Alternative Energy Sources for the

University of Kansas

Environmental Studies Capstone Final Paper Dr. Kelly Kindscher

May 10th 2010

By: Katie Beall, Eric Burkemper, Raff Deeds, Daniel Doherty, Moud Safadi

THE PROBLEM WITH COAL

There are a number of serious problems associated with the use of coal-fired power plants as the

main source of energy for the University of Kansas. Most of these problems are not borne directly by the

university, which makes it easier for them to be overlooked by the administration. However, these

problems have a very real effect on human health, the environment, and the increasing effects of global

warming. By relying on coal-generated power, KU is allowing itself to be a large contributor to a

growing global problem.

Global Warming

According to the Pew Center on Global Climate Change, the average temperature of the earth is

rising as a direct result of the release of carbon dioxide into the atmosphere. This is due to the burning of

fossil fuels for human use, with electrical power plants being large contributors to this problem. As a

result of the emission of this and other greenhouse gases, average global temperatures have increased by

1˚F, and temperatures have increased by as much as 4˚F in some places. Scientists predict that

temperatures could rise by 11˚F by the end of the century (Pew 2009). The Pew Center describes the

many effects on the environment, human health, and the economy global warming will have.

The environment will suffer from global warming as sea levels rise due to the melting of ice

sheets, mountain glaciers, and snow pack, and also due to thermal expansion of ocean water. This will

lead to the flooding of many major coastal cities. Extreme weather patterns such as heat waves and

hurricanes could become more frequent (Pew 2009). The entire United States can expect environmental

disruptions and degradation in some form. In particular, Kansas, as well as the rest of the Midwest, can

expect to experience hotter, more frequent, and longer-lasting heat waves than ever before (Ebi &

Meehl, et al. 2007).

The implications of global warming for human health are also severe. The Pew Center lists the

following as concerns for human health: heat waves, floods, storms, increased smog and ozone in cities,

and reduced availability of water (Pew 2009). The likelihood of increased occurrence and intensity of

forest fires in the Northwest also pose a growing risk to human health due to increased development in

wilderness areas (Ebi & Meehl, et al. 2007).

Global warming will have a strong impact on the US economy, as well. Property damage

resulting from wildfires, flooding, and extreme weather will result in high costs that must be paid by

insurance companies and by the United States government (Ebi & Meehl, et al. 2007). There will also be

a damaging effect on various economic sectors. On the Gulf Coast alone, fisheries, recreation industries,

tourism, agriculture, shipping, and oil and gas industries will all be hurt by damage that will likely result

from global warming (Ebi & Meehl, et al. 2007).

Human Health

The use of coal-firing plants also has serious implications for human health. According to the

Environmental Defense Fund, between 6,000 and 10,700 deaths from heart ailments, respiratory disease,

and lung cancer each year can be attributed to coal-firing plants that receive public international funding

(Penney 2009). Air pollution from these plants can also be associated with infant deaths, asthma, and

other lung diseases (Penney 2009).

Another study that was commissioned by environmental groups and undertaken by a consultant

that the Environmental Protection Agency uses further illustrates the harm to human health caused by

the use of coal-powered plants (“Deadly” 2004). According to the study, power plants shorten nearly

24,000 lives a year, including 2,800 from lung cancer. The study also states that 22,000 of these annual

deaths are preventable by the use of currently available technology. Furthermore, people exposed to the

fine particles of pollution produced by these plants lose an average of 14 years off of their lives.

Pollution from the production of energy from coal causes many health problems each year that do not

result in death. According to this same study, power plant pollution is responsible for 38,200 nonfatal

heart attacks and 554,000 asthma attacks each year.

Realistically, the dangers to health caused by coal-fired power plants do not cause as large of a

direct impact to students and faculty at the University of Kansas, as the campus is not as directly

exposed to this pollution. However, the University is contributing to this problem in places where they

are more prevalent by increasing demand and production of energy created from coal.

Harm to the Environment

Coal-fired power plants cause a number of harms to the environment. According to the Union of

Concerned Scientists, the average 500 megawatt coal plant annually emits 3.7 million tons of carbon

dioxide, the primary cause for global warming; 10,000 tons of sulfur dioxide, which leads to acid rain;

500 tons of small airborne particles, which create a haze that obstructs visibility; 10,200 tons of nitrogen

oxide, which causes smog; as well as 720 tons of carbon monoxide; 220 tons of volatile organic

compounds (VOCs); 170 pounds of mercury; 225 pounds of arsenic; and 114 pounds of lead (Union

2010).

