The building's chiller is the single biggest user of electricity in a typical facility. Add in the heating system, and the energy used to distribute the heating and cooling to the building, and it is no surprise that most successful energy management programs have focused on lighting and HVAC.

Fortunately, facility executives have many options when it comes to conserving energy in lighting and HVAC systems. By applying new lighting technology, facility executives can cut lighting energy use by an average of 30 to 50 percent, while improving the performance of the lighting system. Lamps with electronic ballasts, lighting controls, high efficiency replacements for incandescent lamps - all are being widely used in lighting system upgrade programs.

Similar improvements are being made in the operation of HVAC systems. New technologies allow facility executives to reduce the energy use of their HVAC systems by 25 to 50 percent, without sacrificing comfort or indoor air quality. High efficiency chillers, direct digital controls, energy management systems - these and other new technologies are being widely applied in building HVAC system upgrades.

Individual Projects or an Integrated Plan?

One of the biggest questions facility executives face when looking at upgrading lighting and HVAC systems is how much should they do. Some technologies offer a fast payback. Other technologies, while reducing energy use and improving the quality of the services provided to the facility, have much longer paybacks, often two or three times longer. Should facility executives focus only on those items that offer a rapid payback, or should they only be concerned with the payback for the overall upgrade program? While the available level of funding can be a limiting factor, other factors must also be considered.

Start with the reasons why the upgrade program is being implemented. Energy conservation, while a driving factor, is not the only issue. The primary purpose of any lighting or HVAC system is to meet the needs of building occupants. When looking to upgrade existing systems, facility executives must focus on the quantity and quality of light and space conditioning needed to meet those needs. Unfortunately, limiting system upgrades to items with a quick payback usually fails to take into account occupant needs. And when occupant needs are overlooked, facility executives risk jeopardizing productivity and morale to the point where tenants may move or the energy management measures that were implemented may be defeated by the occupants.

Another problem with limiting system upgrades to components with quick paybacks is the effect it has on overall system performance. Implementing quick payback projects tends to produce a series of upgrade patches.

But simply replacing the lamps does not address the issue of how much light is actually needed in the space. If the space is overlit, additional energy could have been saved by examining the lighting requirements, changing the number of fixtures installed, using a ballast with a lower ballast factor or installing lighting controls. Similarly, the original chiller may have been oversized for normal operation. Additional savings could have been achieved by installing a smaller chiller, or two smaller chillers whose operation can be staged to match the building load, or by installing a variable speed drive on the new chiller. Even more energy could have been saved by installing a high efficiency cooling tower.

Finally, programs that are implemented in a patchwork fashion are more expensive and more disruptive to building occupants. When the entire system is upgraded, all work in a given area can be performed at the same time. When the system upgrade is implemented as separate components at different times, occupants will be disrupted and finishes disturbed each time a new project is initiated.

For these reasons industry experts recommend that lighting and HVAC upgrades be implemented on a system-wide basis rather than on an individual project basis.

One at a Time?

The next question that the facility executive faces is how to implement the upgrade. Should the lighting system be upgraded before or after the HVAC system, or should those systems be upgraded at the same time? Again, funding may dictate how the program is implemented, but the close interconnections between lighting and HVAC systems suggest that the best approach to upgrading is to upgrade both at the same time.

The strongest interconnection between lighting and HVAC systems is energy use. Lighting systems introduce heat into the conditioned space. For every kilowatt of energy used by the lighting system during the air conditioning season, the HVAC system must remove one kilowatt of heat, or slightly more than 3,400 Btu. The higher the lighting load, the higher the load on the building's chillers.

Not only does this increase the cooling energy requirement for the building, but also it increases the size of the chiller required to cool the building.

A comprehensive lighting upgrade program will reduce the load on the building's chiller, lowering its energy use. If the load reduction is large enough and if the HVAC system is being upgraded at the same time, it may be possible to replace the chiller with a smaller unit, saving both installation and operating costs.

A second link between the lighting and HVAC systems is a result of the type of work that must be performed during the system upgrade construction. During a lighting system upgrade, ceilings are removed and replaced, and overhead wiring is installed and connected to new wall- mounted controls. During an HVAC system upgrade, ceilings are removed and replaced, overhead ductwork and distribution units are installed, and control wiring is run between overhead units and wall-mounted thermostats. If lighting and HVAC system upgrades are not performed at the same time, many of the construction demolition and replacement tasks must be performed twice.

A third interconnection is relatively new and is increasing in importance as facility executives move towards interoperability in building automation systems. In the past, lighting and HVAC systems were treated as independent systems despite their energy connection. Neither system could communicate with or share operating information with the other.

New building automation system designs are replacing these independent control systems with ones that are fully interoperable. In an interoperable system, conditions and control actions in one system can be shared with other components in the building automation system. For example, when the lighting system's occupancy sensors determine that a space is unoccupied and turn off the lighting system, a signal can be sent to the HVAC system directing it to reduce the airflow to that space to a minimum setting.

By performing the upgrades to the lighting and HVAC systems at the same time, facility executives can take advantage of opportunities arising from these interconnections, opportunities to further improve system performance while reducing energy use. Unfortunately, when upgraded separately, many of these opportunities are not available.

Paying for Upgrades

Upgrading lighting and HVAC systems generally is an expensive undertaking. While most well-designed and properly implemented system upgrades will pay for themselves through energy savings in five to eight years, depending on the scope of the upgrade, not all organizations can afford to pay for the upgrades up front. Rather than cut back the scope of the upgrade project, facility executives have the option of entering into a performance contract with an energy service organization.

The concept of an energy performance contract is straightforward. An outside contractor, vendor or utility pays for the energy upgrade up front, and recovers its investment over a set period of time by being paid back from the energy cost savings generated by the upgrade. There are two basic types of energy performance contracts: guaranteed savings and shared savings.

Types of Contracts

The guaranteed savings contract establishes a fixed level of energy savings from which the contractor will be reimbursed for expenses. If the energy modifications fail to achieve this guaranteed level of energy savings, the contractor absorbs the loss. If the level of savings exceeds the guaranteed level, the facility keeps the difference. Guaranteed savings contracts tend to be used more on long-term, high-dollar projects when the facility executives wants to minimize risks to the facility.

The shared savings contract establishes how the energy savings produced by the system upgrades will be divided between the contractor and the facility. How the savings are split between the contractor and facility varies from contract to contract, but most set the split at a given rate, such as 50-50 or 30-70. Shared savings contracts are more commonly used in short-term, low-dollar projects.

Energy performance contracts offer a number of advantages. Facilities do not have to invest capital up front to implement system upgrades. Regardless of the initial cost, entire upgrade programs can be implemented quickly. Both the guaranteed savings and the shared savings contracts generate a positive cash flow from their initiation. Facilities do not have to carry debt as a result of the upgrade.

They do, however, have their challenges. Energy performance contracts are more complex than other contracts, particularly if the process is being bid. All will include early termination penalties that levy costs against the facility in the event that the contract is terminated early. But the biggest challenge and the biggest risk of performance contracts comes from projecting future energy use for the facility based on its historical use. To do this, a baseline must be established. Energy use data must be collected for a three- to five-year period and normalized to correct for such factors as variations in weather, area changes within the facility, changes in use of the facility and past energy conservation efforts. Without this normalized baseline data, facility executives would not be able to determine the savings that are the result of contractor's upgrades.

Finally, facility executives must carefully evaluate both the contractor and the upgrades the contractor is proposing to perform to determine that the energy savings will not come at the expense of a quality working environment for building occupants or the long-term health of the facility and its systems.