Energy Exchange

Investor Confidence Project Aims To Develop Multi-Billion Dollar Energy Efficiency Finance Market

By EDF Blogs / Published: July 17, 2013

This commentary, authored by James Lester, originally appeared on Cleantech Finance.

Last month, we discussed an influential new report by Ceres and the Investor Network on Climate Risk (INCR), Power Factor: Institutional Investors’ Policy Priorities Can Bring Energy Efficiency to Scale. The report detailed several policies that if put in place, could unlock broad-based financing from institutional investors for energy efficiency, a potential several hundred billion dollar investment opportunity.

Among the issues that prevent large scale energy efficiency financing, Ceres and others have found that there is no systematic method to measure the accuracy of the initial predicted energy and financial savings of each project. There is not a robust fundamental way to make sure the upgrades are performing after they have been completed. The Environmental Defense Fund (EDF) and a collection of expert partners are working to change that.

EDF has worked with a variety of industry experts to design a straightforward set of protocols that define a clear road-map from efficiency opportunity to an investment quality project with reliable returns and access to markets. The project, known as the Investor Confidence Project (ICP) hopes to enable a market for investment quality energy efficiency projects, by reducing transaction costs and engineering overhead, while increasing the reliability and consistency of savings. Read More »

Is EnergyRM’s Metered Energy Efficiency Transaction Structure A Game Changer?

By Scott Hofmeister / Published: July 8, 2013

Source: EnergyRM

At EDF we are always on the lookout for innovative clean energy financing models, especially those that complement On-Bill Repayment (admittedly, one of our favorites). When we heard about EnergyRM’s recent financing approach – which uses a combination of an Energy Service Agreement (ESA), innovative measurement and verification (M&V) and utility bill repayment – we had to find out more.

EnergyRM’s Metered Energy Efficiency Transaction Structure (MEETS) went live on the Bullitt Foundation headquarters building last month. The promise of MEETS, developed by Rob Harmon’s EnergyRM, was quickly all over the news, including the New York Times.

Quick Factoid: The name Rob Harmon may be familiar to energy enthusiasts – he pioneered the Renewable Energy Credit (REC) 15 years ago. The REC served to catalyze the renewables industry. Harmon hopes his newest innovation will do the same for the efficiency market.

MEETS relies on EnergyRM’s DeltaMeter, a proprietary energy modeling software, to report energy savings in real time. The DeltaMeter seeks to address a perennial Achilles heel of many energy efficiency transactions: measurement and verification of energy savings. EDF is addressing this same problem head-on by working with stakeholders to establish protocols and standards for efficiency projects through the Investor Confidence Project. This complex problem, which has traditionally been part science and part art, has been impervious to a silver bullet solution. Lots of interested folks are itching to take a look inside the DeltaMeter black box and see how EnergyRM plans to solve it. Read More »

Also posted in Energy Efficiency, Grid Modernization / Read 1 Response

On-Bill Repayment in California: Two Steps Forward, One Step Back

By Brad Copithorne / Published: July 2, 2013

This commentary originally appeared on EDF’s California Dream 2.0 Blog

Last week, the California Public Utilities Commission (“CPUC”) issued a proposed decision with the final implementation rules to create the nation’s first On-Bill Repayment (“OBR”) program for commercial properties. If properly constructed, the program is expected to allow building owners to finance clean energy retrofits with third party capital and repay the obligation through their utility bills.

The good news is the CPUC’s proposed decision contains the vast majority of the program elements necessary to create a flourishing financing market for energy efficiency and renewable projects. The CPUC ordered robust disclosure to tenants and property owners of any OBR obligation in place, required a centralized program administrator to reduce expenses for market participants, required an equitable share of partial payments between the utility and the lender and agreed that nonpayment of an OBR obligation will result in the same collection procedures from the utility as nonpayment of an electricity charge.

Unfortunately, constructing a successful financing program is much like building a boat. A boat with 90% of its hull in place will not travel very far. The proposed decision appears to also have a potentially fatal flaw. The CPUC has required all subsequent owners and tenants of a property to provide consent to ‘accepting’ the OBR obligation, but does not specifically state what will happen if the consent is not given.

