You are here
- 9.2 Increase Funding for Projects with Financial Payback
- 2015 Illinois Climate Action Plan (iCAP)
- 9. Financing
Key Objective: 9.2 Increase Funding for Projects with Financial Payback
Many sustainability projects, especially in the area of energy conservation, by their very nature generate a long-lasting or indefinite stream of energy savings. Many such projects pay back their up-front costs in a reasonable period of time, and thus represent sound financial investments in addition to offering environmental benefits. The campus should increase the number of such projects that are implemented by committing additional funds to such projects, streamlining the review process, and encouraging units across campus to identify such projects.
Increase the Revolving Loan Fund
Given the state’s financial challenges, our campus finds itself in a challenging financial situation with uncertain prospects for future state funding. To the extent that careful stewardship has enabled the campus to hold modest cash reserves, this is an ideal time to make an expansion in the RLF. A one-time strategic investment in the RLF will lead to a substantial reduction in utility expenditures for decades to come, and will strengthen the campus’s financial position going forward. A 2011 study showed that the median annual return on investment (ROI) on RLFs is 32%, demonstrating that these funds “significantly outperform average endowment investment returns while maintaining strong returns over longer periods of time.” We suggest that the RLF be increased to at least $10 million; this would put us in the company of aspirational peers such as Caltech ($8M), Harvard ($12M), and UCLA ($15M).
Expand the Reach of the Revolving Loan Fund
An increase in the RLF will need to be accompanied by an active outreach campaign to units across campus, including auxiliaries, so they are aware of this resource. The administrators of Harvard’s RLF have cited the challenge of “promoting the fund across a decentralized campus,” but even so Harvard’s RLF has “experienced average annual returns of 30%, saved the university $4.8 million dollars annually, and reduced Harvard’s environmental footprint.”
Currently, RLF projects are reviewed and funded on an ad hoc basis, whenever a substantial balance is available. In order to make it easier for units and auxiliaries to participate in the RLF, the RLF review process could be modified so that proposals are reviewed for funding on a regular schedule, at least twice per academic year. The RLF guidelines could also emphasize that loans are not restricted to facility-oriented projects, but that the additional costs of purchasing energy-efficient equipment can also be considered.
Increase Energy Performance Contracting
Energy Performance Contracting has been enormously successful, and offers the potential of dramatic energy savings across campus. Given that debt incurred by EPC comes with a stream of energy savings to service the debt, and then continues to generate savings after the debt is retired, the use of this methodology could be substantially expanded.