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Dear Vice-Chancellor or Principal

Revolving Green Fund: Invitation to apply for a third phase of funding 

1. Higher education institutions (HEIs) are invited to submit applications for funding from the third phase of the Revolving Green Fund (RGF). Applications must be submitted by noon on Friday 22 February 2013.

2. In this third phase (RGF3), we will make available up to £20 million in recoverable grants for projects that achieve cost savings as well as reducing carbon emissions. Funds will be targeted in two areas: small-scale energy efficiency programmes, and retrofit projects. HEIs are not required to make an institutional contribution. 

History of the Revolving Green Fund

3. The RGF was established to help HEIs in England reduce carbon emissions. It has made a major contribution to carbon reduction as demonstrated in an independent evaluation (available at The first phase of RGF was managed by Salix Ltd. The second phase was managed by HEFCE and consisted of two strands, small-scale energy efficiency programmes and exemplary retrofit projects. Institutions were able to apply for funding in each of the two strands. Funds were repayable over a fixed period through a reduction in the HEFCE grant to an institution. The repayments were phased so that they would be financed by savings generated by the investment.

4. This third phase of RGF is similar to the previous phase in that it consists of the same two strands, with funds repayable over a fixed period through a reduction in the institution’s HEFCE grant. The eligibility criteria for the small-scale energy efficiency programme have been relaxed and some changes have been made to the application forms.


Strand 1: Small-scale energy efficiency programmes 

5. We are seeking applications for programmes of relatively small-scale measures to improve energy efficiency. One application may be made per HEI for a programme consisting of one or more projects. There is a minimum application value of £50,000 and a maximum application value of £500,000 per HEI.

6. To ensure that funds are used for the most efficient proposals, programmes as a whole must meet the following criteria:

  • a maximum 6.5 year payback period
  • a cost per tonne of carbon dioxide saved (‘lifetime cost of carbon’) of £125 or less (see Note 1).

Where an institution requests funding for automatic metering (see paragraph 8 below), the capital costs to be used when calculating the programme’s payback period and lifetime cost of carbon should only take account of the projects that directly reduce energy consumption, and must exclude the cost of the metering project. The calculation of the relevant capital cost is therefore as follows: 

Relevant capital cost = Total programme cost - metering cost

7. HEFCE’s aim in modifying the criteria from previous rounds is to give institutions greater flexibility in the choice of projects, and to recognise that many institutions have already implemented the lower payback energy efficiency measures. The payback period and lifetime cost of carbon for individual projects do not have to meet the criteria; only the programme as a whole, excluding any metering project, must comply.

8. Up to 25 per cent of the total programme costs may be spent on automatic meter reading. As described above, such expenditure does not form part of the calculation of the payback period or lifetime cost of carbon for the programme.

9. Where an institution plans a programme of small-scale energy efficiency projects, we will assess them as a whole and normally fund all or none of the projects within the programme. The investment in small-scale energy efficiency programmes must be completed within 18 months of the date of award.

Strand 2: Exemplary retrofit projects

10. We are also seeking applications for whole-building or campus-wide retrofit projects that will reduce carbon and act as exemplars. These projects will provide evidence of what works and will form a research base for new and existing technologies. They will also promote skills development and market growth in relevant technologies, as well as cultural and behaviour change.

11. We intend to fund around 10 projects of this type. Only one application will be accepted per HEI. HEFCE will contribute a maximum of £1 million per project.

12. Applications should demonstrate how the project will act as an exemplar, and how the learning will be captured and disseminated. Institutions can decide how to demonstrate the project’s merit: for example through the Building Research Establishment Environmental Assessment Method; through Display Energy Certificate or Energy Performance Certificate ratings; or in terms of improvements in carbon emissions relative to floor area. Where applicable, we would also expect to see a considerably more efficient use of space following completion of the project.

13. There is no maximum payback period for applications to the exemplary retrofit strand. However, the payback period will form part of the overall selection criteria.

14. The HEFCE-funded elements of any exemplary retrofit project must be completed within 24 months of the date of award. We recognise that particular projects may take longer than 24 months to complete, or may include a number of phases that span longer than 24 months. While the overall project may take longer, applications can be made for specific elements of a larger project, provided that the elements for which HEFCE funding is sought will be completed within 24 months.

How to apply for RGF3

Who and what is eligible?

15. All HEFCE-funded HEIs are eligible to apply. Projects starting after 1 May 2013 are eligible for funding.

16. In line with the Department for Environment, Food and Rural Affairs’ guidance to companies for measuring and reporting greenhouse gas emissions, projects that benefit from Feed-in Tariffs or Renewable Obligation Certificates are eligible for funding. In June 2011 the Department of Energy and Climate Change advised that organisations may claim an emissions reduction from renewable electricity projects that enjoy such benefits under this guidance. Reductions arising from such projects can therefore count towards institutional carbon targets.

The application process

17. Applications must be made via the HEFCE extranet ( by noon on Friday 22 February 2013. Sample application forms are provided at Annexes A and B. We will be writing to all heads of institutions providing details on how to access the online form. A copy of this letter will also be sent to Heads of Estates.

