Energy Efficiency Investment
Washington, D.C.—In response to the Environmental Protection Agency’s new proposal to reduce carbon pollution from existing power plants, Steven Nadel, executive director of the American Council for an Energy-Efficient Economy (ACEEE), made the following statement:
After a long warm-up, energy efficiency is taking its rightful place as a starting player in the clean energy game. This spring, we’ve seen both the public and the private sector put serious resources into helping build financing solutions to help efficiency reach the scale it needs.
The moment we have been waiting for has arrived! The Warehouse for Energy Efficiency Loans (WHEEL), a financing platform that will open the market for energy efficiency investment to institutional investors, is open for business. WHEEL acts as a virtual financial warehouse for relatively small individual loans, holding them until there are enough loans to attract attention from large investment houses.
Recent months have seen some exciting developments in energy efficiency finance. Investment funds, capitalized at about $200 million, are set to break into the potentially extensive market for energy efficiency projects in the buildings sector.
Proponents of energy efficiency believe that it not only saves energy and money, it creates jobs. The stronger the evidence that energy efficiency programs and polices create economic opportunity and jobs, the greater the likelihood that federal, state, and local governments will support them. Managers of existing programs use a variety of methods to monitor and evaluate their job creation impacts in order to justify and extend the investment.
Intelligent efficiency refers to a systematic approach to saving energy that marries traditional energy efficiency with wireless and cloud-based computer technologies. These technologies enhance our ability to gather, interpret, and act upon energy information in order to improve performance and achieve new levels of energy savings.
Over the past several years, the energy efficiency community has worked hard to engage lenders in what is estimated to be a $279 billion market. At ACEEE’s annual Finance Forums, we have witnessed tremendous progress.
One of the most overused misnomers in the energy efficiency field is the term “hard to reach” for customer segments that aren’t easily served through existing utility customer-funded programs and marketing channels. The reality is that the segments covered by this term shift constantly as new programs or business models are developed that allow segments to be served cost-effectively, at scale.
Observers of U.S. energy policy might think of energy efficiency as a useful investment strategy to smartly manage the growth of energy consumption. They might also see it as a cost-effective means to ease our transition into a post-carbon world. And yes, the evidence does support both of these notions.
Over the past several years, financing for energy efficiency investments has been widely viewed as a promising solution to reducing upfront cost barriers to investment in energy efficiency. However, several markets, including multi-tenant commercial office and multi-family, remain stubbornly hard to reach.