savings generated by their implementation. Finally, the savings would have to be guaranteed so that the campus would not be at undue risk.
Building that dream…
In late 1997, we formed a project team that crossed departmental and agency boundaries. Invited were representatives from our budget office, general accounting, legal, hospital administration, the state energy office (who also provided seed money for the project), the state's division of facilities construction and management, our own department, and an independent engineering consultant. The idea was discussed, poked at, shot down, and resurrected until we felt comfortable testing the waters.
A subcommittee of this project team relied on information available through NAESCO (National Association of Energy Service Companies) to identify a list of approximately two dozen accredited ESCOs who might be able and willing to help us realize our dream.
An RFQ was developed and distributed through public advertisement as well as direct solicitations. We received approximately a dozen responses to our inquiries. It is still interesting to us how seriously some of the respondents took the request, yet how totally unprofessionally some others responded.
The entire project team then had the opportunity to review the responses, in order to narrow the list down to three ESCOs. We were looking for an ESCO who had a solid track record on similar projects for a specified number of years, had various financing options to offer, was not linked to any single manufacturer of any of the products we would use, had a good guarantee package, and had consistently good references. (Ironically, some of the references provided to us were quite negative, and in one instance, consistently so.) Equally important to us was that we had to be convinced the selected ESCO fully understood our goal: to construct a chiller plant by saving energy dollars.
The three ESCOs on our short list made face-to-face presentations to our team. We invited them to bring anyone they wanted to help "make the sale." One group of presenters focused primarily on the financial aspect of the project, but very little on the engineering challenges. Another did the exact opposite, if only to emphasize to us that our plan was unworkable, and that we should allow them to retrofit the entire campus, and let them run the plant afterwards. The third gave reasonable attention to all critical aspects. But only one understood and built their presentation around our stated goal: to construct a chiller plant by saving energy dollars.
After the interviews, the team members individually rated the three respondents. We were amazed at the consistency of our ratings, since we intentionally did not discuss them before committing them to paper. The references and the ratings of the written and oral presentations together led to the selection of the ESCO who would help us reach our goal.
Once the successful ESCO was selected, it was time to move into the technical/analytical phase. The first part of the contract stipulated that a technical audit would be performed. If we, after reviewing the results of the audit, decided not to pursue the balance of the project, we agreed to pay the ESCO for services rendered at a stipulated flat rate per gsf, with the results of the audit being our property. If we all agreed to move into the implementation phase, the cost of the audit would be rolled into the cost of the project.
The ESCO we selected has its strength in its engineering capabilities. There were thus no qualms about sending them into our specified buildings to perform the audit. A team of specialists carefully analyzed components, performance, and utilization patterns of those buildings. Their engineering expertise allowed them to make a non-prioritized list of proposed energy saving modifications (ECMs) for each of those buildings, identifying cost and payback for each line item.
We were extremely pleased to see that the recommended retrofits pertaining to lighting only amounted to approximately 15 percent of the total, thereby allaying any fears that we were only going for the quick fix and quick payback items. Most of the recommended ECMs were accepted, with a few being modified or deleted.
It now appeared certain that the dream was going to be realized. The sum of the measures to be implemented showed a guaranteed net energy savings sufficient to cover the cost of construction of our chiller plant, after covering the cost of the implementation of the approved ECMs. There was nothing that could stop us now!
Even good dreams have their bad moments…
The legislation in our state requires us to obtain formal approvals and support from our institution's Board of Trustees, our system's Board of Regents, the State Building Board, and the legislature in order to construct a project of this scope. Thus, before we even entered into the above selection process, some of us were deeply involved in successfully acquiring those approvals. This proved to be frustrating in a small number of cases.
There were individuals along the way who remembered too well the energy service industry of the 1970s, when there were many unethical "consultants" hovering like harpies. Some of us were duped into implementing quick-fix measures that ultimately cost more in the long run. We encountered some skeptics who feared the chosen ESCO would dupe us into accepting inferior products and service at excessive cost.
Our challenge, thus, was to devise a contract that would convince our skeptical friends in critical places that we knew what we were doing, and that we (the university) were reasonably protected from known and unanticipated risks. We had to establish specifications that required the use of components and systems of our choosing. We reserved the right to accept or reject any subcontractor, both on the retrofit work and the plant construction. An open-book pricing requirement had to be imposed through the contract. With these assurances in place, the mandated approvals were acquired, even then in spite of our inability to hush all of the naysayers.
There is another Utah code that requires institutions like ours to receive approval for any long-term financial obligation. The previous approval had addressed the construction of the chiller plant, but was not intended to concern itself with the funding scheme for its construction. Since we did not know at that time if, how, or when we were going to proceed to construction, we elected to hold off on this approval process.
Thus, once we identified the financing strategy for the construction project, we had to go to the trustees, the regents, and various legislative and executive branch authorities for additional approvals. I found that the sweating I was doing before was nothing compared with my experience at this point. I had a deeper appreciation of what that deer blinded by the headlights of an oncoming car might feel like. But, after days and weeks of worrying, that approval also came forth, thanks largely to the enthusiastic support of our administration.
From dream to success…
The dream turned into a miracle. The construction project was authorized and took off formally in August 1999, approximately eight months after the work began on the implementation of the energy saving modifications. The condition of some of the old chillers in the Patient Care Hospital did not allow us to prolong the construction project any longer. In fact, we had to scrunch that timeline as much as possible. We also expanded the scope of the project (with separate funds) to include the elimination of failing chillers serving two high-rise residential buildings, located in close proximity to the new chiller plant.
The project scope was impressive. We had to bury thousands of feet of a new chilled water distribution system and interconnect it with existing building systems, properly deal with a previously unknown fault line, complete the design and construction of the chiller plant, and acquire nearly 7,000 tons of chillers and associated cooling towers. Yet, the entire project was completed ahead of schedule, by the end of June 2000! This was the original deadline we had picked when we first began the process in late 1997, before we knew all of the hurdles we would have to cross. We are convinced this success is entirely the result of the tremendous team effort that all of the players put into the project. It would be remiss on our part not to recognize the ESCO and associated consultants and subcontractors as being undeniable partners in this success.
After the dream…
The chiller plant has been purring along since June without any significant bleeps. The retrofits are producing the projected results. We even have a five-year warranty on all lights. But, as one of my previous bosses liked to say, "A satisfied man has no future." Not being content with peace and quiet, and as these words are being written, we are seeking approvals to move into another phase: to install a satellite high temperature hot water plant in a shelled part of the building we had already built for that purpose. The funding concept will be the same, if we are successful. Going through the same approval process with a different mix of board members could be, shall we say, stimulating. By the time this article is published, we'll know where we stand on this final phase.
There is, in our mind, no reason to believe we will not be successful. Who knows, perhaps a year from now we will be able to brag about having constructed a $20 million chiller/HTHW plant, and implemented nearly that same dollar value in ECMs. And all that without spending one new dollar acquired from taxpayer or student!