Session Recap >> The Billion Dollar Green Challenge
This session was presented at AASHE 2011 on Tuesday, October 11th. Thanks to Russ Pierson for taking copious notes to share with those that could not be in attendance. Join the AASHE 2011 Transcription Project and help spread the great ideas presented at the conference!
Presenters:
Mark Orlowski, Sustainable Endowments Institute
Heather Henriksen, Harvard University
Rob Pratt, GreenerU
John Onderdonk, Caltech
Session Abstract:
Facing burdensome budget cuts and unstable energy costs, many colleges are grappling with how to finance urgently needed, but capital-intensive, energy efficiency retrofits. In response to this need, the panel will advance the hypothesis that innovative investments in revolving loan funds can provide a viable and vital large-scale funding solution. Panel presentations and discussion will explore:
-- Examining the revolving loan fund model that has been successfully implemented to finance energy efficiency improvements at more than two dozen colleges across the country. Several case studies will provide insights on how different types of schools were able to overcome obstacles and activate previously untapped funding for energy/cost savings.
-- Exploring various funding options for creating large-scale green revolving loan funds based on a new financing model for low-risk/high-yield endowment investment in energy efficiency. Along with highlighting financial mechanisms, panelists will address questions about endowment investments likely to be posed by senior administrators and trustees, as well as how to respond effectively.
-- Encouraging colleges to invest a combined total of $1 billion in robust energy efficiency retrofits on campus by 2013, as part of the Billion Dollar Green Challenge. The Billion Dollar Green Challenge is an initiative coordinated by the Sustainable Endowments Institute in partnership with more than a dozen other organizations including AASHE, American College and University Presidents' Climate Commitment, Clinton Climate Initiative, National Wildlife Federation, Second Nature, and the U.S. Environmental Protection Agency. The Challenge is scheduled for launch in Fall 2011.
Mark Orlowski
Founder & Executive Director
Sustainable Endowments Institute
The challenge: to invest one billion dollars. www.greenbillion.org
Report/survey released: Greening the Bottom Line
Founding circle of 32 institutions, representing $65 million. 18 states and British Columbia
Benefits of Green Revolving Funds:
• Reduce energy consumption and operating expenses thereby generating savings to finance future projects
• Effective tool to meet ACUPCC requirements
• Educational opportunities and community involvement
• Opportunity to attract capital from a variety of resources.
Low-risk, can beat the stock market. Median annual return: 32%. Low-risk investing in campus infrastructure.
These are actually a hedge against future energy cost increases.
Reallocate endowment into green fund. Donor restrictions on where money can be spent, but not usually where it can be invested. Utility rebates.
Benefits of Joining
• A "Think Tank" on Green Revolving Funds
• Web platform for managing fund
• Planning and analysis
• Free consulting services
• Connections to peer support
• Media attention and recognition. Chronicle of Higher Ed, BusinessWeek, etc.
15 partners and funders
Heather Henriksen
Director of the Office of Sustainability
Harvard University
"Universities have a special role and special responsibility in confronting these challenges of climate change and sustainability ..."
Harvard's fund is one revolving fund model
Fund helps meet sustainability commitments
Green loan fund
$12 million revolving loan fund
Upfront capital for environmental projects, have come from President's Office
29.9% ROI
Sample projects:
Highlights the behavior piece.
Makes the case for staffing in sustainability.
Focus on HVAC, lighting, electrical.
Loan products:
Full cost, 5-year payback, $500K
Incremental cost, 10-year loan up to $500K
Soft cost/feasibility study, focused on LEED costs in early days, 2-year payback up to $150,000
Renewable Energy, payback loan over 5 years, unto $500,000. Project payback not a factor.
Enhanced Metering, new one
Governance: Green Loan Fund Review Committee
• Strong governance vital to success
• University-wide
• Review applications
• Ask clarifying questions
• Prepared for executive approval if no member disapproves
• Application forwarded to Finance
Case Study: Rockefeller Hall
• Only borrowed $150,000, but enabled a lot of new tech, 43% less water, etc.