18. Applications can be edited on the extranet at any time until the final section is completed and saved. When an institution completes and saves the final section of the form, the application is deemed to have been submitted to HEFCE, and applicants will receive an acknowledgement e-mail from HEFCE within five working days.

19. Applicants will be notified of the outcome of the selection process in May 2013. The first payments will be made to successful applicants from June 2013. Applicants should be aware that we will publish details of successful applications in order to share good practice.

Assessment criteria and process

20. The assessment criteria for the small-scale energy efficiency programmes will be:

  • clarity and quality of information submitted
  • carbon and financial savings, payback period and lifetime cost of carbon savings
  • arrangements for project management
  • institutional commitment to reducing carbon emissions, influencing behaviour and establishing a low-carbon culture.

21. The assessment criteria for the exemplary retrofit projects will be:

  • clarity and quality of information submitted
  • predicted carbon savings, financial savings and payback period
  • extent to which the project will act as an exemplar
  • project management and arrangements for managing risk
  • institutional commitment to reducing carbon emissions, the efficient use of space, influencing behaviour and establishing a low-carbon culture
  • benefits for the sector – potential for replication across the sector and plans for how the learning will be captured and disseminated.

22. We have contracted external expertise to help assess the applications, including validation of the predicted savings. Applicants should note the importance of providing full, clear but succinct information to assist the assessors in reviewing the proposed projects.

23. The process will be overseen by the RGF advisory group, which will have a role in assessing the applications for exemplary retrofit projects. Members were appointed primarily by seeking nominations from representative groups, to provide a range of skills and perspectives.

Financial and monitoring arrangements

24. It is expected that up to £10 million of the available £20 million will be made available for exemplary retrofit projects. This may be varied on the advice of the advisory group.

25. The funds will be paid to institutions on a payment profile agreed between HEFCE and the institution at the time of award. They will be repaid over a fixed period through a reduction in the HEFCE grant to the institution. The repayments will normally be made in eight equal, six-monthly instalments in May and November, starting 18 months after the date of award for small-scale energy efficiency programmes and 24 months after the date of award for exemplary retrofit projects. RGF3 funding allocations should be included in any notification to HEFCE of borrowing limits because there will be a clear intention and timescale for repayments.

26. Progress will be monitored by HEFCE through a brief report twice a year.

27. HEIs may be able to develop new revenue streams as a result of work undertaken using funds allocated from the RGF. As a public body, HEFCE must ensure that RGF3 support does not constitute unlawful state aid. This is unlikely to be the case if products and commercial partners are procured according to public procurement rules. Further advice is available, in advance of application, from Stephen Butcher, HEFCE Head of Procurement (tel 0117 931 7425, e-mail

Equality and diversity

28. The Equality Act 2010 requires HEIs to comply with the Public Sector Equality Duty and to publish information annually demonstrating how they have done so. This includes a consideration of the equality impact of a project, a process formally known as equality impact assessments. Projects for which RGF support is sought may require such analyses. There is guidance on undertaking equality analyses on the Equality Challenge Unit’s web-site (

Freedom of Information Act 2000 and Environmental Information Regulations 2004

29. HEFCE is subject to the Freedom of Information Act 2000 (FOI) and the Environmental Information Regulations 2004 (EIRs), which give a public right of access to information held by a public authority. Much of the information provided to us in applications for RGF funding will fall within the meaning of ‘environmental information’ as defined in the EIRs. Thus if a valid request is received, all applications, communications between HEFCE and applicant HEIs, information arising from this work, and outputs of projects are subject to disclosure. We will comply with such requests in accordance with the relevant legislation and our own policies.

30. Institutions can, if they wish, provide potentially sensitive information (such as trade secrets or information relating to commercial interests) in a separate annex attached to the application form. This approach will highlight to us that you want the information to remain confidential. You should indicate to us the nature of the sensitivity. Where possible we will seek the views of applicants before disclosing this information. The information provided in the annex can only be withheld if it is legal to do so, so HEFCE may be obliged to disclose. We will disclose upon request all information in the main application document.

31. Further information about FOI and EIR can be found on the Information Commissioner’s web-site (

Further information

32. If you have queries please phone Gordon Franks (tel 0117 931 7001) or Andrew Smith (tel 0117 931 7001), or e-mail

Yours sincerely


Sir Alan Langlands

Chief Executive



1. The lifetime cost of carbon is the lifetime carbon saving of an energy-saving measure and is calculated using the project capital cost, the annual carbon saving and the relevant persistence factor (these change for different technology types). A worked example is provided at Annex C, and a list of persistence factors compiled by Salix Finance Ltd is at Annex D.

Date: 15 November 2012

Ref: Circular letter 29/2012

To: Heads of HEFCE-funded higher education institutions

Of interest to those
responsible for:

Estates, Finance, Sustainable Development

Enquiries should be directed to:

Gordon Franks, tel 0117 931 7046, e-mail