New Zero-Down, No-Risk Energy Efficiency Investment Fund Aims To Unlock $150 Billion In Savings

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Double your money, create more than 1 million jobs and make a big dent in US carbon and greenhouse gas emissions – that’s what could be realized if the US were to double energy productivity by 2030, according to the Alliance Commission on National Energy Policy’s recently release Energy 2030 report.

Looking to spur energy-efficiency gains across the US, CalCEF and Metrus Energy on March 13 launched a new financial intermediary service that could unlock the doors to a projected $150 billion in energy-efficiency savings by providing “otherwise hard-to-get financing for small and medium-sized businesses (SMBs).”

With the Efficiency Resource Fund, CalCEF and Metrus have come up with a no-risk, zero-down way to offer SMBs funds to finance energy-efficiency projects, projects that could yield $15 billion a year in energy savings over the next decade, according to a joint press release.

Credit: NEEA's Suite Search
Credit: NEEA’s Suite Search

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The CalCEF-Metrus Energy Efficiency Resource Fund

Working through the Efficiency Resource Fund process, building owners sign an Efficiency Service Agreement (ESA) of up to 10 years, “then hire contractors to design, install, measure and maintain energy-saving improvements,” the Fund partners explain.

The latest energy-efficient heating, ventilation, and air conditioning (HVAC) systems and other energy efficiency equipment and appliances typically have useful lives that extend well beyond 10 years. Fund customers can continue to realize savings and benefits once the term of the ESA expires.

By making energy-efficiency improvements, building owners, as well as building inhabitants, benefit from improved safety, health, wellness, comfort, and productivity, and a reduced carbon and overall environmental footprint, while also realizing savings on utility bills. The Fund recoups its investment by billing customers for realized efficiency gains.

Moreover, the Fund bridges a big gap in financing available to SMBs looking to carry out energy efficient projects. According to the Fund partners, “This innovative approach bridges the funding gap that has stymied these small- and medium-sized retrofit projects – some 4 million building nationwide.”

Added CalCEF managing director Paul Frankel:

“The Efficiency Resource Fund is a trail-blazing investment vehicle that taps a massive, underserved market opportunity.”

“We’re enabling a whole class of projects that would otherwise not be completed, while at the same time delivering not just savings for customers but also attractive returns for impact investors and generating capacity for utilities.”

The returns and benefits from making investments in energy efficiency are increasingly being recognized in the US. CalCEF and Metrus are pitching the Efficiency Resource Fund to pension fund managers and construction industry in particular, prospects for whom such investments can prove particularly attractive.

Energy-efficiency investments, according to the CalCEF and Metrus, garner “a substantial return on investment, while also generating new local construction jobs that will increase pension contributions.”

The Wide-Ranging Benefits And Advantages Of Investing In Energy Efficiency

New York State Comptroller and trustee of the New York State Common Retirement Fund, Thomas P. DiNapoli, is encouraging portfolio companies to boost investments in energy efficiency and renewable energy, the Fund partners highlighted. Adding to the impetus, executive director of the Los Angeles County Chapter of the National Electrical Contractors Association (NECA) and 20-year pension trustee Jim Wilson was quoted as saying:

“There’s a huge amount of money to be saved—and, for investors, earned—by improving energy efficiency throughout our economy and putting professional contractors and skilled tradesmen to work.”

A long-standing supporter of CalCEF, Sidney E. Frank Foundation trustee Cathy Halstead emphasized the multiple, cross-cutting gains and benefits to be derived from investing in energy efficiency improvements.

“The Efficiency Resource Fund is a unique opportunity for investors to put money to work in an area that will produce multiple positive outcomes. We’ve supported the development of this novel financing mechanism because we see its potential for advancing green buildings, green jobs, emissions reductions, and cost savings for small and medium businesses.”

Now Accepting SMB Applications

The Efficiency Resource Fund is now accepting financing applications from facility owners with energy-efficiency retrofit project plans under $1 million.

CalCEF expects to raise another $10 million in capital from investors by the end of 2013. Fund details are available online in its concept paper, “The Sub-Million Dollar Question: Leveraging Impact Investment and Service Agreements for Small and Mid-Sized Energy Efficiency Projects.”

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