Financing Energy Efficiency Projects
Green Revolving Funds
The up-front investment needed for energy efficiency projects is often a major hurdle for colleges and universities seeking to reduce their energy costs. In response to this challenge, many colleges and universities have established revolving loan funds to provide low-interest loans to fund projects that have considerable capital costs, but may yield a significant return on investment.
A green revolving fund is a pool of money that finances campus projects and initiatives. An initial sum of money is set aside to create the fund, and the fund is then administered to projects that have a positive monetary savings or return. A portion of the return from the project is reinvested into the fund until the project has been paid off. The fund is then reused for more projects. Revolving loan funds have been successfully used by schools across the country to pay for sustainability upgrades.
Efficiency Vermont, in partnership with the Sustainable Endowments Institute, launched a statewide initiative in 2011 to raise awareness with college presidents and administrators about an innovative investment tool for colleges and universities – the Green Revolving Fund. Green Revolving Funds invest in enhancing energy efficiency and decreasing resource use, thereby reducing operating expenses and greenhouse gas emissions. By treating the energy efficiency opportunities as an investment portfolio instead of budgetary costs, a college can make progress towards its environmental goals and bottom line while assuring that capital will be available for future energy efficiency investments.
Leasing
In today’s economic environment, many colleges and universities are faced with increasingly tight operating and capital budgets. Rather than be just an expense, the utility budget can be viewed as a source of funds for energy efficiency improvements. With uncertain and often-increasing energy prices, installing energy-efficient equipment can allow for facility upgrades using dollars saved from future utility bills.
Lease/purchase agreements are used to finance everything from telecommunications systems, kitchen appliances, laboratory equipment, to computers. When future cost savings are considered, lease/purchase agreements are also ideal for financing energy efficiency projects.
Performance Contracting
Performance contracts are agreements in which an energy savings company (ESCO) guarantees the performance of the equipment being installed. They can be used for energy efficiency projects, water conservation, lighting upgrades, co-generation projects, geothermal projects, and any type of biomass projects for energy efficiency. Typically the cost of the equipment or project is paid by the energy cost-savings created by the project.
For more information, contact Richard Donnelly at Efficiency Vermont at rdonnelly@veic.org or by calling 1-888-921-5990.