Over the past year, there has been a sea change in the recognition of the importance of energy efficiency by facility owners, business leaders, policy-makers and investors: President Obama calls it sexy, venture capitalists are banking on it to be this year’s cleantech darling (investment is up 39 percent), and businesses and homeowners are eager to take on the cash rewards and electricity savings that energy efficiency retrofits promise. For facility managers, energy efficiency improves a company’s bottom line, reduces stress on the electric grid, and is the most cost effective and rapid strategy to accelerate sustainable buildings, businesses and communities. However, despite the rising focus on the energy efficiency sector and proof of retrofits’ payback, implementing large-scale retrofits remain largely off-limits due to high upfront costs.
The lack of customized financing solutions remains a significant impediment to wide-scale adoption of energy efficiency. Prospective customers are typically not interested in using their own capital to fund energy efficiency projects. Research and development initiatives have advanced energy efficiency technologies. But customers need innovative financing solutions to adopt, implement and fund these products.
CalCEF Innovations, the market strategy and public policy arm of the California Clean Energy Fund, recently released a whitepaper report entitled Energy Efficiency Paying the Way: New Financing Solutions Remove First Cost Hurdles (www.calcef.org/innovations/index.htm). This new report, the second in a series supported by CalCEF Innovations, identifies and explores strategies in a case-study approach for developing and financing energy efficiency projects at no first-cost to the industrial or commercial end-user.
Programs of special interest to the green facility community include:
Regional Programs
Property Assessed Clean Energy (www.pacenow.org) programs, which are offered in certain regions of the country, provide facility owners 20-year loans for efficiency projects that are repaid through property tax assessments.
On-bill financing, sponsored by local utilities, can provide 100 percent financing for efficiency projects that are typically less than $250,000 with loan repayments included on the regular utility bill.
Nationally Available Financing Solutions
Metrus Energy offers a new financing structure, the Efficiency Services Agreement (ESA) (www.metrusenergy.com), that covers 100 percent of the upfront and ongoing project costs whereby customer repayment is based on a cost-per-avoided unit of realized energy savings and efficiency performance, i.e., the reduction in operating costs. Earlier this year, Metrus announced a large retrofit project with BAE Systems and ESCO partner Siemens that will annually save $200,000 in utility expenses, more than 1 million kWh of electricity and 30,000 therms of natural gas.
Transcend Equity’s Managed Energy Services Agreement (www.transcendequity.com) finances and implements efficiency upgrades at large commercial properties and takes responsibility for paying property owners’ utility bills.
The financing options highlighted in CalCEF Innovations’ report reflect recent trends in the efficiency marketplace to help facility managers overcome a key barrier to implementing projects: the lack of upfront capital to fund projects. Facility managers can learn firsthand from the examples highlighted in the whitepaper in order to determine a financing strategy that works best to accomplish their retrofit needs. Achieving a lower electricity bill through energy efficiency improvements does not have to involve breaking the bank.
Bob Hinkle
Bob Hinkle is the CEO of Metrus Energy and former Entrepreneur in Residence (EIR) for CalCEF Innovations.
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