LoanSTAR Revolving Loan Program

The Texas LoanSTAR (Saving Taxes and Resources) low-interest revolving loan program finances energy-related cost reduction retrofits for state, public school, college, university, and non-profit hospital facilities. Borrowers repay loans through the stream of cost savings realized from their energy cost-reduction projects. The LoanSTAR Program Administrator should be contacted for information on current loan interest rates.

As of May 2020, LoanSTAR has funded over 325 loans totaling over $545 million. 

Eligible Projects

Energy cost reduction measures (ECRMs) financed through the program include, but are not limited to, energy-efficient lighting systems; high-efficiency heating, ventilation, and air conditioning systems; energy management systems; energy recovery systems; building shell improvements; load management projects; and systems commissioning. Utility dollar savings are the most important criterion; therefore, ECRMs are not limited to measures that save energy. The evaluation of on-site renewable energy options (e.g., solar water heating, photovoltaic systems, small wind turbines) is encouraged in the analysis of potential projects.

All LoanSTAR projects must be analyzed by a Professional Engineer and meet other criteria specified in the technical guidelines, which can be found on the program website. Projects financed by LoanSTAR must have an average simple payback of 10 years or less.

Process

Each April and October, the State Energy Conservation Office (SECO) publishes a Notice of Loan Fund Availability and request for applications of LoanSTAR loans. The notice is published in the Texas Register, on the Comptroller’s website, and on the SECO Funding & Incentives webpage. Applications are scored by a review committee, with the highest scoring applicants receiving funding commitments first.  Scoring is based largely on the following considerations.

1. Information provided in the application including the application and one of the following: Engineering Assessment Report / Utility Assessment Report, Preliminary Energy Assessment, or Project Assessment Commitment;
2. Location of proposed project; and
3. Public access to the projects’ energy savings information.

Selected institutions will be asked to sign a Memorandum of Understanding (MOU) agreeing to complete and submit an Energy Assessment Report (EAR) or a Utility Assessment Report (UAR) within 120 days. With an executed MOU, SECO reserves funding for the institution.

SECO performs design review, design specification review, and on-site construction monitoring at 50% and 100% completion of each project phase.  Repayment of the loans does not begin until after construction is 100% completed and it has been determined that the project was designed and constructed in accordance with the LoanSTAR Technical Guidelines.

More information, including project applications and a detailed program guidebook, are available on the program website above.