A power plant of the same size also creates a great deal of waste. This includes 125,000 tons of

ash and 193,000 tons of sludge each year. More than 75% of this waste ends up in “unlined,

unmonitored onsite landfills and surface impoundments.” These toxic substances can easily contaminate

groundwater and damage ecosystems (Union 2010).

There is also a great deal of water consumption within these power plants. A 500-megawatt

power plant typically uses 2.2 billion gallons of water each year. This water is drawn from nearby water

sources and ends up killing a number of fish eggs and larvae as well as juvenile and adult fish. Once the

water has been used, it is released back into the body of water it was taken from, along with many

chemicals and contaminants contained in the water. The heated water causes “thermal pollution” of the

water source, which decreases fertility in fish as well as increases their heart rates.

ALTERNATIVE ENERGY SOURCES

Energy sources that provide an alternative to fossil fuels are referred to as alternative energy.

Alternative energy sources are renewable, in that many of them are of possibly limitless abundance, and

cleaner, in that they release lower amounts of carbon dioxide, if any at all. Some of these alternative

energy sources include wind energy, biomass energy, geothermal energy, and hydroelectric energy.

Energy surrounds every aspect of life. Because of this, a healthy energy source needs to be utilized.

Currently, the most widely used energy sources are coal and oil. This section of the paper will provide

brief descriptions of three different alternative energy sources: wind, solar and biomass, along with

details of the positive and negative aspects of each of these sources, including how they both protect and

impact the environment.

Solar Energy

It is a fact that almost all existing organisms on earth utilize the sun as their prominent energy

source. The sun provides the fuel for the creation of oxygen and of food, and in some ways can be

describes as the very bottom of the earth’s food chain. The sun’s energy is essentially limitless, while

fossil fuel reserves, on the other hand. Solar energy, which utilizes this limitless energy source, is cost

effective and is improving with each successive generation of technology. According to Portable Solar

Panels, “solar energy gives off no pollution, the only pollution produced as a result of solar energy is the

manufacturing of solar panels in factories, transportation of the goods, and installation”. According to

Alternative Energy Sources solar energy has become of increasing importance to industrially developed

countries as the use of fossil fuels has become problematic, with its effects of global warming and

pollution. Third world countries with a plentiful amount of sunlight represent the fastest growing

market for solar energy.

Another key reason for the increase in the usage of solar energy in third world countries is

because of the lack of electricity and the expensive prices of oil (3 or 4 more times expensive than in the

United States). A few additional positive aspects of solar energy are that fossil fuel prices (depending

on certain global demand-supply factors) are constantly fluctuating. However, this will not be a problem

with solar power. Furthermore, solar energy systems can generally be easily installed, have very low

maintenance needs, and the systems are usually quiet.

With that said, the usage of solar energy does come with a few boundaries and negative

consequences. For example, solar power requires significant tracks of land in order to manufacture the

kind of power crucial for large cities. As for negative impacts on the environment, materials used in

solar systems such as the photovoltaic cells used for manufacturing can create health and safety hazards

because of the use of arsenic and cadmium in the production. Another major predicament is the amount

of money this alternative energy resource costs. Solar energy’s high cost comes from the regulations set

by the government that sets limits on installations of personal systems such as solar panels, solar

collectors and solar house designs. Another reason for the high cost is the amount of money it costs to

maintain a facility. Most people are not willing to commit to this long-term investment. Furthermore,

approximately less than 1% of the worlds heating, transportation and power energy come from direct

sunlight even though it is now possible to meet all our energy needs with this undemanding, renewable

resource.

Wind Energy

The large mass of air moving on the earth’s surface creates a considerable amount of energy. In order to

benefit from this energy source, this wind must be harnessed. The best way to harness wind is by

utilizing a wind turbine. Wind turbines use wind to generate electricity through a spinning blade that is

connected to a generator. The generator is what creates the electricity. Wind energy is an ideal energy

resource, because it has nearly no negative impacts on the environment. Wind energy creates almost no

threat to public safety and produces almost no air and water pollution, other than a small release of

minor toxic materials because of the use of computers. According to the American Wind Energy

Association, wind energy “reduces smog and eliminates a major source of acid rain; could reduce total

US emissions of carbon dioxide (a greenhouse gas) by 1/3 and world emissions by 4%.”

