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State and Local Net Greenhouse Gas Emissions Reduction Programs
State and Local Net Greenhouse Gas Emissions Reduction Programs
Energy Revolving Loan Fund
Program type: Energy Efficiency
State: Missouri
Description
The Energy Revolving Fund provides a long-term solution to rising energy costs for schools and local governments. The Department of Natural Resources' (DNR) Division of Energy established a Public School Loan Fund for K-12 schools in 1989. The success of the program led to the establishment of a similar program for local governments in 1990. The loan program provides clients with technical and financial assistance to implement cost-effective energy efficiency upgrades. City and local governments, public schools, hospitals, and water and sewer districts can save tax money on energy expenditures and redirect these savings to fund essential services. New construction is also eligible under this financing program if savings can be used to finance the incremental costs for higher energy efficiency measures.
During this financing program's operation, more than $23 million has been loaned to schools and local governments, saving more than $4.8 million annually in energy costs. To achieve these savings, 144 public schools have received more than $15 million to implement projects with an average payback of 4.4 years. The 101 local governments receiving $7.5 million dollars from the fund have implemented projects with an average payback of 5.7 years. DNR estimates that the energy efficiency measures that have been implemented will achieve a payback within eight years. Beyond the cost savings, the projects also lead to creative energy solutions. For instance, Kansas City is converting more than 5, 800 mercury-vapor streetlights into high-pressure sodium streetlights, reducing electric demand by more than 3 million kilowatts per year. Kansas City is also replacing 150-watt incandescent bulbs in 2, 518 signal lights with high efficiency light-emitting diodes (LEDs). Schools have also replaced incandescents with LEDs to achieve significant energy savings. All of the projects implemented through the loan funds are repaid from savings generated by energy efficiency capital improvement projects. The loan funds are considered off budget, but not general debt obligations.
Applicants requesting simple energy conservation measures must complete an application form, and submit an abbreviated worksheet documenting implementation costs and energy savings. These projects include wall, ceiling, or pipe insulation, lighting changes, window replacement or changes, programmable setback thermostats, and some heating plant replacement projects. Applicants with more complicated energy conservation measures must complete an application form and submit a Technical Assistance Report (TAR) to DNR. The TAR is an engineering study with a more detailed analysis or modeling of a building that identifies opportunities to reduce energy costs. This study is useful to the client in evaluating and selecting energy-saving recommendations. The study can also be targeted to specific measures, such as boiler upgrades and controls, to better meet applicant needs.
Development
The Missouri Department of Natural Resources' Division of Energy established the Energy Revolving Loan Program in 1989 using Petroleum Violation Funds to capitalize the revolving loan fund. Program partners include the Missouri Department of Elementary and Secondary Education, Municipal League, Association of Counties, School Board Association, Association of School Business Officials, Association of Rural Educators, and School Plant Managers.
Developing the program required passage of a Missouri law authorizing its structure and operation. Marketing the program to potential clients included convincing school officials that they could enter into such loan agreements without the loan being considered as a general debt obligation.
Lessons Learned
The development of the Energy Revolving Loan Fund required a close working relationship with school and local government officials and associations. Two critical actions were required to initiate the program: enactment of the state law, and declaration by the State Attorney General that funds could be borrowed from the state without voter approval. Once school and local government officials were convinced that they could enter into such a loan, marketing of the program followed.
The great interest in the program generated a new source of capital. Current loan funds are being leveraged with bonds issued by DNR's Environmental Improvement and Energy Resources Authority.
Benefits
The program provides financial relief to school districts and local governments and their taxpayers. As of fall 2000, the program had saved more than $5.5 million for its clients. School districts and municipalities can spend revenues on equipment and services that improve student learning, rather than on energy.
The program has significant environmental benefits. In 2000, it reduced CO2 emissions by about 10, 000 tons, SO2 emissions by about 175 tons, and NOx emissions by about 80 tons. These environmental benefits, as well as the economic savings, will grow as more schools and local governments implement energy efficiency upgrades.
Contact Information
Bernard Thompsontitle not availableMissouri Energy Center
1659 E. Elm
Jefferson City, MO 65102
Phone (573) 751-7466
Fax (573) 751-6860
Email: nrthomb@mail.dnr.state.mo.us
Website: http://www.dnr.state.mo.us