Seattle Group Pilots Energy Efficiency Investment Vehicle
A group of stakeholders in Seattle have partnered to test an investment vehicle for energy efficiency that’s based on a new meter and that aligns the business interests of utilities and commercial buildings.
Asset management firm Equilibrium Capital Group has joined with utility Seattle City Light and EnergyRM, a firm that has invented the Metered Energy Efficiency Transaction Structure (MEETS). For the past five years, Equilibrium Capital has worked with EnergyRM in creating MEETS to shape a new transaction structure that will allow energy efficiency to be an investment vehicle.
MEETS relies on a key innovation: EnergyRM’s patented energy efficiency meter, the DeltaMeter, which measures the energy yield from deep energy efficiency retrofits or designs over extended periods.
In a nutshell, MEETS turns energy efficiency into a product. “It can accurately measure energy efficiency as delivered, turning kilowatt hours into a unit that can be bought and sold,” said Bill Campbell, a principal at Equilibrium Capital.
EnergyRM’s meter technology will be tested in collaboration with the Bullitt Foundation at the Bullitt Center’s new Living Building in Seattle.
To date, energy efficiency programs have presented a conundrum for utilities that are asked to promote initiatives that reduce their own revenues. With MEETS, Seattle City Light has now deployed a metering capability that aligns its own economic interests behind energy efficiency in commercial buildings.
Campbell said, “From our perspective, energy efficiency has been a huge but inaccessible value proposition.” Savings, such as energy savings performance contracts, are not investable; but cash flows are investable, he said. MEETS is designed to create investable cash flows out of the efficiency value locked in buildings. The utility pays for this measured value, and investors can invest in it. MEETS does not affect the utility bill for the building. The DeltaMeter measures the energy savings and allows it to be sold as it occurs.
Others are working on financial models for energy efficiency, too. The Environmental Defense Fund has been working on a new project to make it easier for investors to loan money for building energy efficiency projects. A team of building scientists, engineers, energy service firms, financial partners, insurers, regulators, policymakers and utilities is working with the EDF on the “Investor Confidence Project.” The goal is to define an open standard to enable the flow of private investment required to launch a global market for energy efficiency in the built environment.
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