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Sunday, 03 February 2013 22:52

Stretching the energy efficiency dollar; Grand Valley looking at longer investment payback periods

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GVSU’s new $65 million Mary Idema Pew library GVSU’s new $65 million Mary Idema Pew library

ALLENDALE — As Grand Valley State University continues pushing the sustainability envelope, facilities engineers at the university expect to see larger upfront costs and longer payback periods for future energy efficiency projects.

In November last year, the university received an $116,280 rebate incentive check from Consumers Energy after installing two new high-efficiency cooling systems at its Central Utilities Building. The incentives are offered under the Clean, Renewable, and Efficient Energy Act of 2008.

With a total investment cost of around $1.5 million, the improvements are expected to save Grand Valley 451,400 kilowatt-hours of electricity annually.

But the university fully expects the up-front costs will get more expensive as it picks off some of the simpler projects, such as replacing dated lighting fixtures with more efficient LED products.

“We’ve been very aggressive in trying to find energy-saving projects,” said Terry Pahl, a facilities engineer for GVSU. “It’s getting harder and harder to find projects because we’ve picked all the low-hanging fruit.”

The current annual electricity bill for the university is around $4.2 million, according to Matt McLogan, vice president of university relations for GVSU. While the university has recouped roughly $312,000 over the last four years, it took the first two years to break even on its investments.

Since 2009, the university either completed or has underway 33 projects with the potential to save Grand Valley more than 2.6 million kilowatt-hours of electricity annually.

Many of the projects early on had around a four-year payback period, but Tahl said the outlook for further improvements isn’t as lucrative, as he is expecting about an 8-percent increase in meter fees next year. As a part of its energy bill GVSU currently spends approximately $77,000 annually on metering fees, he said. 

Since the Consumers programs are funded through meter fees and a program surcharge participants pay, Pahl sees more research and engineering work that will need to take place on the front end of any future projects.

“In talking with some other facilities managers at (Michigan State University) and (the University of Michigan), we’re looking at more eight- to 10-year paybacks when it comes to efficiency projects,” he said.

In the short term, GVSU is targeting a number of lighting projects as well as installing variable frequency drives that control motor speeds for water pumps and similar mechanisms. Projects related to heat recovery could also be in the offing.

“We’ve probably dug a little deeper than most to recoup our monies,” Pahl said. “We’re ahead of the game this year, but we’ll be digging and scratching to find projects and available funds.”

Consumers Energy’s programs are set to run through 2014, but a representative from the utility said they would have to wait and assess whether or not it will continue to offer the rebates after that.

The utility has more than 150 energy efficiency incentive and rebate programs. In the third quarter of 2012, Consumers divvied out nearly $3.7 million in incentives to commercial and industrial customers. The total number of projects is just shy of 1,000.

With 959 program participants, Consumers estimates that the amount of energy saved could serve more than 5,000 residential electric customers and nearly 800 residential natural gas customers for a year.

“The cheapest kilowatt is the one that is not produced,” said Roger Morgenstern, senior public information director for Consumers Energy. “Efficiency is where we are putting a lot of our focus right now.”

By offering incentives for efficiency, Consumers Energy can to some extent defer larger capital investments. The steps give the utility more wiggle room in planning for future generation needs, Morgenstern said.

“It’s important to recognize the impact of energy efficiency,” Consumers Energy CEO John Russell told MiBiz in December. “Due to the effectiveness of our energy efficiency programs, we’ve seen electric sales growth reduced by 40 percent over the past two years.

We hope all our customers take advantage of energy efficiency offerings and savings in 2013.”

Right now, the energy provider is in the process of assembling land and securing permitting for its Cross Winds Energy Park, a $250 million, 150-megawatt wind farm planned for Tuscola County. The project is expected to reach commercial operation by the end 2015.

Editor’s note: This story has been updated from its original form. The amount GVSU spent on electricity costs was incorrect in a previous version. This version also updates the university’s metering fees. 

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