Financing Energy Efficiency Upgrades In Commercial Properties

An Update

Last September, I wrote about some of the barriers that commercial building owners face when they want to finance energy efficiency upgrades for their properties.  The post also discussed an innovative new strategy called an Energy Services Agreement (ESA) that removes several of these barriers.  Since that time, several of the companies mentioned in that post have continued to innovate and make great progress.  I thought it would be useful to provide an update on some of their key accomplishments.

Transcend Equity

Yesterday, Transcend Equity (Transcend) announced that they are being acquired by SCIenergy, a leading energy management solutions company.  This acquisition should provide Transcend with access to additional technology, customers, capital and marketing resources.  EDF is excited to see what the combined company can accomplish.

Transcend recently made a commitment to fund $100 million of energy efficiency (EE) projects as part of the Better Buildings Challenge and broke ground on an ESA transaction in New York City.  Transcend is partnered with Mitsui to provide equity capital for their projects.

Abundant Power

Abundant Power is a diversified EE finance firm that works on a variety of products including Property Assessed Clean Energy (PACE), On-Bill Finance and revolving loan funds in addition to the ESA structure.  Recently, they have helped Alabama establish a $60 million revolving loan fund and Washington, DC establish a commercial PACE program that could finance up to $250 million of EE upgrades.  Abundant Power has also committed $100 million of financing as part of the Better Buildings Challenge.

Green Campus Partners

Green Campus Partners (GCP) has arranged over $350 million in EE financings for public sector properties and completed two ESA transactions in 2011 for private universities.  GCP committed to Better Buildings Challenge $100 million of EE financings in 2011 and another $200 million in 2012.  The firm exceeded its target in 2011 and expects to do the same in 2012.

GCP has also worked with EDF on the Clean Heat NYC campaign and recently signed a major development agreement with St. Barnabas Hospital to finance their conversion away from dirty heating oil.

Groom Energy

Groom is a Boston based EE project developer that offers ESA-style financings for customers.  To date they have been most active in the commercial and industrial space.  Groom is also a thought leader in the Enterprise Smart Grid which uses advanced technology to monitor and reduce energy usage behind the meter.  This morning, Groom published a comprehensive report on the topic.

Metrus Energy

Metrus Energy (Metrus) has had a very productive start to 2012 including a recent high-profile ESA project selection and a pipeline of advanced stage projects that totals $50 million. Metrus has broadened the geographic diversity of its pipeline which now spreads across the commercial, industrial and institutional markets, with active projects under development in the financial institutions, media and entertainment, telecommunications, hospital, higher education and non-profit sectors. Metrus is on-pace to exceed its $75 million investment commitment under the Better Buildings Challenge program. On the project implementation front, Metrus is actively advancing its existing ESA program with BAE systems with the addition of several multi-million dollar projects at new BAE sites. BAE Systems is a global company engaged in the development, delivery and support of advanced defense, security and aerospace systems.  Metrus has also expanded its base of Energy Services Companies (ESCOs), contractors and energy utility channels by adding 25 new partners.             

Carbon Lighthouse

Since launch in 2010, Carbon Lighthouse (CL) has completed projects at 70+ office towers, schools, community centers and industrial facilities in California and Oregon. CL achieves its mission by combining energy efficiency, retro-commissioning, demand response, solar and competition for pollution permits into one simple package for customers.  CL primarily provides projects on a deferred compensation basis similar to an ESA, and can also provide customers with third party direct ESAs or utility On-Bill Finance and Repayment programs.

Conclusion

EDF has worked with each of these five firms and we are encouraged by their energy, focus and innovation.  Each firm has a somewhat different business strategy and mix of products, but the EE market should be large enough to support a variety of business models.  We look forward to continuing to work with these firms and others as this critical market grows in the coming years.