Wind energy has many positive attributes ranging from environmental to economical. Wind

energy can produce jobs for rural communities and for worldwide industries. According to the

American Wind Energy Association (AWEA), wind and solar industries are likely to be one of the main

sources of new manufacturing jobs in the 21st century. Wind energy revitalizes rural communities as

well, by providing steady income through lease and royalty payments to farmers and other landowners.

For every megawatt (MW) of wind energy produced, $1 million in economic developments is generated

(AWEA). However, wind energy does have a few negative consequences. For instance, wind turbines

have the potential to kill a large number of birds due to the rotation of the blades, and wind farms’ tidal

power buoys disrupt fish migration routes (harmful effects on the environment and wildlife). Wind

energy also negatively affects the breeding habitat of prairie chickens.

Overall, the production of wind power energy is only a miniscule part of the worlds overall

energy use. With that said, the use of wind energy does not have the potential to single-handedly solve

large issues such as global warming.

Biomass Energy

The third and final alternative energy resource is biomass. Biomass is similar to solar energy

because it obtains the majority of its energy from the sun. Biomass consists of all animal and plant

matter on the earth’s surface, essentially anything that has been alive or is currently alive. The way

biomass receives energy from the sun is predominantly through plants that absorb and store the energy

in the roots and leaves. As the energy is stored in the leaves and roots, the animals eat the plants, which

then create growth and succession. The most apparent environmental benefit of biomass is the

displacement of fossil fuel usage, and the corresponding reduction in air pollution and acid rain (Energy

Development, Inc). Another extremely beneficial aspect of biomass is that it is “cost effective and

generally, the energy is generated and supplied in the same area due to which installation of large

pipelines is not required” (Buzzel, Ghosh).

Additional positive aspects of biomass are that biomass is a renewable resource (because more

biomass in constantly being created), biomass can create electricity by burning garbage in waste-to-

energy plants, and it can create gas, known as biogas, which is used in stoves and furnaces. Biomass can

also be turned into fuel for automobiles. Currently, biomass is responsible for 14% of the world’s

primary energy consumption (Interesting Energy Facts).

However, biomass does have a few negative impacts and consequences related to the

environment and to economics. Biomass consists of fermented animal waste that can be detrimental to

soils. Biomass is also created by grains, agricultural crops and other natural products that inevitably will

have a future drawback. The burning of biomass can contribute to pollution and global warming, as

some of the gases emitted into the atmosphere during production such as methane, nitrous oxide and

carbon dioxide contribute to global warming. Furthermore, the production and conversion involved in

altering biomass to an energy resource is expensive, and the ethanol created during the production of

biomass releases higher levels of nitrogen oxide into the atmosphere. Finally, biomass can have a net

loss energy if it is not directly deposited in plant matter (Energy Matters).

ALTERNATIVE ENERGY AT KU TODAY

Presently, there are several research programs taking place in various departments on campus

that are investigating alternative energy use. This research includes bio-fuels, production of wind

turbines, and even the benefits of a single wind turbine located on top of Mallott Hall. However, none of

these programs are being implemented on a large scale. For the most part, the University operates almost

entirely off of carbon-based fuels.

Energy Use

The total amount of energy consumed each year by the University is nearly 125 million

kilowatt-hours (kWh). According to the University’s website, the amount of energy consumed has

increased since 2005 correlating with the amount of Metric Tonnes, CO2 Equivalents (MTeCO2). For

example, the total amount of purchased energy from Westar Energy by the University for 2008 was

124.7 million kWh, which is almost a 10 million kWh increase from 2005 when the University

consumed 116.2 million kWh. At 7.37 cents per kWh (the national average cost for January 2010), that

translates to a total cost of over $9.1 million for 2008 and $8.5 million for 2006. This means that the

University’s energy costs went up by approximately $600,000.

These calculations were made using current rates per kWh due to the inability to access the

University of Kansas’s past budget information. However, given the increase in energy consumption by

KU since 2005, it can be expected that with new construction, rising student enrollment and the rising

cost of coal generated energy, the amount of energy consumed by KU will be greater than or equal to

that of past consumption values. According to a report by Daniel Swick, “An Examination of

Greenhouse Gas Reduction Potential at the University of Kansas,” the University produced 124,205.9

MTeCO2 in 2008 from just “purchased electricity.” This accounts for over half the total amount of

MTeCO2 produced in 2008, which includes everything from paper purchased to study abroad and

directly financed air travel to refrigerants and chemicals. This is an increase from 2005, when the

University’s energy consumption was responsible for 111,777.7 MTeCO2 and an even larger increase

from 1990 when the University was only producing 81,953.5 MTeCO2 from purchased electricity.

