Energy Revolving Fund
Committing $13M as part of Billion Dollar Green Challenge
In February 2012 the University of Vermont became the thirty-fourth college in the nation to commit to the Sustainable Endowment Institute’s Billion Dollar Green Challenge, agreeing to establish a revolving fund to finance on-campus energy efficiency improvements. Thanks to a resolution by the university’s Board of Trustees that passed on February 3rd, UVM earmarked $13 million for a new Energy Revolving Fund, making it the largest response to the challenge to date. Harvard’s Green Loan Fund is a $12 million revolving loan fund and had been the largest green revolving fund (GRF).
The Billion Dollar Green Challenge was launched in October 2011 by the Sustainable Endowments Institute and 15 partners. The program invites colleges to invest a total of one billion dollars in energy efficiency upgrades delivered through self-managed revolving funds. To date, colleges have committed nearly $80 million in total. See the Greening the Bottom Line 2012 report here.
Monies in UVM’s fund will come from cash on hand from tuition payments and other revenue sources, which is normally invested for short periods in low-risk financial instruments before it is spent on operating expenses such as wages, utilities, and supplies. The $13 million represents less than 10 percent of the total cash UVM typically has at its disposal.
The university has established two major criteria for projects to be eligible for financing. They must have a payback period of no more than seven years and cost $3 million or less. The university is setting a goal of a five percent return for the investment.
UVM is partnering in the effort with both Efficiency Vermont, the statewide energy efficiency utility operated by the non-profit Vermont Energy Investment Corporation, and the Burlington Electric Department (BED), UVM’s electricity provider. Between 1992 and 2012 UVM spent about $8.6 million on energy reduction projects in partnership with BED with paybacks of around seven years.
The Sustainable Endowments Institute was founded in 2005 as a special project of Rockefeller Philanthropy Advisors. The Cambridge-based nonprofit organization has pioneered research and education to advance sustainability in campus operations and endowment practices. For a list of the partners in the Billion Dollar Green Challenge, including Efficiency Vermont, see greenbillion.org/about/.
UVM Energy Initiatives Working Group
UVM has a working group, the Energy Initiatives Group, to plan and implement projects that will be funded through the $13M Energy Revolving Fund. The group consists of staff responsible for facilities projects, from the departments of Physical Plant, Facilities Design & Construction, Campus Planning, and Capital Planning & Management. Also joining the group as needed are representatives from Efficiency Vermont (our state-wide energy efficiency utility), Burlington Electric Department, and Vermont Gas Systems; these utilities provide support for energy efficiency in the form of technical services and rebates.
The Energy Initiatives Group is currently refining a list of $9 milion of projects, with no single project exceeding $3 million, and will next be conducting feasibility studies and other research so as to estimate the costs and benefits of the projects and determine whether the proposed projects fit within the requirements for this fund: seven-year or less simple payback, and 5% return to the fund. The next step will be receiving approval to proceed on projects from the VP of Finance & Administration. The group anticipates that at least one major energy project will be underway by the end of the academic year.
Challenges so far are less about energy efficiency projects, and more about finance. The budgeting and accounting systems required for this fund are different from the current ways of doing business. Turnover among key budget managers during this time presents further challenges. The VP of Finance & Administration, who is responsible for reporting the results to the Board of Trustees, will be consulting with the budget director and treasurer to create a new budget and project reporting structure.
- Vermont Cynic: Electricity Use Steady (December 5, 2012)
- A separate Clean Energy Fund of about $225,000 per year generated by a $10 per semester student fee addresses renewable energy and innovations relating to energy efficiency, with a focus on student engagement.
- Much of the above text was excerpted and adapted from an article on February 8, 2012 by Jeffrey Wakefield, UVM’s $13 Million Commitment to Green Challenge Is Country's Largest; Surpasses Harvard.