Setting up a Revolving Energy Fund - 100% Renewables

A lot of times in our work the question comes up as to how energy efficiency and renewable energy projects can best be financed. One financing option is to create a “Revolving Energy Fund”, also known as a ‘Green Revolving Fund’ or ‘Sustainability Revolving Fund’.

A Revolving Energy Fund (REF) is an internal fund that provides financing to implement 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 investments, thus establishing a sustainable funding cycle while cutting operating costs and reducing the environmental impact of an organisation.

The seed capital for the REF can either come from an annual operating budget or the capital budget. There may be a one-time infusion of capital or multiple infusions over time to scale the fund gradually. It is essential that the portfolio performance of all the energy projects and the cash injections be forecast, to see whether the fund will grow or deplete over time.

The advantages of a REF are that it cements your commitment to your sustainability goal and provides a tangible vehicle to achieve it. On the other hand, there might exist internal hurdles in setting up the fund. We have found that another barrier for REFs is that organisations are not aware of this financing vehicle and the manner in which it operates. Moreover, in the case of Councils, a resolution might be required.

Free Download: Financing Options for Sustainability Projects

To help our clients with setting up such a fund, we developed a downloadable checklist and worksheet. In this document, you will find out more about the necessary background work, how to pitch the fund and engage your stakeholders so you get it approved. You will also look at the financial flows, the size of the fund and seed capital, as well as manage the fund.

pdf-icon“Revolving Energy Funds Checklist and Workbook”

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