Dive Brief:
- A new Noesis Energy survey of hundreds of energy efficiency developers found the third party ownership financing that drives solar growth is not impacting energy efficiency because both energy managers and developers seem unaware of the option.
- The survey found two-thirds of projects do not go forward because of a lack of financing that third party funds could provide and almost half of energy managers and three-quarters of developers rarely or never propose one of the emerging third-party financing options.
- Because others are uneducated about the financing opportunities or find them too complicated or don’t trust the claims, Noesis has added the “much bigger market and revenue opportunity” in financing to its building energy performance service and recently closed a $30 million fund that will lease energy efficiency systems and equipment for retrofits of commercial and industrial buildings.
Dive Insight:
The emerging third-party owned (TPO) plans for energy efficiency fall into two categories: market enablers like property-assessed clean energy (PACE) and on-bill repayment (OBR) that finance through property taxes or utility bills and are implemented through policies, and project-level structures like equipment leases, shared savings, managed energy services agreements (MESAs) and the metered energy efficiency transaction structure (MEETS) that are taking energy service companies’ energy savings performance contracts for public sector buildings to the private sector.
No energy efficiency providers except ESCOs have created scalable TPO businesses like SunEdison, SolarCity, and Clean Power Finance have in solar. Some efficiency market watchers say the sector is ready to grow, thanks to the emerging TPO fundings in the hundreds of millions of dollars, improved state-level policies, better underwriting standards, and a deal volume that will enable securitization. SCIenergy is also planning to go from energy management to financing efficiency through MESAs for the commercial sector.
