In 2007, the City of Hutchinson began taking a closer look at how much energy was being used to perform city operations. John Paulson, Hutchinson’s Environmental Specialist, began entering the city’s energy data into the State of Minnesota’s B3 Benchmarking system and discovered that when it came to energy efficiency, Hutchinson had “lots of opportunity to improve.” But like many communities, Hutchinson needed to find a way to pay the upfront costs of energy saving measures.
B3 benchmarking allowed the city to develop some baseline information about where they were using energy, and to see which facilities were using more energy than average for buildings of that size and use. Paulson and other city staff began assessing the facilities that seemed to have the most potential for energy savings. “We’d been deferring maintenance,” said Paulson, “so we started considering working with an energy services company [ESCO].”
An ESCO usually begins by performing an in-depth analysis of the property and coordinates an energy efficiency plan designed to meet the needs of the customer. The savings in energy costs can then be used to pay back the capital investment of the project. In Hutchinson’s case they began to look at a number of different performance contractors before deciding on AMERESCO in 2008. After an initial assessment of the facilities, it started to become clear which projects might generate the most savings.
Although they knew they wanted to proceed with an efficiency project, the team also wanted to find ways to keep the initial project costs down. Paulson knew the city could take advantage of some local utility rebates, but continued to look for other funding sources. “We were developing the project just as the ARRA (American Recovery and Reinvestment Act) funds were becoming available,” said Paulson. Making use of convenient timing, the city applied for and received a $139,054 grant from the State of Minnesota’s Energy Efficiency Conservation Block Grant (EECBG) program. Combined with the utility rebates of $16,340, Hutchinson was able to bring its share of the project costs down to $219,720 out of a total project cost of $375,114.
In total, the project encompassed 14 city-owned buildings or facilities including the library, ice arena, city center, airport, police department and several others. While most of the EECBG dollars were used for lighting retrofits or upgrades, Paulson said the biggest cost savings came from replacing the variable frequency drives (VFDs) at the wastewater treatment facility. VFDs allow the user to vary the speed of the motor. “The numbers are better than we anticipated,” said Paulson, “and the VFDs were a big part of that.” AMERESCO projected savings based on 90% of existing use, but the city found that by utilizing the VFDs with inline dissolved oxygen monitors they were able to run them at an average of 35% of existing use.
A final piece to a performance contract is measurement and verification (M&V). When the City of Hutchinson finalized a contract with AMERESCO, it included some guarantees of energy savings. After the energy improvements have been made and everything is in working order, measurement and verification takes place to assure that the predicted energy savings are being realized. In Hutchinson’s case they were guaranteed savings of $32,571. The actual savings are expected to be $60,272, largely due to the successful performance of the VFDs at the wastewater treatment facility.
Paulson said that he has calculated a simple payback time of 5.6 years for the entire project, after which the city will begin to distribute annual decreased costs to operations. “The City of Hutchinson is constantly striving to maintain its assets at a high level stressing operational efficiency and functionality,” Paulson said. He also noted that additional savings will be realized through decreased costs of operations and maintenance as newer equipment requires fewer repairs, and light bulbs need to be changed less frequently.
Commenting on the upfront assessment by AMERESCO, Paulson said, “The city-wide lighting audit was very in depth. The upfront assessment is probably the most important part of the process. ”
He suggests that other cities interested in working with an ESCO do their homework, know which questions you want answered, and advises, “don’t be shy, ask those questions up front.” He suggests that before deciding on which performance contractor to work with cities ask for and speak with references that the company can provide. As for the City of Hutchinson, Paulson concludes: “It was a fantastic learning experience.”
About the Local Government Energy Action Series:
This effort tells the stories of Minnesota municipalities, counties, and schools and the tangible results of their energy-saving efforts to inspire others to take their own actions.