This data seems to contradict a statement made by KU that claims that they are “committed to

a policy of energy efficiency and energy conservation, particularly during this time of rising utility costs,

tighter budgets, and new construction on campus.” In other words, the University is interested in

keeping its bottom line down, and what’s wrong with that? Nothing, as long as policy and decision

makers take into account how they are impacting the world they live in and that their children’s children

will have to live in, as they attempt to achieve that bottom line. If they don’t, we will end up with cheap

buildings and poor environmental practices that will only cost the University more in the future.

By taking the initiative to pay a higher initial investment cost, the University reduces future

costs, as well as potential environmental impacts. As Patrick Attwater from Cromwell Environmental

says, “In the case of sustainable energy, you must look at the investment cost as the cost of the energy

yielded from sustainable generator for the next thirty years being paid up front. This is because with

sustainable energy, the sun and wind are free, but the technology to harness these natural forces and turn

them into power is very expensive in present times.”

Sustainable Initiatives

At the University of Kansas, environmental awareness is not entirely absent from investment

priorities. KU helps promote awareness through the employment of several sustainability staff members.

One of the most sustainable aspects of the University’s energy usage has been the purchase of wind

energy credits in the name of Anschutz Library on the Lawrence campus to offset the carbon energy

they have consumed. Students pay $1.25 each semester, a Campus Environmental Improvement Fee,

initiated by the Student Advisory Board, in order to fund these wind energy credits. It is estimated that

Anschutz uses about 2.8 million-kilowatt hours of energy each year. For every 100-kilowatt-hour block

of energy purchased, approximately 1,440 pounds of coal are not burned. This in turn eliminates 2640

pounds of carbon dioxide emissions from the atmosphere.

However, advertisements on campus and throughout the library suggest that the building is

now actually being powered by wind energy. This is fairly misleading, because the library has only

purchased credits, which go to help fund the construction and operation of a wind farm. The energy that

powers the library is still from a coal-fired plant and therefore still pollutes the environment. In addition,

this choice to purchase credits does not come without a cost to students.

Just as students at KU receive report cards for their efforts as students, the University also

receives a report card for its environmental practices. The Sustainable Endowment Institute, an

independent organization, gave the University a C+ overall for their sustainability, with an “A” for its

“Student Involvement,” noting the Center for Sustainability, KU Environs and the Student

Environmental Advisory Board. The University also received an “A” for its “Investment Priorities” for

investing in renewable energy, possibly in reference to the Anschutz Library wind credits, and also

because of goals to optimize investment return. However, the University has not received good marks in

all areas of its current energy practices. The Sustainable Endowment Institute gave the University a “D”

for its “Green Building” practices. KU only requires new buildings to improve by thirty percent on the

Energy Efficient Design standards. Their environmental updates to and improvements of buildings are

essentially implementing only the minimum of environmental improvement practices by current

standards. These improvements consist of merely installing low-flow fixtures and retrofitting the

lighting in buildings. However, if the University refuses to be more forward-looking and to make the

right choices today, the wrong choices will be costly in the future. For example, a building constructed

to fulfill solely the minimal environmental standards will suffer by its inefficiency a hundred years from

now.

Additional steps KU has taken toward efficiency and sustainability include a $25 million

project, started in March 2010, aimed to increase the energy efficiency of the campus. It is expected that

this improvement will reduce the energy costs by $2 million a year. Furthermore, the declaration that

costs will be lowered is backed by the company Energy Solutions. If this savings is not achieved, they

will pay the University the difference for up to 15.5 years after the completion of the agreed upon

upgrades. Some of these “upgrade” ideas are as simple as changing behaviors to include the practice of

turning off computers at night. This alone is projected to save $200,000 a year and will reduce the

amount of MTeCO2 KU is responsible for and the amount of money spent on energy bills.

