Greening the Bottom Line on Campus

Groundbreaking report reveals how colleges are saving millions of dollars with an innovative green financing model
CAMBRIDGE, Mass. (Feb 9, 2011)’Facing rising energy costs and steep budget cuts, many colleges are grappling with how to finance urgently needed energy efficiency upgrades. In response, more schools are tapping a new option for financing sustainability improvements, while earning a high return on investment. Their successful methods are revealed in Greening the Bottom Line:The Trend toward Green Revolving Funds on Campus.Released today at www.GreeningTheBottomLine.org, the report was published by the Cambridge-based Sustainable Endowments Institute in collaboration with 11 partner organizations.
Based on the first survey ever conducted about green revolving funds (GRFs) in higher education, Greening the Bottom Line details how GRFs help cut operating expenses and greenhouse gas emissions at 52 schools. The breakthrough in this approach is how cost savings are used to replenish the fund for investment in the next round of green upgrades.
‘The trend is clear both in terms of money saved and reduced energy consumption,’ said Mark Orlowski, Executive Director of the Institute. ‘The number of green revolving funds has more than quadrupled since 2008. A major incentive is the financial benefit. Our survey found a median annual return on investment of 32 percent.’
A wide variety of projects are financed through GRFs, ranging from dormitory showerhead replacements to retrofitting lighting across campus. For example, in 2009 Harvard University installed energy-efficient lighting in 10 parking garages, resulting in annual savings of $400,000. Funding was obtained through a $1.2 million loan from the Harvard Green Loan Fund and $200,000 from utility rebates. According to Greening the Bottom Line, the parking garage lighting upgrade is projected to yield a 23 percent annual return on investment over the next 10 years.
"Through funding installation of energy efficient and sustainable technologies, Harvard's Green Loan Fund has consistently delivered reductions in the university’s utility bills that range above and below $5 million annually,’ said Heather Henriksen, Director of the Office for Sustainability at Harvard. ‘The Green Loan Fund has generated high returns on investment, while improving Harvard's environmental impact and our bottom line."
While most funds are new, others have been in existence for a decade or more and have proven consistent long-term performance. For example, Western Michigan University’s GRF, has financed 101 projects, with an average annual return on investment of 47 percent.
‘Since 1996, our total project costs have been approximately $5.85 million and our annual cost savings are approximately $2.75 million, with a total cost avoidance to date of approximately $16.71 million,’ said Dr. Harold Glasser, Executive Director for Campus Sustainability at Western Michigan University.
The Energy Retrofit Program (ERP) at Stanford University began funding efficiency projects in 1993. "Our fund has already financed over 200 efficiency projects on campus, with an average simple payback period of just four years,’ said Office of Sustainability Associate Director, Fahmida Ahmed. ‘ERP has delivered an estimated cumulative savings of over 240 million kilowatt-hours of electricity since it began’roughly equivalent to 15 months of the university’s current use’and prevented 72,000 metric tons of carbon dioxide equivalent emissions.’