Green Revolving Fund (GRF)

Good post on innovative finance models for sustainable communities (link).  Regarding the GRF:

"Energy efficiency saves money. But there is always the challenge of justifying and securing the upfront capital often needed to implement efficiency projects. The Green Revolving Fund(GRF) model is emerging as an effective solution. The model is increasingly common among higher education institutions and state governments, and it is gaining traction with healthcare facilities, municipalities and businesses.  A GRF is an internal investment vehicle that provides financing to parties within an organization for implementing energy efficiency, renewable energy, and other sustainability projects that generate cost savings. These savings are tracked and used to replenish the fund for the next round of green investments, thus establishing a sustainable funding cycle while cutting operating costs and reducing environmental impacts.

For example, the City of Ann Arbor established The Municipal Energy Fund in 1998 to be a self-sustaining source of funds for investment in energy-efficient retrofits at city facilities, so the City could continually reduce its operating costs over time. The Energy Fund is financed by re-investing the funds saved through energy efficiency measures into new energy saving projects. In 1988, the City utilized its municipal bonding authority to fund a $1.4 million Energy Bond which enabled the City to implement energy efficiency measures in 30 City facilities. The payments for this ten-year bond were generated through energy cost savings. With the bond paid off in 1998, the City chose not to eliminate the bond payment line item in the annual budget but rather to reduce it by 50% to $100,000. This money was then used to finance the new Municipal Energy Fund."