The University’s Energy Policy, updated in 2009, indicates that to save energy in the

buildings, individuals must keep windows and doors shut and turn off power-consuming devices,

placing the initiative on individuals. One of the main problems with this policy is that during months

when the weather is more favorable, when heating and cooling generators could be turned off, buildings

must nevertheless keep windows and doors closed, with internal air conditioning maintaining the

temperature. Another problem is that during the winter months, departments can obtain plastic film from

Facilities Operations to cover any inefficient single pane window. However, installation is either left up

to the department that requested the film or the department must pay to have the film installed. This

seems peculiar, considering that it is the University itself paying the heating costs and therefore stands to

benefit from the installation of these window coverings. The policy does indicate that the existing

standard for new construction is a thirty percent improvement on ASHRAE Energy Efficient Design

standard, which was also noted on the environmental report card, issued by the Sustainable Endowment

Institute. Unfortunately, the university seems to view this standard as its ultimate goal rather than as a

bare minimum, as the Sustainable Endowment Institute intends it.

A final problem with KU’s Energy Policy is that it has not sufficiently taken the time to

investigate what sustainable energy sources would be beneficial to implement on campus. Conversely,

other universities such as New York University and John Hopkins University have policies similar to

KU’s that specifically set goals of improving their energy efficiency and reducing their carbon emissions

through the use of renewable or sustainable energy sources.

THE COST OF ALTERNATIVE ENERGY

Although the university has various departments currently conducting research on producing

renewable energy for campus, no large-scale projects have been proposed to offset a significant amount

of the energy consumed by campus buildings. This is in part because renewable energy production is a

fairly new topic. However, many universities around the country have already taken part in such

significant projects. A key factor in the feasibility of undertaking such a significant project is the

economic and financial burden it has the potential of placing on an institution such as the University.

This is why it is critical to develop extensive research in the economic feasibility of implementing a

extensive renewable energy project for the university.

To continue with three widely known forms of clean renewable energy, wind, solar, and biomass, we

researched the monetary costs and benefits of implementing each on small and large scale formats. To

do so, we looked at several local and national renewable energy production companies to come up with

total costs including research and development (R&D), manufacturing, parts, installation, operation and

maintenance (O&M), and property. We also looked into past projects that have been completed at other

universities or colleges, comparing their initial costs, return on investment, and any tax or governmental

grants they received for their project.

Wind

To determine the price of producing wind energy, we researched a few companies advocating the

expansion of wind turbine use. The most notable source was Windustry, a company based out of

Minneapolis. They promote “progressive renewable energy solutions and [empower] communities to

develop and own wind energy as an eco-friendly asset.” They provide services such as outreach and

education in their promotion.

According to Windustry, a commercial scale wind turbine averaged between $1.2 and $2.6 million

for every megawatt (MW) of production capacity. Large wind farms normally are populated by 2MW

turbines at a cost of around $3.5 million each, installed. More clearly, 1MW equals 1,000,000 watts and

has the capacity to power around 1000 average American homes. Large wind farms with hundreds of

multi-megawatt turbines typically power hundreds of thousands of homes and businesses and cost nearly

half a billion dollars to install. While these systems have high initial costs, with governmental incentives

such as tax credits and treasury grants from federal, state and local levels, investments can be decreased

dramatically.

If the University of Kansas were to implement a large-scale wind farm, it must be located in

western Kansas to maximize efficiency. In western Kansas, the wind potential is far greater than in

eastern Kansas, where KU is actually located. With that, costs of transmissions lines would play a

significant role in the feasibility of implementing such action.

On a smaller scale, wind turbines become less expensive, but also become less efficient in terms of

energy conversion. That, however, does not mean they will not be beneficial to the KU. On a smaller

scale, typically categorized by turbines less than 100 kilowatts (kW), it is estimated that costs equal

around $3-$5,000 for every kW of production capacity. As we mentioned early, an average home

requires a 10 kW turbine to take care of their energy needs and will cost somewhere within $30-

$50,000. This type of turbine would be beneficial to smaller offices or even be beneficiary by cutting

down a portion of the energy cost of larger buildings. Another benefit comes from the ability to install

on campus or very near to campus, significantly cutting down on transmission costs.

Solar (Photovoltaic)

Another sustainable resource the University has yet to tap into on a significant level is the sun, or

solar energy. Although some research is happening on campus in implementing a solar utility, once

again, KU has yet to progress to a project of significant capacity. The initial costs of solar projects vary,

but are roughly more expensive than wind energy. Research in technology is still being developed to

harness more energy from the sun and cut the cost of producing the solar panels.

