programs SECO

History of LoanSTAR Program

The Texas LoanSTAR (Loans to Save Taxes and Resources) Program was initiated by the Texas Energy Office in 1988 and approved by the U.S. Department of Energy (DOE) as a statewide energy efficiency demonstration program. The program uses a revolving loan mechanism allowing it to continue indefinitely and benefit future generations of Texans. The quality controls on all phases of LoanSTAR have made it one of the most successful and best-documented building energy efficiency programs, state or federal, in the United States.

The funding source is federal petroleum violation escrow funds (PVE). LoanSTAR is unique in a number of ways including the acronym for its name (its origins are in the Lone Star State). It's also the nation's largest state-run building conservation program. The loans are targeted for public entities including state agencies, school districts, higher education, local governments and tax-supported hospitals.

In order to comply with the mandate, SECO developed program procedures and guidelines allowing LoanSTAR to not only prove that the financed energy retrofits would pay for themselves, but also to demonstrate that the actual energy savings were being exceeded by more 20 percent of the original savings estimate. Among the program's quality controls were:

  • development of technical energy assessment report guidelines;
  • training of energy engineering consulting firms on audit techniques and guidelines;
  • development of protocols so that each project is metered/monitored to track pre- and post-retrofit energy consumption; and
  • creation of methods for analyzing energy savings from retrofits.

In addition to these steps, program staff followed up with agencies to ensure that retrofits were working properly and assisted with building commissioning for improved operation and efficiency. Consequently, actual measured savings exceeded audit estimates of energy savings; few energy efficiency programs can make this claim.

There have been several changes to the LoanSTAR program since its inception. Initially (1989-1994), loans were made for a period of four years with program paybacks averaging 3.4 years. All major projects had to be metered and monitored for savings verification. In 1995, the loan period was lengthened to eight years, and metering and monitoring became optional for loan recipients with labor costs allowed to be rolled into the loan. Also that year, DOE approved removing the program's "demonstration" label.

In 2001, the loan payback period was extended once again to the current 10-year maximum term.

Performance Contracting and Water Conservation

In 2001, SECO received DOE approval for LoanSTAR to finance energy saving performance contracts and for water conservation retrofits to be included LoanSTAR projects. With these changes, loan recipients may now choose between traditional design/bid/build or design/build retrofits, and water conservation projects may be incorporated into LoanSTAR loans.

LoanSTAR Emissions Reduction

The LoanSTAR program has had a significant impact on environmental pollution from such chemicals as nitrogen oxide (NOx), carbon dioxide (CO2) and sulfur dioxide (SO2). As of January 1, 2017 LoanSTAR-funded projects have prevented the release of 14,921 tons of NOx, 5.2 million tons of CO2, and 11,081 tons of SO2.