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Performance Contracting Lowers Utility Costs

Sacramento Public Library Authority

Innovation Summary

The Central Library in Sacramento was in dire need of mechanical repairs to the HVAC systems. Library and City staff partnered to install new, efficient systems and pay for the costs with energy savings over the next twelve years.

Problem Statement

As facilities age they require more and more maintenance costs to keep mechanical systems running and meeting the needs of staff and patrons. After twenty years or so those costs can lead to a full replacement with very high capital costs. Performance Contracting allows those high capital costs to be invested up front with the anticipated energy savings, or cost avoidance dollars, used to pay off the investment over time.

Many private firms offer this model but they of course build in a profit margin to the plan. Sacramento Public Library partnered with the City of Sacramento staff to plan, implement and pay back the costs using only City and Library staff.

Energy savings are calculated based on the design and engineering of the new building components. Actual savings are measured after installation to ensure that the anticipated savings are as good or better that those calculated.


New HVAC components were proposed with an eye toward those that offered the best ROI, in this case the best energy cost reductions as compared to the cost of the goods and installation. Staff focused on Variable Frequency Drives (VFD) that speed up and slow down fans and pumps according to demand, instead of running at full speed all the time. Also, new hot water boilers were installed that use gas much more efficiently and that heat water in smaller batches, eliminating wasted supplies.

Lighting systems were also examined but they were left off of the list because there had been an earlier retrofit that brought them close to current technology standards. The payback was not sufficient to warrant the investment. The best use of technology in terms of efficiency was to install "sleep" or shutdown software on all computer workstations, but that had already been done by Library staff before the start of the project. The payback period for that component alone was less than one year.


The overall investment for this project was $250,200. The Library expects to see savings of $2,207 per month. Of that, $2,095 will be used to pay back the initial investment and it will be fully paid in twelve years. The library will continue to reap the benefits of these improvements after that time, with new equipment, restarting the clock on full replacement needs.

After four months of operation the Central Library has seen electrical costs drop by 22%, from $50,014 last year to $38,947 during equivalent four months this year. This is a monthly savings of $2,766, exceeding our anticipated savings by $559 per month.