Current costs of photovoltaic (PV) systems equal roughly $8-$10,000 for a 1 kW system. For a

small home or office a 2 kW system would cover most of the energy needs. However, on a larger scale,

for a single building, systems can cost somewhere around $200-$500,000 starting at a 20 kW system.

Benefits of solar panel systems also include the transmission cost. Normally the systems are mounted

directly on top or near building, which decreases the requirement of transmission lines and decreased the

overall costs.

The company that looked most promising in solar energy advocacy was Borrego Solar, out of

southern California and Boston, Massachusetts. They were founded in 1980 and have over 1000

photovoltaic system installations in their history. Their services include education and outreach

advocating the need for renewable energies and the many options out there, focusing on solar. They also

provide custom designed PV systems to best fit any rooftop. They claim that powering a building from

solar energy is a low risk, long term, and high return way to reallocate energy spending. The initial

return on investment is somewhere between 5-11% and increases as utility prices increase.

Bio-fuel

Another sustainable resource that is already being produced on campus is biodiesel from cooking

oils used in KU’s eateries. Unfortunately, biodiesel is typically not a cost effective renewable energy.

However, extensive research has been underway by the National Renewable Energy laboratory (NREL)

to advance technology in producing and converting plant matter into usable fuels. Currently they plan on

developing new technologies to extract oils from trees, grasses, residue and algae to contribute to 36

billion gallons of fuel per year by 2022.

According to the Energy Information Administration (EIA), yellow grease, also known as

recycled cooking oil, costs around $1.40 per gallon to produce. That is twice that of the cost to produce

petroleum diesel which is still around $0.70 per gallon. And finally the least cost effective oil comes

from soybeans and is projected at around $2.73 per gallon. The benefits in biodiesel are in the additive

market. Adding biodiesel to a normal diesel engine can have benefits such as cetane boosting. Cetane is

known to increase the performance of a diesel motor and reduces harmful emissions and particulate

matter from the exhaust. It is difficult to say if biodiesel will be seen at general gas pumps, however, for

university and city bus transit systems, biodiesel is a great way to reduce carbon dioxide emissions and

produces cleaner exhaust.

FUNDING

As discussed, one of the main obstacles impeding renewable energy initiatives is the initial cost

associated with these projects. In order to turn the possibility of renewable energy into a genuine reality,

large, reliable, and constant sources of funding will need to be identified and utilized. If KU wants to

really make a dent in its energy bill, a contract with a private company will most likely be the way.

Most universities that have built large-scale facilities have teamed up with a third-party through use of

Power Purchasing Agreements or an Equity Flip Structure. Furthermore, because universities are exempt

from taxes, they do not qualify for all of the government and tax incentives that come with starting a

renewable energy venture. Partnerships with third-parties help to make these incentives available for the

University’s benefit.

Third Party Financing: Power Purchasing Agreements:

Universities are able to form partnerships with third party Energy Service Companies (ESCOs).

There are two contracts that must be agreed upon between the university and the venture company

beforehand. The first is a site lease agreement, and the second a power purchasing agreement. The

University provides land or space for the renewable energy project, and the ESCO does the rest. The

ESCO takes care of the planning, building, financing, and operation of the project (Raise the Funds

Toolkit 2008). The ESCO owns the plant/project and usually sells the energy back to the university at a

low reduced cost. After an agreed amount of time the university has the opportunity to buy back the

project/facility usually at a reduced cost. The ESCO can take advantage of the tax incentives that the

university could otherwise not, such as land tax, depreciation, and renewable energy utility rebates. The

university is spared enormous upfront costs, they get the benefit of lower energy bills, and they will

eventually own the plant and can sell any renewable energy credits generated. Both parties benefit.

Universities Under a PPA

Colorado State University

Colorado State leased land to Fotowatio Renewable Ventures (FRV), who completed a 15 acre

2000 kW solar plant in December 2009 (CSU News Release 2010). CSU is locked in a 20 year PPA

with the company to buy the energy generated by the solar panels at a low, fixed cost. Even if energy

prices rise, CSU will only pay the agreed amount for the energy. After the twenty-year contract expires,

the university has the option to either buy the plant or have FRV remove it at no cost. Not much data has

been made available since the plant went online. CSU originally anticipated saving over $2 million over

the 20 years, but the plant has proven to be quite successful and CSU is expecting to save a lot more

(AASHE.com).

