Energy Efficiency Financing that Delivers Results for Businesses

摘要

A key service in many utility energy efficiency programs is providing attractive financing for commercial, industrial, and institutional end users for project implementation. This paper describes a Paid-from-Savings option as part of a comprehensive program approach for project implementation. Lack of capital is a key barrier to energy efficiency project implementation. Often, energy efficiency projects do not compete well for scarce capital resources in corporate America. Similarly, public entities such as schools, government buildings, and institutions have severely curtailed budgets in this economy and cannot allocate funds for project implementation. Similarly, the majority of bonding proposals for schools and local governmental entities have been rejected. Utility provided and/or facilitated financing alternatives can overcome this barrier. However, typical program financing offers nothing better than financing from the marketplace (e.g., banks). The only difference may be that the program has screened financial institutions that are willing to provide financing for energy efficiency projects. As a result of this “no value added” service, typical financing programs are anemic. Utility delivered Paid–from-Savings programs that use program funds to buy down interest rates rather than paying out cash incentives have proven effective at delivering results for customers who lack capital for energy efficiency. When combined with a program-backed guaranteed positive cash flow, they are an ideal mechanism since they not only provide the implementation funds, but also add credibility to savings claims. Unlike conventional performance contracting, utility delivered Paid from Savings programs provide transparency to the financial instruments overcoming skepticism about inordinate profiteering.