Did you know that energy efficiency not only pays for itself, but it can also fund future Energy Efficiency Measures (EEMs)? When ERG performs energy audits or retro-commissioning, we always find several EEMs that have quick paybacks – less than one or two years. Later, building managers fold those savings back into the general fund and forget about them. However, if instead you put all or part of those savings into a Green Revolving Fund (GRF), which in turn funded future EEMs, you can create a virtuous cycle of building and operational optimization.

The GRF Speeds Energy Efficiency

Establishing a GRF can reduce the time needed in the future to get approval for energy efficiency projects. This saves the CFO and the Facility Manager’s time. For many organizations, energy is not a big expense. Therefore, these investments are relatively small and have nearly zero risk. Additionally, a GRF does not affect the bottom line, line of credit, or any other budget. Once established, the utility budget line items replenish the fund and energy savings accumulate in useful ways – one might even say it’s sustainable!

The GRF Helps Document Progress

By documenting the utility budget and the savings that grow the GRF, the organization can clearly see how much energy, carbon, and money they save as a result of the implemented EEMs. This is valuable data, as increasingly customers and employees alike demand that companies reduce their carbon footprint. The GRF gives your organization the empirical data to use in marketing materials and CSR/ESG reports to demonstrate your efforts to reduce the impacts of climate change.

Using the GRF, the savings from the RCx can fund both the next set of improvements and monitoring-based commissioning (MBCx). MBCx will ensure ongoing building optimization, enable predictive maintenance, other building enhancements, and other newly-funded energy efficiency measures will continue to make strides to eliminate unnecessary waste.

Getting Started

A GRF begins by understanding your starting point. A utility benchmarking process will define your baseline annual energy usage profile. This weather-normalized regression analysis will predict your baseline energy usage into the future. You can do this at the EPA portfolio manager website, by hiring an energy efficiency professional, or on your own. This usage, plus any rate changes, defines your expected annual energy budget. Make a commitment to always fully fund this amount to a set-aside account. This is your GRF. Use it to pay utility bills. It will grow as you start to save energy. ERG then recommends an energy study to identify the first measures to get the ball rolling. Depending on your building this would be a retro–commissioning study or an investment-grade energy audit. This study will define a list of recommended EEMs and provide a full financial analysis. The report then acts as a road map that the facilities department can use to prioritize the recommended EEMs.

Setting up the Fund

There are many ways to establish the GRF. Which approach is best depends on your organization. Here are a couple of ideas. The easiest is to simply designate the initial capital outlay using internal funds. Alternatively, if the company does not wish to use internal funds, another option is to borrow the funds. There are many off-the-books financing opportunities that will fund energy efficiency projects. The energy savings accumulating in the GRF from the EEMs will more than pay back the loans. After you have funded the first EEMs, the GRF will take over, paying back loans and funding all future efficiency investments.

Using the Fund

Once you establish the fund and the first projects are underway, the savings from those projects will accumulate in the GRF. Typically, projects need a measurement and verification (M&V) process to determine that the goals of energy efficiency projects are coming to fruition, but if you use a GRF, the growing balance in the account is ample evidence. The payments to the GRF from the general operating funds will only need to be adjusted to account for utility rate changes or when operational changes or renovations alter the building’s energy use. As the GRF balance accumulates, use it to implement EEMs that were postponed for financial or other reasons. Use it to incentivize green practices among employees. Use it for on-site renewables, or to implement maintenance-savings projects like data analytics or monitoring-based commissioning (MBCx). Eventually, you can complete all recommended EEMs, and the GRF becomes a source of funding for other special projects, all funded through energy efficiency. For more information, reach out to Energy Resources Group at info@EnergyResourcesGroup.com or 314-644-0000.