Innovations and Opportunities in Energy Efficiency Finance
Energy efficiency is the “low-hanging fruit” of a clean-energy economy. U.S. Department of Energy figures show that reducing energy use in the nation’s buildings by 20 percent would save some $40 billion per year in commercial buildings alone, while reducing air pollution and greenhouse gas emissions and advancing energy security.
Meanwhile, efficiency projects would stimulate economic growth and create jobs.
Despite these benefits, advanced energy efficiency improvements and technologies have not yet been widely adopted – largely because organizations lack access to capital to offset the up-front costs of building improvements. Now, federal mandates, state regulations and state-level financing support, along with innovative financing models, are mobilizing capital for energy efficiency projects and mitigating project risks.
An expanding menu of energy efficiency finance strategies is also speeding adoption of cutting-edge technologies like smart grid hardware and software, energy information management and sensor controls, demand response, energy storage, super efficient lighting, distributed renewable generation technologies and more. A new paper posted on the Wilson Sonsini Goodrich & Rosati (WSGR) Web site explains the five major energy efficiency finance models prevalent today:
Energy savings performance contracts (ESPC) implemented by energy service companies (ESCOs)
Energy services agreements
Managed energy services agreements (MESA)
Property Assessed Clean Energy (PACE)
On-bill financing and on-bill repayment (OBF/OBR)