Bundle Green Retrofits

Over the past year, I’ve met with school districts from across the country. I continue to find that the challenges these districts face are incredibly similar. 

Two years ago, schools wanted to talk about building green while struggling with the concern of first costs. Today, if your district is among the few that are still building new, contractors’ bids are coming in 15 percent to 40 percent under budget, leaving you with enough to tackle your entire green wish list with extra funds to spare.

What a difference a few years can make! For the vast majority of districts, the conversation has shifted. Philosophically, you know green is the right choice — a monumental shift worth celebrating. But with capital projects on hold and operating budgets shrinking as deferred maintenance lists grow longer, green once again feels like a luxury you might be unable to afford.

The U.S. Green Building Council can help you to make something out of nothing. The lull created by the challenging economic climate is an excellent opportunity to focus on low and no-cost strategies to green existing facilities and to use energy efficiency improvements as the “first fuel.”

School districts that undertake a comprehensive whole-building retrofit by coupling low- and no-cost improvements with energy-saving system upgrades are finding that they can afford to green their existing facilities. It’s the alternative — doing just a little at a time – that could be expensive.

Many districts address their deferred maintenance and facility improvement projects with a phased approach. For example, they upgrade lighting fixtures across the district one year and replace all the windows the next. This piecemeal approach is neither efficient nor effective.

Undertaking single-system upgrades across a district limits the potential for future whole-building retrofits for these facilities. In many cases, these smaller improvement measures replace old, inefficient systems with high-performance systems that yield fast paybacks through energy savings.

What makes fast paybacks problematic is that once a building receives energy-efficient upgrades for a few systems, it becomes a poor candidate for a more comprehensive retrofit. According to Greg Kats’ new publication, Greening Our Built World, “Once a building is retrofitted, it is typically uneconomical to retrofit it again for years. To achieve deep improvements will require that these shallow ‘cream-skimming’ retrofits generally be eliminated in favor of deep retrofits that achieve at least a 30 percent or 35 percent improvement in efficiency.”

Deep retrofits are best achieved through a paid-from-savings approach, which is a financing strategy to green existing buildings that leverages the savings generated from building system upgrades to pay for a comprehensive greening project within a defined payback period.

Using this strategy will enable your school to implement needed repairs and upgrades, achieve reductions in energy and water use and incorporate other green strategies and technologies in the most cost-effective manner.

The guiding principle for paid-from-savings projects is the concept of bundling — aggregating utility cost-saving measures with low- and no-cost green improvement measures to optimize green opportunities and project economics. Longer payback measures are bundled with quicker payback measures to create a project with a shorter overall payback period and a higher return on investment.

Successful paid-from-savings retrofits apply the concept of bundling to their financing strategies too, utilizing a combination of mechanisms, including existing capital or operating funds, tax-exempt bonds, utility rebates and grants, or performance contracting.

The National Clearinghouse for Educational Facilities (www.NCEF.org) is a one-stop shop for information on public financing vehicles available to schools and districts, including the billions of dollars currently available for school modernization projects.

Earlier this year, USGBC released the “Paid-From-Savings Guide to Green Existing Buildings” to help owners implement repairs and upgrades, achieve reductions in energy and water use, and incorporate other green strategies and technologies in the most cost-effective manner. The publication provides guidance for building owners to decide if the paid-from-savings approach is a viable option and instructions for determining if their building has the potential to achieve LEED certification.

A copy of the "Paid-From-Savings Guide to Green Existing Buildings Executive Summary" can be downloaded for free through USGBC. To access this and other resources mentioned in this article, including profiles on successful projects, please visit www.GreenSchoolBuildings.org/SCN.

Rachel Gutter is director of the Education Sector of the U.S. Green Building Council.