At 2,500 miles from the nearest landmass, the Hawaiian Islands rely on fossil fuels for 90 percent of their energy needs at a cost three times higher than found on the mainland. To finance projects to reduce these costs, the state’s department of transportation entered into an energy performance contract (EPC) with Johnson Controls, investing $245 million in energy-efficient upgrades that will deliver $680 million in savings guaranteed by Johnson Controls.
In other parts of the country, states embracing smart connected technologies are installing lights along highways that automatically turn on and off while collecting and transmitting information regarding traffic flow, air quality and noise levels. Variable speed limit signs and electronic information boards report weather conditions, warn of accidents and provide real-time information updates that are simultaneously communicated to websites, mobile apps, broadcast stations and social media feeds.
But these upgrades come at a cost. Unfortunately, transportation departments are often unprepared to pay the price using the traditional appropriations process, which derives funding from tax dollars.
As a result, state transportation departments are embracing alternative funding mechanisms with vendors like Johnson Controls, that can help identify challenges, prioritize goals and design EPCs to secure infrastructure improvements and integrate new technologies.
And it’s working. In Hawaii, airport improvements will reduce electric utility bills by 49 percent. State highways are safer, brighter and more efficient, with expectations to generate 43 percent in energy savings. Harbors, too, are more efficient and safer. And they are doing this with no capital investment and no risk.
Johnson Controls assumes the risk, agreeing to pay the difference between what is saved and the guaranteed savings. Projects are designed so that annual energy and operational savings are greater than or equal to the required payments over the term of the contract, leaving a net neutral impact on the state or department budget.
Alternative funding sources like EPCs are assuming ever-increasing roles in state transportation department programs that improve security and visibility, increase operational efficiencies and meet sustainability goals. As they deliver these benefits, performance contracts also impact communities across the state in positive ways—enhancing public safety and freeing capital for other improvement projects.
As national director of state government, Phillip is responsible for growing the state government market for SSNA, including General Services, the Department of Transportation and Department of Corrections. Phillip earned an MBA from Texas Tech University, an MS degree from Clemson University, and a BA degree from the University of North Carolina.
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