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Applications must be submitted by noon on Wednesday 15 October 2014

Dear Vice-Chancellor or Principal

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

1. Higher education institutions (HEIs) are invited to submit applications for funding from the fourth round of the Revolving Green Fund (RGF4).

2. The fund is available for HEIs receiving HEFCE funding, and is not open to further education colleges or other providers. If you are unsure whether your institution is eligible, please contact us.

3. RGF4 is provided in partnership with Salix Finance Ltd, an independent publicly funded company which provides the public sector with loans for energy efficiency projects. This collaboration has allowed us to make RGF4 the largest round of the fund to date, and to benefit from Salix’s expertise in this field.

4. Applications must be submitted by noon on Wednesday 15 October 2014.

5. Salix and HEFCE are providing up to £34 million in recoverable grants for projects that achieve cost savings and reduce carbon emissions. Funds will be targeted in two areas:

  •  small-scale energy efficiency programmes
  • large-scale projects which may be retrofit, new technology, or other projects such as space rationalisation which meet the objectives of the fund.

RGF4 will accept applications for water-saving projects, since there is an increasing focus on water management and significant savings are achievable.

6. HEIs are not required to make an institutional contribution, and are advised to seek full funding for their projects up to the limits set out below.

History of the Revolving Green Fund

7. The Revolving Green Fund (RGF) was established to help HEIs achieve cost savings and reduce carbon emissions, and has so far provided £61 million of repayable grants. ‘Revolving Green Fund 3: Application assessments and outcomes’, published in July 2013, sets out details of the 156 projects funded under RGF3. ‘Evaluation of rounds 1 to 3 of HEFCE’s Revolving Green Fund’, published today on our web-site includes the following findings.

  1. RGF projects will deliver annual savings of £19 million, releasing funds for teaching and research.
  2. The average pay-back period for projects is four and a half years.
  3. HEIs applying to or receiving RGF funding have reduced carbon emissions by 7 to 10 per cent more than other HEIs.
  4. Annual carbon savings from RGF projects of 100,000 tonnes amount to about 12 per cent of the sector’s 2020 carbon reduction target.

8. We are responding to feedback received on the process: for example, by allowing a wider range of small-scale projects and by increasing the sums available. The overall structure of the RGF remains broadly similar, however.


Strand 1: Small-scale energy efficiency programmes

9. We are seeking applications for programmes of relatively small-scale measures to improve energy efficiency. One application per HEI may be made for a programme consisting of one or more projects. The minimum and maximum application values per HEI are £50,000 and £750,000.

10. Applicants may apply either for a recoverable grant, or a grant that can be recycled within the institution for other appropriate projects. Recyclable grants will be returned to the fund at the point when an institution can find no further appropriate projects or within six years of notice being given, whichever is earlier. To ensure that funds are used for the most efficient proposals, programmes as a whole must meet the following criteria:

  • a maximum eight-year payback period
  • a cost per tonne of carbon dioxide saved (‘lifetime cost of carbon’) of £200 or less.

Where an institution seeks funding for automatic metering, the energy efficiency projects and metering combined must meet the criteria detailed above.

11. 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 is at Annex D.

12. Programmes as a whole must meet the criteria; individual projects do not have to.

13. 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 by 31 December 2016.

Strand 2: Large-scale retrofit, new technology, renewables or other projects with a specific intervention to reduce carbon emissions

14. We are also seeking applications for whole-building or campus-wide large-scale projects that will save money and reduce carbon emissions. These projects will provide evidence of what works and promote a culture of carbon reduction.

15. One application may be made per HEI. There is a minimum application value of £750,000 and a maximum application value of £2 million per project.

16. 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; exceeding Building Regulations; or in terms of improvements in carbon emissions relative to floor area. Where applicable, we would also expect to see considerably more efficient use of space following completion of the project.

17. There is no maximum payback period for applications to the large project strand, but payback period is one of the selection criteria set out at paragraph 24.

18. The RGF-funded elements of any exemplary retrofit project must be completed by 31 December 2016. We recognise that particular projects may take longer than this to complete, or may include phases that extend beyond this period. Where the overall project will take longer, applications can be made for specific elements of a larger project, provided that the elements funded by RGF4 are to be completed by 31 December 2016.

How to apply for RGF4

Who and what is eligible?

19. The fund is available for HEIs receiving HEFCE funding, and is not open to further education colleges or other providers. Projects starting after 1 January 2015 are eligible for funding.

20. Government advice on carbon accounting conventions means that it will not be possible to fund projects that benefit from the renewable heat incentive or feed-in tariff.

The application process

21. Application forms are available on the Salix web-site, and must be submitted to Salix by noon on Wednesday 15 October 2014. Sample application forms are provided at Annexes A and B.

22. Applicants will be notified of the outcome of the selection process in January 2015. The first payments will be made to successful applicants from April 2015. Applicants should be aware that we will share good practice by publishing details of successful applications.

Assessment criteria and process

23. 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 and establishing a low-carbon culture.

24. The assessment criteria for the large scale 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 and establishing a low-carbon culture
  • potential for replication across the sector and how the learning will be captured and disseminated.

25. It is expected that approximately half of the £34 million available will be allocated to large projects. HEFCE and Salix may vary this on the advice of the advisory group and the technical advisers (currently Atkins consultants).

26. The process will be reviewed by the RGF advisory group, which will have a role in assessing the large project applications. HEFCE appoints members primarily by seeking nominations from representative groups, to provide a range of skills and perspectives.

Financial and monitoring arrangements

27. RGF grants below £750,000 (small-scale projects) will not require HEFCE borrowing approval. For grants above £750,000 (large projects), borrowing consent is required where total annual servicing costs would exceed 4 per cent. Where approval is required for large RGF projects, the institution should indicate in its application for RGF funding the revised borrowing threshold required (see Annex F of the Financial memorandum, to be replaced on 1 August 2014 with the Memorandum of assurance and accountability). Any request for borrowing will be considered automatically alongside the application for funding.

28. The funds will be paid to institutions on the basis of a payment profile agreed at the time of award. They will be repaid over a fixed period, through a reduction in the HEFCE grant to the institution. For both large and small-scale projects, repayments will be made in eight equal half-yearly instalments, beginning in May 2017 and concluding in November 2020.

29. Progress will be monitored by Salix, using light touch procedures similar to previous rounds of RGF.

30. 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 RGF4 support does not constitute unlawful state aid. This is unlikely, 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

31. We expect institutions to demonstrate that they have considered the equality impact of their project, including positive steps that can be taken to eliminate discrimination, advance equality of opportunity and foster good relations. This includes a consideration of all the protected equality characteristics (age, disability, gender identity, pregnancy or maternity, religion or belief, race, sex, and sexual orientation) in line with the Equality Act 2010. Guidance on how to do this proportionately is available from the Equality Challenge Unit.

Freedom of Information Act 2000 and Environmental Information Regulations 2004

32. HEFCE is subject to the Freedom of Information Act 2000 and the Environmental Information Regulations 2004, 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.

33. 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 information is intended to remain confidential. Applicants 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.

34. Further information about freedom of information and the EIRs can be found on the Information Commissioner’s web-site.

Further information

35. If you have queries, please contact Gordon Franks at HEFCE, tel 0117 931 7001, e-mail, or Lucinda Green at Salix, tel 0207 406 7635, e-mail

Yours sincerely

Professor Madeleine Atkins

Chief Executive

Date: 19 June 2014

Ref: Circular letter 18/2014

To: Heads of HEFCE-funded higher education institutions

Of interest to those
responsible for:

Estates, Finance, Sustainable development