Did you know that while 20 states have “on-bill financing” programs designed to fund energy efficiency retrofits, the participation rate of these programs is only about 1%? (www.aceee.org/sites/default/files/publications/researchreports/e118.pdf)
And with over $1.2 trillion in potential energy efficiency retrofit savings in the commercial and industrial sector, it boggles the mind that much of this low-hanging fruit is being left to rot on the tree.
According to an excellent dispatch by Sandra Kwak, reporting from the ARPA-E Energy Innovation Summit’s panel titled “The Future of Financing Energy Efficiency,” the consensus seems to be that the biggest obstacle to overcome is education: many of the individuals and business interests best suited to capitalize on energy efficiency financing are unaware that these programs and protocols exist.
As Kwak reports, Marshall Salant, head of Citigroup’s Alternative Energy Finance Department, highlighted this knowledge gap when he asked the audience “How many of you live in a building that has had a deep energy efficiency audit? Do you even know? What about the building that you work in?”
And while the default risk of on-bill financing is low, and most retrofits are relatively inexpensive (especially when compared with potential energy savings once improvements are in place), as Jeff Bartos, President and CEO of Mark group, points out to Kwak, “What we suffer from is ignorance in the market, not just on the part of the customer, but between institutions.”
Kwak lays out five ways to improve the current situation:
1. Engage: in both education and economic competition.
2. An outfit approach by segment: understand that, when it comes to energy efficiency, each market segment has different needs.
3. Create additional financing mechanisms, including E-bonds.
4. Secure financing: lower the risk and increase the reward.
5. National standardization: find a way to streamline the efforts of ASHRAE, USBG, LEED, and Energy Star to form one coherent set of rules, regulations, and recommendations.
Kwak wraps up her report by writing, “Energy efficiency is not a leap of faith. The dollars are on the ground (and in the walls, windows, and control systems). However, policy, market mechanisms, smart strategy, and customer psychology need to be advanced in order for efficiency to show businesses, individuals, investors, the government, and the environment the returns they are looking for.”
Couldn’t have said it better myself.