Cash-Strapped Colleges Turn to Businesses for Energy-Saving Deals

This excellent article in The Chronicle of Higher Education by Scott Carlson, is blurbed: "As funds for facilities dry up, colleges sign energy-efficiency contracts that don't always work out." It'll be available for a few days at this link. (Note: There are several related sessions at SCUP-45; search for "energy".)

With dwindling state resources, tight budgets, and a renewed focus on energy efficiency, more colleges are turning to energy-services companies, commonly known as ESCO's, for facilities projects. At the same time, companies that have not traditionally worked as ESCO's are joining that market, raising risks that colleges will be stuck with deals that overpromise and under-deliver.

The business models of ESCO's have varied over the years, but today most agreements between energy-services companies and colleges follow a fairly straightforward plan: The college and the company do a detailed accounting of the college's current energy use and decide on a set of projects that will yield energy savings. The college gets a loan to cover the cost of the work to be done by the ESCO and pays back the loan through the energy savings. If the savings are not as high as the company estimated, often it will pay the difference . . . Energy-performance contracting is a complicated business, in which technical experience and a familiarity with the clients can help avoid problems later on.

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