ACEEE Finance Forum: New Innovations In Energy Efficiency Finance
News from the 2013 ACEEE Energy Efficiency Finance Forum
Thought leaders on energy efficiency finance convened in Chicago May 13-15, 2013, for the 7th annual ACEEE Energy Efficiency Finance Forum. Participants discussed the latest developments and innovations in energy efficiency finance, in particular:
Property Assessed Clean Energy (PACE). Property owners taking part in a PACE program receive financing support for energy efficiency or renewable energy measures from a local government or approved financial institution, and the investment is repaid by an assessment or other like charge added to the owner’s property tax bill for up to 20 years. There are now 20 active PACE programs in the U.S.; many are now financing their first projects and hoping to scale up quickly in the years ahead. See presentations from session 2B at the ACEEE Finance Forum, and the Institute for Building Efficiency paper, “Setting the PACE”.
Master Limited Partnerships (MLPs) and Real Estate Investment Trusts (REITs). MLPs and REITs are well-established investment structures. MLPs traditionally enabled investors to bundle energy projects like oil and gas pipelines and other fossil fuel developments under a structure that is taxed like a partnership but trades like a stock. Legislation introduced in Congress would allow the MLP structure to be used for renewable energy and energy efficiency. REITs offer similar but complementary structures to MLPs. Both MLPs and REITs are popular with investors because they enable shares to be traded in public markets. Project developers like them because they provide access to cheaper capital through the markets. See presentations from session 1B at the ACEEE Finance Forum,
On-bill Repayment. Linking repayment of energy efficiency investments to the utility bill can provide a significant improvement in credit quality and can help ensure that the investment is repaid by the same entity that sees the energy savings on the energy bill. This year, California and Hawaii may introduce on-bill repayment programs. See presentations from session 3A at the ACEEE Finance Forum, and see the Environmental Defense Fund website.
Efficiency Services Agreements (ESA) and Managed Energy Services Agreements (MESA). In both the ESA and MESA models the energy services provider pays 100 percent of the up-front costs for the energy efficiency improvements to the building. The customer then pays the energy services provider over time, based, for example, on a cost-per-avoided-unit-of-energy basis.
The 2013 report from the WSGR legal advisory firm summarizes these and more of the latest “Innovations and Opportunities in Energy Efficiency Finance.”
An additional theme of the conference was that better data and information are needed on the building energy performance to enable the scaling of the market for energy efficiency investments. The same data that enables finance also has potential to increase the demand for energy efficiency in buildings. For more information on data-driven finance strategies see the Institute for Building Efficiency paper, “Data Driven M&V to Support New Financing.”
The conference agenda and most presentations can be found on the ACEEE Energy Efficiency Finance Forum website.