Statewide Energy Partnership

Case study

Background

The University’s carbon footprint results primarily from
facilities energy consumption, faculty and staff travel, and
student commuting. With AB329 regulations on greenhouse
gas (GHG) emission looming and the University’s annual
purchased energy costs approaching $300 million, the Regents
adopted a Policy on Sustainable Practices in 2004 that seeks to
place UC among the leaders in higher education in attaining
carbon neutrality while reducing operating expenses. Under
AB32 and the policy, UC must reduce its carbon footprint to
1990 levels by 2020 regardless of systemwide enrollment
growth and occupied space. Further, the policy calls for
carbon neutrality as soon as practicable after 2020 and
delineates interim steps toward that goal.

Goal

The Office of the President (UCOP) aims to identify, qualify,
and implement energy efficiency projects systemwide to meet
the policy goal of reducing energy use to 2000 levels by 2014,
adjusted for growth, in a financially viable manner that results
in long‐term economic and environmental benefits.

Successes

UCOP completed a systemwide Strategic Energy Plan (SEP) in
2008. The SEP scope included gathering of shelved energy
efficiency and related deferred maintenance projects,
identification and qualification of new projects, and
assessment of renewable energy generation potential on each
campus. The SEP identified 2,700 potential projects, of which
900 were found most financially viable. The total cost of these
projects was estimated at $250 million, yielding an expected
$40 million in avoided energy costs each year. To reduce
project costs, the University negotiated an agreement with the
utilities that will provide up to $60 million in incentive grants if
the University delivers 187 million kWh and 10.8 million
therms in energy savings by December 31, 2011. The Regents
authorized the program’s financial and energy‐saving
parameters in March, 2009.

Challenges

The SEP presented unique challenges, particularly during a
strained economic climate. The utilities were reluctant to pay
the University higher incentives for energy savings than they
paid to other customers, despite the fact that the University
delivers these savings at a significantly lower cost. The utilities
have also resisted committing a large incentive budget to the
University and require frequent assurances that the University
will deliver the energy savings. UCOP also had to secure state approval to use operating budget savings to cover debt service
for this program. Several campuses have underestimated the
resource requirements associated with implementing the large
number of projects, creating a bottleneck in project
development. The University also faces the ongoing challenge
of reducing energy consumption while bringing new energyintensive
buildings on line.

Initial investment

The SEP was funded with a $2 million portion of the
University’s 2005 Enron securities fraud settlement. Crossdepartmental
collaboration was substantial, with significant
time and effort contributions from Budget & Capital Resources,
Finance, and campus administrative leadership.

Fiscal results, current and anticipated

As of September 15, 2010, the program has delivered (or will
deliver based on projects under construction) 94.4 million kWh
and 7.6 million therms – equivalent to 50% and 70% of
program goals, respectively. These energy savings result in
71,600 metric tons of annual GHG reduction.

This translates to $15.6 million in gross cost avoidance. After
debt service, net campus cost avoidance equates to $9.5
million. Thus far, campuses have applied for $87.3 million of
the $193.7 million Regentally‐authorized bond funding.

Current action and next steps

The systemwide program is managed by UCOP, with
implementation delegated to campuses. Installations include
technologically advanced lighting, ventilation, and space
conditioning systems. To integrate UC technology research
into operational environments, technical support is provided
by the UC Davis‐based California Lighting Technology Center
and Energy Efficiency Center, the UC Information Technology
Leadership Council, and the California Energy Institute.

Concluding statement

The self‐funded program has shown that despite budget
constraints, UC can and will invest in efficiency. In September
2010, the Regents authorized a moderate funding increase and
an extension of the program to the end of 2012. The
University’s energy efficiency program is indeed on track to
meet the interim 2014 policy goals.