Harvard Launches Green Building Loan Fund

Harvard Launches Green Building Loan Fund

In March 2005, Harvard University launched a Green Building Loan Fund. This $3 million fund for new construction projects is modeled on an existing fund that supports retrofits and renovations -- the Green Campus Loan Fund. Both are revolving funds that provide capital for investments in energy and resource efficiency and get repaid by claiming a share of the savings. In doing so, they help to overcome a hurdle faced by many institutions in which fixed capital budgets make it difficult to invest in efficiency improvements, even when those improvements can yield very attractive returns. A third fund, for investments in renewable energy for campus activities, was also established in March.

Harvard's $2.8 million Green Campus Loan Fund, launched in January 2002, is managed by the Harvard Green Campus Initiative. The Initiative has funded over 40 conservation projects, with an estimated return on investment of 28%. The most popular projects involved upgrades to lighting and lighting controls. Other capital investments supported by the fund include mechanical-system upgrades, irrigation controls, and photovoltaics. By far the best short-term returns, however, were achieved by programs aimed at changing student behavior. The Go Cold Turkey program, for example, gets students to sign pledges that they will turn off their computers when they leave for Thanksgiving and Christmas vacations. Competition among dorms stimulates participation.

Harvard's Green Campus Loan Fund provides, from inside the institution, many of the same services that other organizations get by contracting with energy service companies (ESCOs). By providing these services internally, however, the loan fund is building the capabilities and skills of staff. "We are building a learning organization that can increase the rate of innovation over time," says Leith Sharp, director of the Harvard Green Campus Initiative, which administers the funds. In contrast, she notes, "an ESCO takes what it learns away with it."

Aside from major trends, such as energy use by an entire school, metered savings are not available for most funded projects. "We can't get actual metered data on account of the amount of 'noise’ in the building data," says Sharp. The metered data is affected by variations in occupancies, other renovations, new equipment, events, and weather, making it too hard to tease out which changes stem from the projects themselves, according to Sharp. Instead, Harvard uses a system of peer-reviewed engineering calculations and usage assumptions to estimate savings. Overall, “we’ve estimated a greenhouse gas reduction equivalent to 5% of 2003 campus emissions,” notes Sharp.

After several years of managing the fund, Sharp is convinced that it is staff time, not money, that represents the biggest barrier to investments in conservation and efficiency. In response, the Harvard Green Campus Initiative offers a range of services to the university at cost. Among these services has been the initial research and development on technologies including biodeisel, green cleaning products, digital irrigation controls, high-performance HVAC and lighting systems, and water conservation. “The Loan Fund will not work alone. It must work in concert with a service-oriented business model that can introduce and carry the time burden of new ideas -- up until the point that they are not new ideas anymore, and the time burden becomes integrated as good management,” says Sharp.

“There are really big savings to be had in almost all buildings on campus,” notes Sharp who cites “building upgrades, better controls, continuous commissioning and better management, and continuous occupant education” as the best ways of achieving those savings. The Harvard Business School has been the biggest client of the Green Campus Loan Fund, accounting for 40% of the fund’s investments. “We’ve seen the entire [Business] School turn the corner and start using less energy -- for the first time ever,” notes Sharp.