Francisco’s announcement
last week<\/a> that it plans to spend $150 million greening up homes, comes a new report<\/a> that studies a slew of other innovative ways to finance energy
efficiency improvements for all types of buildings.<\/p>\n
<\/p>\n
It’s no big surprise that the key to ramping up the energy efficiency industry and <\/p>\n Energy efficiency “immediately saves money for end-users, <\/p>\n Yes, you read that right—CalCEF is a non-profit VC, a product <\/p>\n The best known such program is Property Assessed Clean <\/p>\n While that can work well for middle and upper-middle class <\/p>\n “High upfront costs are preventing large entities from <\/p>\n That led CalCEF to investigate possible solutions to the <\/p>\n One workaround is something called on-bill financing. For <\/p>\n Best of all, the loans carry zero percent interest, though <\/p>\n “It has significant potential as it’s something customers <\/p>\n Another cool—and I mean literally cool—utility-related <\/p>\n The system, called the Ice Bear<\/a> and made by a Windsor, Colo., company called Ice Energy<\/a>, is not new. What is new is <\/p>\n Last month, the Southern California Public Power Authority <\/p>\n Building owners benefit from lower electricity bills while <\/p>\n But for really big retrofit projects—those involving large <\/p>\n One is being pioneered by one of the report’s authors, Bob <\/p>\n Metrus finances and manages the energy efficiency retrofit <\/p>\n “We lock in the price per unit of energy saved during the <\/p>\n Metrus, which recently completed its first project for a <\/p>\n The customer, of course, continues to benefit from the <\/p>\n The company Transcend <\/p>\n “Everyone talks about what a great opportunity energy <\/p>\n At last, the financial creativity appears to be catching up Related Links:<\/strong><\/p>\n Obama announces $3.4 billion in smart grid investments<\/a><\/p>\n Dr. Stephen Leeb is easily duped by deniers<\/a><\/p>\n
fostering technological advances is no-money-down financing so building
owners
can avoid the capital costs of retrofits. And that’s exactly what the California Clean Energy Fund<\/a> (CalCEF) is working toward.<\/p>\n
improves the bottom line for companies, reduces local exposure to electricity
grid outages and offsets the need for new power plants,” wrote the authors of
the report from the <\/a>CalCEF, a non-profit venture capital outfit based in San Francisco.
“Yet, efficiency upgrades and their respective financing options are often out
of reach for most end-users, as the initial capital cost exceeds near-term
savings.”<\/p>\n
of the California energy crisis of 2000-2001—remember Enron?—that resulted
in the bankruptcy of Pacific Gas and Electric, Northern California’s dominant
utility. As part of the bankruptcy settlement, CalCEF was created to accelerate
energy innovation and was seeded with $30 million from PG&E.<\/p>\n
Energy, or PACE, in which cities float bonds to finance retrofits and
homeowners pay back the cost through a surcharge on their property tax bills
over 20 years.<\/p>\n
homeowners in environmentally conscious communities, PACE is not as useful for
commercial buildings, office towers, and industrial sites, whose owners may be
solely motivated by the bottom line, according to the CalCEF report.<\/p>\n
addressing energy inefficiencies,” says Paul Frankel, the managing director of
CalCEF Innovations, the organization’s initiative that focuses on developing
green energy financing and policy.<\/p>\n
dollar dilemma, some of which are currently being implemented.<\/p>\n
instance, San Diego Gas & Electric will finance up to $100,000 in energy efficiency
retrofits for commercial customers (and up to $250,000 for school and
government buildings). Recipients then pay back the loans through a surcharge
on their monthly utility bill.<\/p>\n
business customers have to repay them in five years. In the first two years of
the program, San Diego Gas & Electric <\/strong>financed 180 retrofits and has another 100 in the queue. Over the next two
years, the <\/strong>utility will make <\/strong>$41.5 million available <\/strong>for on-bill retrofits.<\/p>\n
understand and like,” says Frankel. “The challenge right now is that because
utilities are not banks, most programs don’t go beyond five years for the loan
and cap the size of projects, which limits what you can do.”<\/p>\n
green financing scheme involves freezing water at night when electricity demand
and rates are low. During the heat of the day—when power demand spikes—the
melting ice cools the refrigerant of a commercial building’s air conditioner so
it doesn’t have to consume electricity to run a compressor.<\/p>\n
that some utilities are financing the installation of Ice Bears in commercial
buildings as way to cut electricity use on hot days when everyone flips on
their air conditioning.<\/p>\n
announced a deal with Ice Energy to reduce peak demand by 53 megawatts by
installing Ice Bears throughout the Southland. Under such distributed
generation programs—in utility geek speak they’re called “Aggregated
Deployment of Thermal Energy Storage Systems”—the utility owns the Ice Bears
much like it would a conventional power plant.<\/p>\n
the utility lowers its costs and its greenhouse gas emissions. And in
California, such systems can maximize the use of wind farms, which tend to
generate most of their electricity at night when the Ice Bears need power to
freeze water.<\/p>\n
industrial facilities and millions of dollars—other even more creative <\/strong>financing models are emerging.<\/p>\n
Hinkle, an entrepreneur-in-residence at CalCEF and chief executive of a startup
called Metrus Energy<\/a>.<\/p>\n
for the corporation. The customer repays the cost over the life of the
contract. The payments are based on how much energy is saved.<\/p>\n
contract term, which is typically 10 years or less,” says Hinkle. “A lot of
customers will not fund those projects themselves because if they have the
money they’ll want to put it in their core business operations, or they don’t
want to take out a loan.”<\/p>\n
large industrial company Hinkle declined to identify, uses equity raised from
investors, as well as bank financing, to pay for the retrofits, which are
performed by a third party. Metrus
retains ownership of the retrofit assets—boilers, air conditioning systems,
and the like—and will sell them back to the customer when the contract ends.<\/p>\n
efficiency savings, especially as energy costs continue to rise.<\/p>\n
Equity<\/a> promotes a variation of the Metrus model called a “managed energy
services agreement.” Transcend finances retrofits for owners of office towers and
other large commercial properties and then takes over responsibility for paying
the owners’ now-lower utility bills for the term of the contract. The property
owner pays Transcend what it would have paid the utility without the retrofit,
and Transcend pockets the difference.<\/p>\n
efficiency is,” says Frankel, “but until recently there hasn’t been investment
commensurate with the hype.” <\/p>\n
to green technological innovation.<\/p>\n
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