The Ford Motor Company Fund recently awarded students at the Erb Institute a $50,000 grant in order to establish a Revolving Energy Fund (REF). The Erb Institute for Global Sustainable Enterprise, founded in 1996 at the University of Michigan, has selected Graham Brown, Mike Elchinger, and Ryan Flynn to help the development of the fund, along with Andy Lubershane from the Department of Economics. The four masters candidates will be designing an optimization financial model for the REF.
The REF is part of a larger $4.4 million program, helmed by the non-profit Clean Energy Coalition, that distributes seed money from the Michigan Public Services Commission. REFs are sustainable pools of capital that finance energy upgrades and collect returns on the money saved from utility bills, then, the extra funds are used to support future energy efficiently upgrades on new projects. The idea is that energy efficiency is, in the long term, economically beneficially, and that a specific source of money can be used to facilitate those building innovations.
The initial $50,000 the students at The Erb Institute are managing will be used to make municipal buildings more energy efficient in eight places that Michigan State Housing Development Authority has dubbed Cities of Promise, which include Detroit, Flint, Pontiac, Saginaw, Benton Harbor, Hamtramck, Highland Park, and Muskegon Heights.
The City of Ann Arbor, home to the University of Michigan, has been successful implementing an REF. Since the city’s 1998 REF has been established, $500,000 of initial capital has resulted in $1.4 million in energy savings. Other cities, such as Portland, Ore. have set up similar programs, for low-income housing residents. If The Erb Institute manages the Ford contribution successfully, REFs may prove to be a viable alternative for other areas in the nation facing severe budget deficits.