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Financing Green Projects

The views expressed are those of the author and do not necessarily reflect the views of ASPA as an organization.

By Aaron Rubardt
December 13, 2019

While confronting climate change is a key priority for King County, resource conservation projects often must compete with other critical community priorities for limited funding in our biennial budget cycle. To overcome this hurdle, King County established the Fund to Reduce Energy Demand (FRED), which utilizes the county’s credit rating and access to debt markets to help agencies secure up-front capital to support initial conservation investments. 

Under FRED, the county provides access to capital to county divisions through the issuance of bonds for capital projects, which will reduce energy use. Energy, water, fuel, solid waste and other potential projects that will result in a financial payback to the county are eligible for the program. Resulting utility bill savings are then used to pay back the bonds.  

As of 2018, King County’s internal FRED program has funded 18 projects, including lighting retrofi­ts and a solar panel installation, totaling approximately $3.5 million dollars of investments which are forecast to result in $500,000 dollars in annual savings.

How It Works

FRED projects are proposed by agencies as part of the biennial budget process. A committee of budget and technical staff reviews the projects and asks questions to each proposer to gain confidence in the viability and calculations behind each project. After approval by the committee, the proposals are formally presented with each agency’s proposed budget for consideration by the County Council. 

After approval of the county’s budget and refinement of the project scopes and budgets based on available utility rebates, the county then secures capital through a bond sale for the projects.

After the bond funds are secured and released to the agency, the agency is obligated to make loan repayments each year. Each agency is responsible for management and implementation of all aspects of its projects. 

County staff work to ensure the debt service payments are paid from the appropriate budget of each participating agency. They also ensure the debt payments are less than the pre-project estimated utility bills and any savings beyond the debt service resulting from the project(s) are retained by the agency, providing an incentive to engage in the program. Project savings are measured and verified after completion based on actual consumption data and verification by local utility staff or service providers.

Successful Projects

The FRED program funded a comprehensive retrofi­t of light fi­xtures to LED technology at three solid waste transfer stations at a cost of $109,000 (with a $50,000 utility rebate). With annual savings of 249,800 kWh and $19,900, this project had a 2.9 year payback, far less than the 10+ year expected life of the new lights.

In addition, the King County Road Services Division used the FRED loan program to support LED lighting replacements at six road maintenance facilities.

Expanding the Program to Neighboring Cities

In 2018, King County invited local cities, which face similar barriers to fi­nancing resource ef­ficiency and renewable energy projects, to participate in the FRED program. Participating cities are subject to the same requirements as County agencies, which include demonstrating that the projects will save money and pay for the loans through utility savings over a 10 year period. Commitments to repay the loan are secured through formal agreements with participating cities.

Author: Aaron Rubardt is the Deputy Budget Director for King County. He has worked with the County for over a decade with a focus on financial management, planning and risk mitigation. His email is [email protected].

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