OBR can work for lenders when it significantly reduces risk and simplifies the underwriting decision. ‘If the lights are still on, then the lender is getting paid’ is a simple rule that will provide significant comfort to ratings agencies and credit committees. Downtown office buildings and suburban shopping malls are foreclosed on a regular basis, but in almost all cases the lights stay on. If an OBR obligation is sure to be paid — even after a foreclosure — the availability of investment and cost of financing will improve dramatically. Read More »

Also posted in California, Energy Efficiency, Renewable Energy, Utility Business Models / Read 2 Responses

NYC’s Storm Preparedness Means Rethinking How We Make And Use Energy

By Andy Darrell / Published: June 20, 2013

Source: Metamatic/Flickr

This commentary, authored by Andy Darrell, originally appeared on EDF Voices.

Last Tuesday, I caught a ferry from the lower Manhattan waterfront (just south of the substation that shorted out so dramatically in the midst of Hurricane Sandy) to the Brooklyn Navy Yard. There, Mayor Michael Bloomberg unveiled his vision of a New York that will be far better able to withstand the battering from giant storms that, thanks to climate change, are likely to arrive with increased frequency and fury.

The Mayor began by noting some stark facts:

“We expect that by mid-century up to one quarter of all of New York City’s land area, where 800,000 residents live today, will be in the floodplain.”
“[Wi]ithin FEMA’s new 100-year flood maps there are more than 500million square feet of New York City buildings – equivalent to the entire city of Minneapolis.”
“About two-thirds of our major substations and nearly all the city’s power plants are in flood plains today.”
“A day without power can cost New York City more than a billion dollars.”

A lot of media attention in the wake of the speech focused on Bloomberg’s call for levees and seawalls to keep rising waters at bay. But embedded in the address was also an ambitious but practical rethinking of how New York City makes and uses energy. The plan frames a future in which solar, wind and microgrids play a much larger role in the city: Read More »

Also posted in Climate, Energy Efficiency, New York / Tagged Superstorm Sandy | Comments are closed

How Policy Can Drive Progress In The Energy Efficiency Market

By Kate Zerrenner / Published: June 20, 2013

Energy efficiency is one of the fastest and most affordable ways to reduce harmful pollution. Why, then, aren’t we financing more energy efficiency upgrades?

Well, simply put, there are quite a few barriers that must be addressed and broken down before energy efficiency skyrockets. Yes, there are already many buildings that have set the bar high for others to follow, but some investor and lender hesitancies still exist that we need to overcome.

Furthermore, the efficiency market cannot create itself. And it is currently stifled, despite investors’ eagerness to take part.

The problem, as the investment community sees it, is that there is no secondary market for energy efficiency loans. In other words, the pool of loans is currently not large enough to make these investments worthwhile for institutional investors. Furthermore, there is a lack of uniform standards for energy efficiency loans, limited data on loan and project performance and an insufficient pipeline of projects. There are also challenges to bringing efficiency to scale, namely:

the split incentive—disconnect between the building owner and the residents, who actually pay the utility bill;
utility disincentives—utilities generally make money by selling more energy, not by reducing wasted energy; and
limited information available to consumers on their energy use.

Also posted in Energy Efficiency, Investor Confidence Project / Comments are closed

Investor Confidence Project Releases Enhanced Energy Efficiency Protocols

By EDF Blogs / Published: June 14, 2013

This blog post was written by guest blogger Matt Golden, Senior Energy Finance Consultant.

Source: City-Data.com

The EDF Investor Confidence Project (ICP) is a multi-year initiative to help spur growth in the commercial energy efficiency retrofit market by reducing transaction costs and engineering overhead, and increasing the reliability and consistency of savings. EDF has worked with a cross-functional team of industry experts to assemble existing technical standards and best practices into a straightforward Energy Performance Protocol (EPP) that defines a standard investment quality energy efficiency project to enable deal-flow and investment.

In November of 2012, we released the initial version of the Energy Performance Protocol for Large Commercial (EPP-LC). We received encouraging reviews from industry allies and many industry leaders have committed to join our growing ICP Ally program, a broad based network of organizations that helps us develop, test, and implement the ICP Protocols.

New Release: Large Commercial – Version 1.1

Building on our initial success and market feedback, ICP is now releasing a new and updated version 1.1 of the EPP-LC, which incorporates a wide array of important improvements that will streamline the project development process and improve results.

Our ICP team is incredibly grateful to all individuals that contributed their time and energy to this process resulting in a more streamlined protocol, especially our committed team of experts who dedicated untold hours and contributed a wide array of industry, research, and public sector experience.