Colorado voters have passed a Renewable Energy Portfolio Standard that requires utilities to get

20% of their energy from renewable sources (CSU News Release, 2010). FRV and CSU have been able

to take advantage of this by selling Renewable Energy Credits (RECs) from the plant to the local utility

company Xcel Energy. Putting all this together was not easy. It took three years from the start of the

idea, but in the end CSU is put in a great “zero-risk on production” situation (AASHE.com).

Arizona State University

ASU has a three-phase plan for implementing solar power on all of their campus locations. Phase

I, which is already complete, consists of two megawatts of solar power distributed on the rooftops of

their Tempe campus buildings. Phase II, which has begun, will extend the schools solar operations to

their west campus and increase energy output by eight megawatts. Phase III will include all the campus

locations and increase energy output by five megawatts (Campus Solarization Status, 2010). ASU

contracted out the solar installations and operations to three different companies: Honeywell Building

Solutions, Independent Energy Group, and SolEquity. The companies will sell back the energy to ASU

at a fixed cost under a 15-year contract after which ASU will then own the solar energy systems

(Jarman, 2008). The companies will sell any RECs generated to Arizona Public Service Company, the

local utility. Arizona Corporation Commission passed mandates that require Arizona Public Service

Company to get 15% of its energy from renewable sources by 2025. Furthermore, two-megawatt system

like the one installed at the Tempe campus could qualify for up to $1 million per year in rebates just

from the local utility (Jarman, 2008).

Third Party Financing: Equity Flip Structure:

An equity flip is an agreement between an institution/utility/project developer and a tax equity

partner (TEP). The TEP own the majority of the project for the life of the tax credit, and is entitled to

most of the cash flow. When a predetermined rate of return is reached the equity “flips” and the

institution/utility/project developer then owns the majority of the project (Delony, 2007).

Hypothetically, the agreed ownership is 80/20, meaning the TEP owns 80% and the institution owns

only 20%. After the TEP has taken advantage of all the incentives, rebates, and credits, and the rate of

return has been reached; then the equity flips and the institution owns 80% and the TEP owns 20%. The

institution then has the opportunity to buy out the TEP and own 100% of the project. So far there is no

record of any university that has used this flip structure, although this practice is common in the wind

power industry and often used by utility/project developers who enter a PPA with the tax equity partner

(AASHE.com).

Utility and Government Incentives

Because universities are tax-exempt institutions, there are only a limited number of incentives that

universities can take advantage of. Every state has a different number of exemptions due to differing

legislation and mandates. According to the Database of State Incentives for Renewables and Efficiency,

there are 12 state and local utility incentives in the state of Kansas. Because of tax exemption, KU is

eligible for only two of these state incentives (www.dsireusa.org). KU is eligible for other federal

incentives such as Clean Renewable Energy Bonds (CREBs), which are interest-free loans for financing

qualified energy projects for a limited term. And Renewable Energy Production Incentives provides

payments for electricity generated and sold by new qualifying renewable energy facilities. However,

there are quite a few more options available if a third party is involved.

Universities That Have Taken Advantage of Incentives

University of Minnesota-Morris

In 2005 the University of Minnesota-Morris installed a 1.6MW turbine at a cost of $1.8 million, with

$600,000 for installation and voltage lines. The turbine generates 40% of the university’s energy needs,

and is expected to pay itself off in 10 years with a 25-year lifetime (Mello, 2008). The university has

been approved for three CREBs to build several new wind turbines, and hopes to be self-sufficient by

the end of 2010 (UMNews, 2009).

University of Oklahoma

The University of Oklahoma has entered a 5-year PPA up with Oklahoma Gas & Electric

(OG&E), to buy the electricity generated from OG&E’s Keenan wind farm, since renamed the OU Spirit

wind farm (North American Wind Power, 2008). The PPA allows OU to sell the renewable energy

credits generated by the plant to corporations. OU could get up to $600,000 per year simply from the

RECs. OG&E has also agreed to increase the number of scholarships and internships available to OU

students interested in pursuing careers in renewable energy (Wolford, 2008).

Endowments, Gifts, and Grants

A great way for universities to fund renewable energy projects is through endowment loans or

grants, Alumni Association gifts and donations, and private grants. Donated funds are sometimes

matched by the university and often go towards expensive start-up costs associated with many

renewable energy projects.

