Evolving Energy Strategies in Higher Ed: What’s Next?

For higher educational institutions, the connectivity, reliability and efficiency of campus operations play a critical role in providing a competitive and high-quality learning environment. That’s why a growing number of colleges and universities across the country are taking a close look at their existing energy infrastructure and are incorporating renewable energy, energy efficiency and environmental stewardship in actionable plans for the future.

In this four-part interview, representatives from California Polytechnic State University, Ithaca College and Duke Energy One take an in-depth look at evolving energy strategies in higher education. In addition to discussing their sustainability goals and respective master plans, they also explore energy management strategies, financing options and what is on the horizon in higher education.

The interview is based on episode 11 of the Beyond the Meter podcast, hosted by Smart Energy Decisions founder John Failla. It has been edited for length and clarity.

Part 1: Sustainability Goals and Master Plans

Strategic plans are the cornerstone of higher education institutions. They are the foundation to moving universities forward in accomplishing their goals – and a great place to include environmental initiatives.

But whether due to campus politics, lack of internal buy-in or not fully understanding the total cost of ownership, even some of the most environmentally progressive schools still manage to hit barriers when trying to achieve energy and sustainability goals.

That, however, has changed in recent years, Johnson said. As higher education institutions realize the importance of engaging students and faculty in the master planning process, they have been able to increase interest in their renewable energy portfolio.

“When it comes to renewable energy, clean energy and sustainability goals on college campuses, presidents and CFOs are opening their eyes to the needs and they’re opening their eyes to the future,” Johnson added. “If you don’t start building that platform now, you’re really going to be left behind.”

The importance of including environmental sustainability in a master plan

Bill Guerrero: Every school goes through a strategic plan process. We decided to match our values and add environmental sustainability to our master plan to show the full commitment of the institution.

Unfortunately, COVID happened. So, there’s a pause on a lot of this. But it’s awesome to see this document contains environmental sustainability. We’re excited about what the future looks like.

A master plan certainly needs capital – that can be very expensive. It’s typically a tool for fundraising. You do a capital campaign, or you work with your business partners and say, “How can we activate elements of this master plan?”

Environmental sustainability [included] in the conversation puts you in the forefront of your donors and your campus community to say, “This is what we value. Let’s see how we can get this done in the next five years.” It’s that type of tool.

The benefits of creating an additional utility master plan

Dennis Elliot: Nearly half of our environmental footprint comes from commuting to and from campus, even though we’re a heavily residential school. So, this issue was integrated into how we envisioned our master plan and the goals we set for it.

Steering committees were created to guide the creation of the master plan, engaging faculty students, staff and community members. We had a task force, specifically working on sustainability and how to articulate those visions into the master plan.

Immediately following that master plan, we created a utility master plan to make sure that we were envisioning not only how to articulate those aspirations, but what were the infrastructures and policies we needed to build out the master plan and do it in a sustainable manner.

They’re separate, standalone documents. That was the first time our institution ever undertook a comprehensive master plan of all utility systems to support a master plan.

The neat part about it is that it was done in alignment with those big strategic goals – our carbon neutrality, water and transportation goals.

Part 2: Energy Management Strategies

While organizations in some markets – such as California and New York – are highly driven by energy costs and a sustainability-focused legislation, such a strong focus on energy management strategies may not be as common in other higher education institutions across the country.

Paying attention to energy efficiency and resiliency is important no matter where you are, Johnson said. And when addressed as a holistic solution, instead of isolated solutions across campus, it can be much more efficient.

“If you wait too late as an administrator – it only takes one Facetime Live to get to a newsreel, and your campus is the epicenter,” Johnson said. “Being prepared and having resiliency plans that are part of your campus emergency action plan is really critical. It’s much better than isolated solutions.”

The importance of resiliency on campus

Dennis Elliot: All we need to do is look at the national news to see wildfires ravaging the entire West Coast these days, and that is the high risk. Our institution has a single point of connection to the utility and passes through high wildfire danger areas. We currently have a single source of supply of water, so those are some risk management issues that are about our resilience.

If those are disrupted, we don’t have adequate layers of a backup plan and creation of redundant systems comes with a significant cost. An integral way we went about our utility master plan was to think about redundancy, backup and resiliency.

Things are headed in the direction of microgrids. They are not a panacea, not a magic bullet and not just something simple to buy. It has to integrate into your existing infrastructure and the way you manage that infrastructure.

It’s all about coupling generation close to the load, being able to manage both load and generation and being able to operate in a disruptive condition – and there are a lot of risk management decisions.

Stepping back and challenging the status quo – the way we’ve always done things and the drivers that led us to do them the same way – created interesting conversations through the lens of resilience.

It’s driving us to make new investments in our energy infrastructure. There’s going to be an interesting change in the direction of this university as we make these long-term planning and technical decisions through a new lens of resilience.

The importance of an energy management strategy

Bill Guerrero: Unfortunately, our school went remote in March. We are continuing to be remote, primarily, this fall semester. When you think about your utility costs, electric, gas and water – we have seen a massive reduction or material reduction in those utility expenses.

But, really, that’s not the strategy. As a residential campus, you want people on the campus. You want that vibrant community. But I would tell you that when you think about investments, and it may get overlooked, the most important investment is in human capital.

