So the university started with a small, discreet and easy-to-understand pilot project that made great economic sense. The project, which cost a total of $25,000, involved replacing the lighting in two four-deck parking garages with energy efficient LED lights.

The LED lights were separately metered, Onderdonk explains, because he was trying to help the non-technical financial staff to understand how the revolving fund worked.

"We walked them through the entire process," he says. "We put the light bulbs in, and we tied the kilowatt savings to the dollar savings, which go back to the endowment to pay that $25,000 loan."

After garnering an $11,000 municipal rebate for using an emerging technology, the project ended up costing $14,000 and allowed the university to save $9000 per year. And it paid for itself in 18 months.

According to Onderdonk, the key to assuring that such a revolving fund works is to use meters to verify energy use. "If you put a meter directly on this variable speed fan that you just put in, you know precisely how much energy that fan is using," he says. "And if you compare it to the metered fan that was in prior, you can see there's a difference."

Caltech started by investing in the lower cost "low-hanging fruit" projects with high potential savings and shorter payback periods--usually up to six years. The quick payback meant that the $8 million revolving fund could finance $30 million in projects between 2008 and 2020.  

Ongoing Savings
Weber State in Odgen, Utah has made a commitment to invest 8% of its endowment, or $5 million, in energy conservation and renewable energy projects that are already saving the school more than $500,000 per year.

The impetus for the university's GRF was the American College and University Presidents' Climate Commitment, which the university signed in 2007. With a commitment to be carbon neutral by 2050, sustainability manager Jake Cain wanted to build a long-term program that would allow the university to achieve its goal.

"I didn't want just a one-time savings of 15% on the energy bill," he says. "I wanted to treat this like an investment."

His idea was to use savings on utility bills to generate more savings, which acts like a savings account with interest that compounds.