Universities that have used Gifts to help fund projects

Carlton College

Carlton College installed a 1.65 MW wind turbine in 2004. The project was funded with $1.8 million

donated by the school endowment fund, and a $500,000 grant from the Minnesota Department of

Commerce (Mello, 2008). The university has entered a 20 year PPA with Xcel Energy to buy the energy

generated by the turbine. This was essential for the project to go ahead because the college needed a

reliable market for the energy (Kingsley, 2005). The turbine is expected to pay for itself in 10 to 12

years, with an expected 25-year lifespan.

Student Fees

The creation of student fees is a great way to raise funds for renewable energy projects. Students

at over 50 schools have voted to pay for a “Green Fee”, which not only helps to increase student

involvement, it also helps promote outreach and education (Raise the Funds Toolkit 2008). The fee can

be used several ways: starting a revolving loan fund, a sustainable grant fund, or being the direct source

of funding for a renewable or conservation-oriented energy project, used to buy renewable energy

generated off-campus, or it can be a combination of both off-campus purchases and on-campus projects.

Universities that have implemented Student Fees

Appalachian State University

In 2004 students at Appalachian State University approved a $5 increase in student fees to start

the Renewable Energy Initiative (ASUREI), a student led group dedicated towards implementing

renewable energy on campus (rei.appstate.edu). The fee generates between $120,000 and $150,000, and

has been used to fund a number of projects (Stringer, 2007). The fee provided funding for two thermal

solar collectors for the university’s Biodiesel Collaborative building, the panels supply 100% of the heat

required to make biodiesel at the research facility. In collaboration with AppalCART, the universities

public transportation system, the student fee was used to buy a 10,000 gallon tank to store B20 biodiesel

used by AppalCART vehicles. The fee was also used to fund three different photovoltaic solar projects

(1.7kW, 1.5kW, and 4kW) totaling 7.2 kW (rei.appstate.edu). In June 2009, ASUREI in collaboration

with New River Light & Power completed work on a 100kW wind turbine outside the Appalachian State

Conference Center (broyhillinn.com).

University of Kansas

In the spring of 2007, KU students approved a dramatic $20 increase in student fees to purchase

a fleet of cleaner-burning buses, that same year a $1.50 fee was also approved by the student body to

start the Renewable Energy and Sustainability Fee, now currently reduced to only $0.25 per student

(Weslander 2007). The Renewable Energy and Sustainability Fee is primarily used to fund capital

improvements that reduce dependence on non-renewable energy sources, but also may be used to fund

education and outreach programs and retrofit/LEED certification projects (sustainability.ku.edu).

Aerospace Engineering Technologies Lite, a group of Aerospace Engineering students on campus, have

applied for funds from this fee to redesign current wind turbines. The prototype turbine will be used to

recharge the mechanical engineering student group Ecohawk’s battery-powered VW Beetle (Vaughn,

2010). In spring of 2009 students voted to pay $1.25 to buy power generated by wind from Westar

Energy for a year, the fee would cover the $28,000 difference between cost of coal-derived energy and

wind-derived energy (KU News Release, 2009). The KU student senate also approved $15,000 to buy

two biodiesel reactors; cooking oil from the dining hall Mrs. E’s is used to make biodiesel. The

Biodiesel Initiative’s ultimate goal is to meet the fuel needs of on campus buses, landscaping and

maintenance equipment, and power generators (Fagan, 2008).

RECOMMENDATIONS

Of the three alternatives that we have examined—wind, solar, and biofuel—solar seems to be the

most practical, immediate solution for the University of Kansas. Complications with wind energy,

including the fact that the high-potential areas for wind within the state of Kansas are located very far

away from the university, make it an unfeasible option at this time. Biofuel energy, while worth

developing further as a replacement for gasoline to power campus vehicles, does not provide us with a

solution for providing renewable electricity to the buildings on campus. Solar panels can be placed on

the tops of many of the buildings on campus, and the energy derived from them will help significantly

reduce KU’s energy use from coal. Furthermore, the University of Kansas should invite a third-party

company, such as Westar Energy, to create a Purchasing Party Agreement, where KU will eventually be

able to independently own and operate its own solar panels.

If the University of Kansas wishes to view itself as a forward-looking and innovative institution,

it needs to utilize current technology and it needs to act as a leader rather than a follower in the move

away from fossil fuel-dependence and toward clean, renewable energy. Both the environment and KU’s

own pocketbook depend on this.

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