Energy Efficiency, Finance  -  January 3, 2025 - By Better Buildings, U.S. Department of Energy

Louisville, KY: Launching a Self-Financed Energy Management Program

In 2021, Louisville Metro Government (LMG) hired its first Energy Manager to track and utilize energy and building performance data. LMG used this data to implement no-cost operational improvements and achieve utility cost savings with a focused effort on utility billing analysis, building audits, and building automation systems. The utility cost savings from these activities were used as seed funding for a new capital fund called the Energy Innovation Fund, which incentivizes ongoing investments in energy performance by allocating utility cost savings to be re-invested in future energy projects. As a result of LMG’s energy management initiatives, the city has saved over $3,200,000 and reduced building energy use by approximately 7.5%, or 93,800 MMBtu. This corresponds to approximately 18,000 tons of CO₂e avoided emissions due to the carbon-intensive power generation from the local utility company.

Barrier: LMG lacked sufficient energy data, a budget for energy improvements, and in-house staff to address energy performance and reach emission reduction goals.

Solution: LMG hired an Energy Manager who adjusted building operations (HVAC and Lighting) to reduce energy consumption by closely tracking utility data and identifying areas for efficiency. These utility cost savings seeded a new capital fund called the Energy Innovation Fund. 

Outcome: Since 2021, LMG has saved over $3,200,00 and reduced building energy use by approximately 7.5%, or 93,800 MMBtu. This corresponds to approximately 18,000 tons of CO₂e avoided emissions. 

Policies: LMG passed a resolution in 2020 that formalized the following goals: 
•    100% clean electricity for Louisville Metro Government operations by 2030 
•    100% clean energy for Louisville Metro Government operations by 2035 
•    100% clean energy community-wide by 2040 
 
Process: LMG Energy Management efforts initially focused on automatically benchmarking all LMG utility accounts through a utility data tracking software, as there was previously no system for tracking usage across its properties. Using the utility data, LMG was able to produce quarterly energy reports and a live dashboard of building- and portfolio-level data, that was made available to the public. After establishing a means of tracking their utility data, LMG targeted several key areas to identify energy savings, including utility billing analysis, building audits, and no-cost operational improvements through building automation system adjustments. Cost savings from these efforts allowed LMG to establish the Energy Innovation Fund. 

Utility Billing Analysis: A utility billing analysis revealed approximately 260 utility accounts that could be switched to more cost-effective utility rates or closed entirely. Addressing these accounts saved the city over $160,000 annually.

Building Audits: Virtual and in-person building audits revealed performance issues that impacted occupant comfort and energy performance, revealing several opportunities for sequencing improvements and other mechanical failures. Through these building audits, LMG found the widespread presence of broken economizers and other costly mechanical failures and inefficiencies. There were also numerous inappropriate setpoints for mechanical system operation that impacted the performance of heating and chilled water loops and air handler unit VFDs. These issues also created inconsistent and uncomfortable space temperature variations. Efforts to correct these are ongoing.

Building Automation System Adjustments: The building automation system was targeted for no-cost operational improvements. Many LMG facilities were great candidates for night and weekend setbacks on HVAC and mechanical systems but had no functional setback programming in place. Using the findings from the building audits, operational parameters were adjusted and standardized across LMG operations where possible. This proved to be a simple and easily replicable approach that was highly effective in improving LMG’s utility performance. By monitoring trend data, performing routine virtual audits after-hours, and interviewing various department contacts, LMG was able to implement aggressive setback scheduling across 900,000 square feet of city facilities. Setback scheduling was able to reduce runtime of central HVAC and mechanical systems by approximately 50%, and facilities that received new setback scheduling showed reductions in energy usage by 20% to 30%. 

Energy Innovation Fund: After these efforts began showing substantial cost savings, the Energy Manager drafted a resolution to create an Energy Innovation Fund (EIF) to ensure demonstrated cost savings were moved to a capital fund to finance future energy projects. The EIF represents LMG’s first ongoing budgetary commitment to make energy upgrades, with seed funding essentially coming from no-cost operational improvements. As the first capital projects are completed, the demonstrated savings will be used to replenish the fund and finance additional projects over time. In total, energy management efforts have realized $3,200,000 of cost avoidance and reduced LMG energy consumption by 7.5% since the 2019 baseline. 
 
Tools & Resources: LMG utilizes a utility data tracking software to compare each period’s utility bills to the benchmarked baseline according to standard methodology derived from ISO 50015 and EVO IPMVP guidelines. Savings values are normalized for weather conditions and changes in utility rates.

Financing: The initial operational cost savings required no capital cost but required the funding of a single Energy Manager position to begin high-level oversight of equipment and building controls operation.

The Energy Innovation Fund (EIF) was formalized in fiscal year 2023 and will receive an annual appropriation equal to 80% of the cost avoidance realized in the previous calendar year relative to LMG’s 2019 baseline. Most of this fund is reserved for projects that will have a rapid return on investment, which initially will prioritize converting LMG buildings to LED lighting, expanding the building controls platform, and projects to modernize HVAC systems and economizers. A portion of the EIF will also be made available to fund energy audits and other studies to inform future spending, as well as more innovative energy projects that may not meet the strict payback criteria established for the majority of the fund.
 
Outreach: LMG publishes quarterly energy reports and a live dashboard with building and portfolio-level data to inform the public and LMG leadership.  

Primary Success Metrics: LMG measures the success of their energy management efforts through the following metrics:
•    Cost Savings (dollars)
•    Energy Usage (MMBTU)
•    Emissions (tons of CO2e)

Secondary Success Metrics: 
•    Improved Comfort: Energy management efforts were particularly focused on facilities that had a history of unreliable performance and comfort issues. Comfort concerns can be an excellent indicator of mechanical systems that are not performing according to their design intent. 
•    Sustained Impact:  The launch and initial success of energy management within LMG has created widespread awareness of the value of this practice as well as properly investing in the maintenance and modernization of the City’s building portfolio. LMG expects that the Energy Program will be self-sustaining by alleviating utility cost burden while freeing up capital for long-term investments. In particular, the Energy Innovation Fund is now a permanent mechanism that will support ongoing, annual investments dedicated to improving energy performance. The reductions in energy usage and costs achieved to-date have demonstrated the value of invested in trained staff, and LMG hopes to expand the program in the future by adding staff to support LMG’s Energy Program.

Outcomes: The results of LMG’s energy management initiatives since 2021 have been over $3,200,000 of cost avoidance to date, and a reduction of building energy use by approximately 7.5%, or 93,800 MMBtu. This corresponds to approximately 18,000 tons of CO₂e avoided emissions due to the carbon-intensive power generation from the local utility company.

This column originally appeared on the Better Buildings website.

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