After conducting an independent audit, Barrett Capital Corporation financed $2 million of a $3 million lighting retrofit at Co-op City, in the Bronx, NY. Co-op City is a cooperative housing development with over 15,000 units and a population of 55,000.
The housing development wanted to replace its existing light fixtures in its eight parking garages with energy efficient lighting at a cost of about $3 million. The new lights would save Co-op City about $300,000 annually on its electric bill as well as save energy.
Green Energy Management Services (GEM) structured a shared savings contract in which the savings from the energy efficiency project itself, combined with a $1 million grant from NYSERDA, covered the cost. But GEM wanted to be paid up-front from the proceeds of the shared savings, rather than receive payment over the 10 year term of the contract.
Barrett Capital stepped in with a financing solution that fulfilled GEM’s requirement for upfront financing by taking assignment of the Co-op shared savings contract.
“What’s unusual with this project is very few people are willing to finance a shared savings contract because it’s unsecured financing,” said Barry Korn, managing director with Barrett Capital. The investment company confirmed through the work of its own independent engineers that the promised energy savings would be realized.
While energy savings performance contracts are fairly common, they’re often financed by the energy contractor, and that contractor will provide regular maintenance and servicing of the retrofit over the term of the contract. Otherwise, a multi-faceted retrofit can be difficult to finance because there are so many variables.
Korn said in the case of a lighting retrofit alone, “it is relatively simple to determine wattage and output.”
The energy efficiency project at Co-op City. is expected to save 2.3 million MWh over a ten-year period.
There are many important energy efficiency ideas and projects on drawing boards all over the New York area and beyond that are starved for financing, according to Barrett Capital.
The Environmental Defense Fund has been working on a 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” to developed a framework to standardize the process for predicting and measuring energy savings for large commercial building projects.