Noesis has a new financing vehicle to expedite energy efficiency upgrades for mid-market projects – ranging from $500,000 to $3 million – in the commercial and industrial sector.
Noesis says its Shared Savings Agreement (SSA) is modeled after the solar power purchase agreement (PPA) concept and backed by an initial fund of $30 million, underwritten by an un-named provider of energy efficiency financing.
Asked how the SSA is different from an energy savings performance contract (ESPC), a Noesis spokesman said, “There are various flavors of energy savings agreements out there. The major difference is that the Noesis SSA is designed for developers/contractors that want to stay in control of the relationship but still avoid exposing their balance sheet to increased levels of risk and capital requirements.”
The SSA allows the customer to pay a variable payment based upon the actual amount of avoided energy measured. The concept is similar to solar net-metering where customers are paid for the actual amount of energy they contribute back to the grid.
Noesis says its SSA will enable energy project developers to offer off-balance-sheet performance contracting to compete with the big Energy Service Companies (ESCOs).
“Too often, these projects are effectively unbudgeted – in other words, the finance department has not forecasted the funds into the fiscal year,” said the Noesis spokesman. “Even though the project may be cash-flow positive very quickly, it does not get the green light. Enabling the project developer (and the CFO) to tap into external funds (i.e. off balance sheet) can make a huge difference.”
While ESCOs often win contracts for multi-million-dollar energy savings projects, smaller projects have struggled to get financing.
Recently, Joule Assets announced a financing scheme that could enable more small businesses to obtain capital for energy efficiency projects. Joule Assets works with vendors of energy efficiency services, providing them with funds. They, in turn, loan the money to the end-user businesses.