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LEED Green Energy Financing

Challenge faced:  

A controller for a small university was instructed to propose a Bronze LEED green energy initiative for the campus – with virtually no budget. Additional challenges included:

  • Electricity costs were projected to go up to $14MwH, with no end in sight.
  • Major weather events made power transmission an issue.
  • The maintenance capital budget was used to fund salaries.
  • Endowments were down dramatically, which meant the LEED project required 100% financing.
Opportunity discovered:  

An energy audit determined 30% of electricity was wasted and delivered a list of solutions, such as new lighting, insulation, and new windows.

The controller wanted a “big picture” solution that would:
Lock in long-term electricity savings and completely finance a LEED green energy initiative.

The university provided an investment grade guarantee and a “waver of appropriations risk,” allowing us to provide a solution that featured:

  • The university’s infinite return on payment from energy savings for 20 years after locking in a rate of $10MwH vs. $14MwH.
  • 100 percent financing of project costs from electrical and heat savings
Benefits:  

All purchased project equipment assets will be delivered to the university at the end of the contract, after all tax credits have been received. Other benefits include:

  • Fixed $10 MwH electricity cost for 20 years, saving $4 MwH.
  • 1 MwH of peak surplus electrical generation capacity that can be sold to the utility and used for expansion.
  • New energy-efficient windows and insulation for the oldest buildings on campus.
  • Off-campus daytime electrical delivery issues are solved by solar and wind electrical and hot water generation on campus buildings and grounds.
  • Solar and wind power generation was covered by a maintenance agreement.
  • Dramatic reduction of winter heating costs from installing Bronze LEED energy savings measures, including replaced light bulb, windows and insulation.
  • Pre-paid long-term maintenance, with normal P&C coverage provided by the university.
 
Please note: We respect the confidentiality of our clients’ transactions. The purpose of this example is to illustrate the unique features and benefits of our financing structures. Key details are not disclosed or may be changed to protect confidentiality. Every university will be different, but payments will be structured so that the university will receive an infinite return on payment from energy savings, as long as an acceptable investment grade guarantee and “waiver of appropriations risk” has been delivered.

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