When I think about investment, people want to talk about solar arrays and changing out boilers, which we do. But without investment in energy personnel leaders, none of this would happen. It would not be in the forefront. So that’s how I would look at our focus: investment in the right people. Then they can truly drive the appropriate change.

Like most of us, when you think about your investments, you’ve got to think about your electric supply agreements, those opportunities where you can really reduce your energy. Those are helpful other opportunities that exist out there.

Part 3: Financing

When it comes to academic expansion or new student services, Johnson said, capital dollars almost always get “tilted in that direction.” It often leaves investments in renewables or energy efficiency upgrades in a losing battle for capital funds.

Over the next decade, Johnson said, many higher education institutions may face critical asset replacement decisions. Conversations about those need to happen sooner rather than later.

Instead of looking at interest rates and deferred maintenance, higher education institutions would be better off looking at outcomes and solutions that take advantage of “wasted money that’s already pouring out of these assets,” Johnson said.

“There’s research that shows academics in America is facing a huge backlog of asset failures and old assets in building infrastructure,” he added. “If it’s not addressed, it really will begin to be a burden on the schools, so you need to find a way to put that capital in there to start saving that money today because it’s being wasted today.”

Cal Poly’s approach to financing

Dennis Elliot: We had to learn how to speak a finance vice president’s language so that we can get the message across and they can see the benefit in investing.

Short-minded thinking: “This is what we do. I have a budget problem that I have to solve this year. I can only give you a dollar if you can give me that dollar back this year.” – is planning for failure.

We’ve had to get more creative about alternative sources of funding. We’ve done this for decades where the [energy service company] business model of turnkey, product, development, finance and delivery had been around for a long time.

Power purchase agreements – whether it’s solar, wind or cogeneration – are a creative way of financing things when you have limited access to capital. The cost of capital is so cheap today that things are financeable.

How Ithaca College is financing energy projects

Guerrero: We already have a [solar array] project off-site. But now we’re looking at, not large [projects], but a 1-megawatt array on campus through a Power Purchase Agreement (PPA).

Having something on campus – even if you’re an engineering student or environmental studies student – is critical going forward when trying not to make decisions as a CFO in a myopic way. I’m looking long term on these types of projects.

When I hear Energy as a Service, that’s completely new to me. When we talk about fixed costs versus variable costs from a CFO perspective – from an energy side, it’s very fascinating. It’s very interesting. So, we’re looking forward to exploring if that helps us fund additional renewable energy projects.

How Cal Poly financed a solar farm project

Dennis Elliot: We saw the K-12 market rapidly adopting solar, and that was largely because of what their price point was.

A high school could build covered parking shade in all their parking lots, and that would be a moneymaker for them because they were a primary-level customer. The university – since we own our own substation – is a transmission-level customer. Back then, we were paying about 10 cents a kilowatt-hour, all in for energy. A 16-cent PPA would be a money loser for me.

We undertook a long planning exercise to identify a good parcel of land, about 20 acres in size, that we built a 5-megawatt solar farm on. That’s a tracking array that got great economy of scale. With that PPA, we’re paying 6 cents flat rate for 20 years. So that kills my cost of grid power, and it’s a big moneymaker for us.

It’s saving the university roughly a million dollars a year.

Part 4: What’s Next?

When it comes to sustainable energy in higher education, Johnson said he’s excited about what the future holds.

Among the trends Johnson expects to see over the years is a greater realization of the benefits of Energy as a Service, especially as more sustainability projects are incorporated in higher education’s master plans. Other areas of potential growth include electric vehicles, battery storage, combined heat and power plants, and energy platforms using artificial intelligence.

“A great day for me at the office is when my phone rings and it’s the CFO or a college president that says, ‘I want to have an honest conversation. I want to open my eyes to our energy futures,’” Johnson said. “What is going to help transform us is when our executives get involved.”

What’s on the horizon at Cal Poly

Dennis Elliot: In 18 to 24 months, I would hope to be talking to you about the rousing success of our effort to adopt big data computing analytics in the energy management world. We’re very early on. We have undertaken this not just as a campus, but as a 23-campus system.

Also, not knocking down risk, repairing the things that are creating the greatest cost first so that we can keep circulating that money and reinvesting it back in the pipeline to create more benefit. Obviously, we’ve got lots of energy projects in the queue – LED retrofits, advanced lighting controls, battery/energy storage – to the cost of what we learned out of our utility master plan.

I’m excited about electrification. We are actively looking at how do we start migrating our infrastructure off carbon-based energy sources and natural gas and rely on electricity as a primary source. By policy, in the state of California, the electric grid will be 100% renewable by the year 2045.

One thing I’m excited about in our central plant is adopting heat recovery technology as we continue to add buildings. You have to understand how the system can and cannot use that so the system is moving in that direction so that technology will fit. That will be an interesting move for us.

What’s on the horizon at Ithaca College

Guerrero: Certainly, we all want that pandemic to step aside so we can start moving forward on a lot of unbelievable initiatives.

I’ve seen $100 million green bonds out there. How does that get to where we are as an institution? It’s not that easy to be completely 100% carbon-free, but if we can get there – right now, we’re currently under 2%.

Then you put in the ESG components – not just carbon footprint – that would certainly be a goal of ours for the next 18 to 20 months.

But I would say, from an academic standpoint, having a solar array on campus where we can have the experiential learning and where we can create higher education on the environmental sustainability certificate program on campus – that would be awesome.