Ohio State ready to sign $1.16 billion energy deal

Ohio State University is expected to sign a $1.16 billion deal that will bring an upfront cash infusion but cede control of the systems that power, heat and cool the 485 buildings on main campus for half a century.

The OSU Board of Trustees is expected to vote April 7 in favor of a 50-year lease of the university’s energy system to ENGIE-Axium, a new partnership of ENGIE North America and Axium Infrastructure.

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ENGIE-Axium will be expected to maintain, operate and improve the energy systems and deliver heat, air conditioning and electricity.

The deal also includes a $50 million energy research center funded by ENGIE and a promise that within 10 years, OSU would see a 25 percent improvement in energy efficiency.

Ohio State said it plans to use the $1.165 billion upfront payment for student financial aid, wage increases for faculty and staff, classrooms, labs and performance spaces and other strategic initiatives.

In exchange for the cash and control of the energy system, Ohio State will pay ENGIE-Axium: $45 million a year, with 1.5 percent annual inflation increases; $9.2 million operating fee that will be adjusted based on actual costs; and a variable fee tied to capital investments the company makes on campus.

Related: OSU moving toward privatizing its power system

Ohio State utility workers are expected to be offered jobs with ENGIE-Axium or they may take other university jobs at their current pay levels.

The deal is expected to be presented to the University Senate on Tuesday and the Board of Trustees on April 7. Leasing out the energy system in exchange for cash up front has been studied since 2014.

Ohio State will be the largest institution nationwide to hire private companies to manage its energy systems on a long-term lease.

In 2012 Ohio State executed a 50-year lease of its parking spaces to QIC in Australia.

Related: Administrator reverses course, stays at OSU

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