For local governments, energy and water efficiency projects are often in direct competition with other priorities for limited financing. King County, WA, however, found a way to provide access to funding for meeting its energy reduction goals without competition with or delay to other critical county work. To aid in the implement cost-effective efficiency projects, King County, WA launched the Fund to Reduce Energy (FRED). While similar to a traditional revolving loan, FRED does not limit the scale of eligible projects where the loan repayment equals or exceeds the costs of borrowing. County divisions are able to apply for funding from the budget office for equipment upgrades which demonstrate the ability to reduce the consumption of energy, water, fuel and solid waste. Resulting utility bill savings are then used to pay back the bonds, resulting in a neutral or positive cash flow.
A group of county staff met over a nine month period to discuss the framework for FRED, including how to educate and train staff on the use of the financing vehicle. No direct costs were incurred during FRED’s development. Part of the on-going success of the program is contingent on educating county agencies on its availability and benefits, including working with agency staff to build expertise on how to identify efficiency opportunities and bring them to completion while continuously proposing more projects during the next annual budget cycle.
In early 2015, after one year of planning, eight energy and water efficiency projects proposed in the 2015/2016 county budget began to be implemented across five county agencies for a total of $2.2 million in loans. As a result, the county has generated project investments of more than $2.5 million across efficiency projects that are designed to help it achieve its rigorous Better Buildings Challenge energy reduction goal of 20% by 2020, from a 2007 baseline. These projects are projected to result in a combined $250,000 in annual savings and carbon dioxide reductions of 1,000 tons per year when completed in 2016.
Learn more about the county’s financing solution here.