Review Scope:
• Loan fund allocation
• Loan limits and payback period
• Reporting requirements
• Administrative fee
• Outreach strategies and governance.
Up to half the fund may be allocated to longer-term projects, higher loan amounts.
Administrative fee built in early, but will be ended soon.
John Onderdonk
Manager of Sustainability, Cal Tech
CalTech Energy Conservation Investment Program
Measurement and verification
Purpose: finance energy efficient infrastructure projects.
Projects must:
• Exhibit verifiable savings
• Contain a measurement and verification plan (before, during, after)
• Have a simple payback of 6 years or less
Started with a $25K LED lighting project. Simple, straightforward.
Paybacks: program gaining momentum, tracked on a quarterly basis.
Grow pattern is visible and measurable
Returns, diversity of projects both growing
Examples:
Hot/Cold Aisle Data Center Retrofit
• 3% creep in inefficiency returning into new system.
• 3-5% in project costs in measuring and verifying
• 180 GPM chilled-water flow reduction with zero impact on operation.
• A broken valve was found in followup verification
RCx-AHU Optimization
• Quick visuals demonstrate projects working
• $500K investment, $240K rebate, $200K annual savings
Downs-Lauritsen
Return fan installation, new dampers and controls
• $50K per year operating savings
• Replaced one constant speed fan with three VFD fans
Active Energyy Management Dashboard software
• Links with Google Earth
• Students, users able to pull down own data into Excel
• Developed a heat map concept, blocks in graphics represent size, track efficiency
Maximum Use and Re-Use of Data
• Constant HVAC staff training
• Codify field operations
• Record training of sequence
• Connect back to operator front end
Rob Pratt
Energy Efficiency Financing Innovation on College Campuses
Rob.Pratt@greeneru.com
Goal is to help colleges aggressively pursue energy efficiency. Energy efficiency really is the first fuel. Addresses energy cost, deferred maintenance issues, carbon emissions.
Energy Efficiency
• Should be at top of college's to do list
• Good news: most energy efficiency projects can be paid through energy savings
• Bad news: delay means colleges are throwing money away
Financing a key:
• Colleges know they should do it but concerned about cost
• Innovative financing mechanisms and tools can help
• The roadmap
- strategize priorities thrughvcareful audit
- utilize innovative financing approach suite to your school
- build support with key campus stakeholders
- complete through major, phased program
Energy Efficiency is the best investment. Your CFO should be on your side!
Traditional financing approaches:
• Operations budget
• Electric or gas utility rebates
• Performance contracts (ESCO financing, 10-20 years)
• Tax exempt bond financing
Use them if they work
Additional approaches:
• Revolving loan funds
- Billion dollar challenge
- Great way to communicate momentum, establish fund
• Student fees for sustainability investments
• Green donors- often non-traditional, new monies
• Endowment financing
• Leasing arrangements
• Power purchase agreements. Currently most often used for renewables; efficiency is the new frontier.
• State financing authorities
• 0% or low interest financing availability (states or utilities)
The Power of Innovative Finance
Sample installation:
Business as usual: $8 million program over 5 years
Using innovative means, you could reach $24 million:
- pay utilities just as you would have without savings. Turbocharged program.
- endowment financing as investment
- reinvested savings
- green donors. Include naming rights, $3 million.
- utility rebates
- operations
Question & Answer
Q: Is it too late to be in the Founding Circle of the Green Billion Challenge?
A: The Founding Circle has closed, but there may be early adoption opportunities.
Q: What's the cost of participating in the Challenge?
A: 8 foundations have provided seed monies. Administrative fee tied to size of fund, no more than $2500 annually. Currently waived. Data sharing is also a "cost component."
Q: How to identify projects?
A: Work with consultant and engineering firms to come in and study the building. Identify possibilities, triage results. Zero cost feasibility study contract, then they are awarded the project.
Posted: October 12, 2011, 11:50 AM