Energy Efficiency & Renewable Energy in Schools
Amount of Funding: $20 million
10-15-09: Governor Brewer Provides Stimulus Funds to Schools. Click here for more information.
7-23-09: Guidelines for $5 million have been established for small school districts interested in solar power. Click here for more information.
Status:Guidelines for remaining funds are in the process of being established.
Further information will be posted as application procedures are developed.
Funding will be divided into two pools, 70 percent for school energy efficiency projects and 30 percent for solar projects. The School Facilities Board (SFB) will distribute the funds to local school districts through a competitive grant process. The energy efficiency program will be based on the framework of the successful FY 2007 SFB Energy Pilot program.
SFB staff recommends basing the solar program around smaller (less than 30,000 sq. feet) schools. Dedicating the solar funds to smaller schools will broaden the impact of the program. For example, if $3 million was dedicated to a small school solar photovoltaic program, the program could provide 20 percent of the needed electricity for 15 schools.
Performance Contracting: In order to maximize the impact of the efficiency program, the SFB intends to leverage the funds through the use of performance contracting and the newly created Qualified School Construction Bonds (QSCB), a new low-cost financing tool under ARRA. In the competitive grant process, school districts will be required to augment the SFB grant with local funds raised through a performance contract. SFB staff estimates that the efficiency investment can be leverage five times or more through this process.
Qualified School Construction Bonds: The use of QSCB will augment the SFB ability to leverage the grant funds by allowing school districts to enter the performance contracts interest free. The federal government gives the QSCB bondholders a tax credit and therefore allows the bonds to be issued at 0 to 1% interest rate. Over the life of a performance contract, this will significantly reduce interest costs. SFB staff will assist school districts in developing a market for this type of bond financing.
Nature of Projects: SFB staff anticipates that these funds will mainly be used to replace and upgrade lighting and lighting controls, and replace and upgrade HVAC and HVAC controls, install solar photovoltaic (PV), solar water heating, and geothermal.
Timeline: SFB staff believes that the SFB can award projects by the end of 2009. School districts can start construction on these projects in early 2010.
Long-term Benefits: If the awarded funds can be leveraged at least five times, based on the results of the pilot program, SFB staff estimates the following annual benefits (assumes a $20 million state investment and $55 million local investment and a seven-year project payback, based on the pilot program).
· Annual utility cost savings: $10 million
· kWh annual savings: 103 million kWh
· CO2 annual reductions: 124 million lbs.
In addition to the energy savings, this program can lay the foundation for a successful performance contracting industry in the Arizona K-12 school system. To date, very few school districts have attempted a performance contract because funds were not available. With the control of the funds in the efficiency program, the SFB can establish a performance contracting protocol that school districts can become comfortable with and use for future energy efficiency upgrades.
Long-Term Benefits: The SFB estimates the following annual benefits for solar projects dependent on the mix of solar products installed and the type of financing used. Solar PV produces about $25 of annual savings for every $1,000 invested. Solar water heating produces about $90 of annual savings for every $1,000 invested. If $6 million were invested in solar products split evenly between PV and water heating, the estimated impact would be:
· Annual utility cost savings: $345,000 · kWh annual savings: 3.4 million kWh
· CO2 annual reductions: 4 million lbs.
These savings could be further increased if the program could take advantage of utility rebate programs.
Job Creation: For general school renovation projects including energy efficiency projects, SFB staff estimates if the State’s $20 million investment is leveraged into at least $55 million in projects, the efficiency program would create approximately 826 jobs.
For the solar program, SFB staff does not have a good estimate for job creation. However, because of the high cost of solar equipment and materials, staff would assume that the number of jobs created per dollar spent is significantly less than job creation in the efficiency program.
Implementation: SFB staff will work with school district procurement experts to develop template performance contracts. SFB staff and Energy office staff will analyze proposals and track performance. Administrative and programmatic costs are included in the total project budget proposed above. Staff members who implement or manage the overall strategy or programs are direct costs to the project.