New Fund Unlocks $150 Billion in Efficiency Savings

Innovative financing offers upgrades to 4 million small and medium properties; controls costs, cuts energy use, puts contractors to work

Mar 13, 2013, 10:00 ET from CalCEF

SAN FRANCISCO, March 13, 2013 /PRNewswire/ -- Manufacturers, schools, churches, and clinics throughout the United States could cut up to $15 billion a year on their energy bills over the next decade, thanks to a pioneering new financial tool launched today by the efficiency-services financer Metrus Energy and CalCEF, an organization focused on accelerating clean energy technologies.

The new Efficiency Resource Fund (the Fund) will provide otherwise hard-to-get financing for businesses to make energy-efficiency improvements, with no upfront costs. This innovative approach bridges the funding gap that has stymied small- and mid-sized retrofit projects—some 4 million buildings nationwide.

"The Efficiency Resource Fund is a trail-blazing investment vehicle that taps a massive, underserved market opportunity," said Paul Frankel, Managing Director of CalCEF. "We're enabling a whole class of projects that would otherwise not be completed, while at the same time delivering not just savings for customers but also attractive returns for impact investors and generating capacity for utilities."

Here's how it works: The Fund signs an Efficiency Services Agreement (ESA) for up to 10 years with a building owner, and then hires contractors to design, install, measure, and maintain energy-saving improvements. As a result, the customer sees a reduction in its total utility bill, while making buildings more productive and comfortable. The Fund recoups its investment by billing customers for their realized efficiency gains.

Since the useful life of the energy efficiency equipment continues well beyond the term of the ESA, customers continue to save for years to come.

"We are excited to bring our efficiency finance know-how to the small and medium sized project market. The Fund will enable these customers to access financing to upgrade their facilities and reap all the benefits that energy efficiency has to offer," said Bob Hinkle, President and CEO of Metrus Energy, the Fund's manager and creator of the ESA.

The Fund is an especially attractive investment for pension funds of the construction trades. It garners a substantial return on investment, while also generating new local jobs that increase pension contributions. Such investments are growing in popularity throughout the country. Recently, Thomas P. DiNapoli, New York State Comptroller and trustee of the New York State Common Retirement Fund, urged its portfolio companies to increase investments in energy efficiency and renewable energy.

"There's a huge amount of money to be saved—and, for investors, earned—by improving energy efficiency throughout our economy and putting professional contractors and skilled tradesmen to work," said Jim Willson, Executive Director of the Los Angeles County Chapter of the National Electrical Contractors Association (NECA), and a 20-year pension trustee.

The Fund will sell efficiency as a service to building owners and provide tax-exempt returns to private foundations, pension funds, and other community-based financial institutions.

"The Efficiency Resource Fund is a unique opportunity for investors to put money to work in an area that will produce multiple positive outcomes," said Cathy Halstead, trustee of the Sidney E. Frank Foundation, a long-time grantor to CalCEF. "We've supported the development of this novel financing mechanism because we see its potential for advancing green buildings, green jobs, emissions reductions, and cost savings for small and medium businesses."

"We believe this new finance mechanism will help members of business organizations like ours save money by reaching their energy efficiency goals sooner. We want to bring regional chambers of commerce to the table," said Diane Doucette, Executive Director of Chambers for Innovation and Clean Energy, a national network of chambers of commerce. "Trade associations and other industry groups, like the Greater Cleveland Partnership's Council of Smaller Enterprises (COSE), will be key channels for helping identify suitable projects and for matching them with vetted local contractors."

The Fund is now accepting customer applications from facility owners who have efficiency retrofit projects that cost less than $1 million.

CalCEF expects to raise $10 million from investors by the end of the year. Details of the Fund are explained, "The Sub-Million Dollar Question: Leveraging Impact Investment and Service Agreements for Small and Mid-Sized Energy Efficiency Projects."


Sarah Golden, Danielle English