Caltech's Green Revolving Fund: Financing Energy Efficiency

For the last six years, Caltech Facilities has managed a green revolving fund called the Caltech Energy Conservation Investment Program (CECIP) to finance energy efficiency projects around campus. To date the program has invested $18 million in such projects that can pay back their costs in less than six years. These investments have received $3 million in rebates and have returned more than $4.5 million to the loan fund in avoided utility costs. The program has been recognized with a number of awards, including, most recently, an Innovation Award from the National Association of College and University Business Officers (NACUBO).

"This award recognizes CECIP's unique combination of innovation in both facilities and finance," says Dean Currie, vice president for business and finance at Caltech. "CECIP is intensely rigorous in its measurement of actual building performance, both pre- and post-investment, and in its recalculation of savings based on actual energy prices, not just those that prevailed when the project was approved. The Caltech board was so impressed with the CECIP concept, that it authorized the continued investment of millions of dollars in the program right through the 2008-2009 financial crisis."

Launched in 2008, CECIP began as a concept for funding energy efficiency work on campus in a way that would not affect the operating budget. As a green revolving fund, the idea was to borrow an initial allocation from Caltech's endowment in order to finance projects that produce a return on investment of 15 percent or more. "The investments made in energy efficiency reduce campus-wide utility costs," says Matt Berbée, director of maintenance management and energy services at Caltech. "These utility reductions go back into the fund and can then be used to finance additional projects."

CECIP plays a key role in Caltech's Greenhouse Gas Mitigation Strategy. To date, Caltech has reduced direct emissions by more than 20 percent since 2008, putting the Institute well on its way to achieving its 2020 emissions reduction target.

The first CECIP-funded project was an LED lighting retrofit in the parking structures on Wilson Avenue. The project was completed in 2009 and has returned more in avoided utility costs than it cost to implement. Since that initial pilot, CECIP has funded dozens of projects across campus including full building automation controls and mechanical system upgrades in Broad Center, Moore Lab, and Beckman Institute.

Since CECIP's inception, Caltech's energy density—the Btu used per square foot of space—has dropped by about 10 percent. Another way to look at the impact of the CECIP projects is that, without them, the Institute would consume about 18 more gigawatt-hours of electricity every year (enough to power more than 1,600 homes).

"As energy efficiency projects are completed, the amount of energy supplied by the grid decreases, and this improves Caltech's carbon footprint," says Berbée. "This is not being green just to be green. These investments are about verified financial performance, reducing environmental impact, and keeping the focus on the main thing: efficiently operated and maintained space for research and education."

Currently, more than 30 CECIP projects are paying back into the fund, producing about half a million dollars every quarter in avoided utility costs.

Berbée says documenting and verifying those savings is necessary to CECIP's success. "We have the numbers to prove that this is working."

And those performance numbers have made CECIP a model for other organizations and institutions looking for ways to finance energy efficiency projects. On October 30, Caltech will host its fourth energy efficiency forum, where managers from other higher-education campuses, private research centers, real estate firms, and companies with campus-like facilities will come to learn about Caltech's efforts and to see CECIP projects firsthand.

"The energy efficiency forum is one of the ways we demonstrate our commitment to continuous improvement," says Berbée. "It allows for the exchange of best practices among industry leaders and offers us the ability to highlight the value of integrating energy management throughout all aspects of a building's life cycle."