I was at an efficiency conference last week. Here’s what I learned.
Last week I joined other energy efficiency wonks to attend and present at the Energy Efficiency Financing Forum in San Francisco, hosted by the American Council for an Energy Efficient Economy.
The conference brought together a few hundred leading thinkers and practitioners in energy efficiency finance from utilities, governments, think tanks, real estate, and specialty financing companies.
Here are the three biggest lessons I took away from the conference:
i) There is lots of energy efficiency investing happening now:
For example Renovate America recently securitized $240 million of energy efficiency bonds rated AA. These Property Assessed Clean Energy (PACE) bonds help property owners in California finance a wide range of energy and water upgrades. Property owners then make payments along with their property taxes.
There were over a dozen energy efficiency investors, each measuring their portfolio in $10s, if not $100s of millions. Deutsche Bank, Bank of America, and other lenders were talking about their work in the sector. Energy efficiency investing is mainstream.
ii) Think about the customer:
One panelist, Cisco Devries (inventor of the PACE concept above), noted that building owners are already spending $40 billion a year in the US on windows, doors, insulation, HVAC, roofing, and appliances. But most of these decisions are ‘fix-it’ now decisions, not necessary efficiency decisions. While a larger capital expenditure now can lead to a lower operating cost later, budgets are usually constrained and lead to less efficient choices.
So what the industry needs to do is help each of these energy managers (whether the mother of a household, or the manager of a commercial real estate portfolio) make decisions that lead to more efficiency in that moment.
We need Amazon’s ‘one-click’ purchase for energy efficiency.
Knowing your customer also means knowing the language they speak. When talking to a CFO, we can help arm energy contractors with information on the financial opportunity and the opportunity cost of delay. It is not the CFO’s job to understand the technology behind the new LED light bulbs, even if it is really cool.
iii) Finance is an enabler for energy efficiency
This is where simplified financing programs can help. Capital providers, like our firm at CoPower, can team up with contractors that you are already working with to seamlessly integrate a financing solution — for no additional upfront cost, you can make a smarter energy choice. The lease or loan is then repaid over time out of the savings to your energy bill.