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Metrus Energy: Efficiency With No Up Front Costs?

Scott Cooney | Friday March 12th, 2010 | 2 Comments

As the economy as a whole remains mired in a sleepy lull, there are sectors that are red hot.  According to GreenBiz.com’s State of Green Business Report, several green industries are creating jobs, growing, and shrugging off worldwide economic slowdowns.  Among these are green building and energy efficiency.

Metrus Energy, a San Francisco startup, has positioned itself as a leader in energy efficiency projects for corporate and industrial clients, a sector that has not quite hopped on the bandwagon of energy efficiency, despite what would seem like an economic and environmental win-win scenario.  The problem, according to Metrus, is the high up-front costs associated with energy efficiency projects.  In terms of energy efficiency retrofits, homes and municipal buildings have had the benefits of a relatively low up-front cost, immediate return on investment, and immediate increase in property value.  Businesses, however, must look at quarterly earnings and decide whether a one-time charge for energy efficiency will please shareholders….or get the CEO canned.

Metrus’ approach, which has culminated in its first-ever Energy Services Agreement project on a large-scale energy efficiency retrofit with BAE Systems and Siemens, takes away the up-front cost barrier.  The result?  A savings of 1+ million kilowatt hours (kWh) annually for BAE Systems, and no up-front cost for the client.  Zero.  Take a moment to think of the potential here.  When we talk about world-changing ideas, this would have to be right up there among them.  According to Metrus, “Metrus’ Energy Services Agreement (ESA) is a new financing structure that connects a cost to the concept of “negawatts,” with retrofit payments made on a per-units-of-electricity-avoided scale, thus avoiding the hurdle of high upfront costs.”  BAE Systems, the client for this first ESA, is retrofitting its Merrimack, New Hampshire, with energy savings expected to begin immediately.  One of the secrets to Metrus’ success is its alignment with engineering giant Siemens, which will implement the changes and provide a performance guarantee, and with Bank of America, which is financing the long term debt that allows the project to move forward.

“BAE Systems is committed to mitigating the environmental impacts of our ongoing business by becoming increasingly energy-efficient and this program will go a long way to meeting our sustainability goals,” said Don Hill, facilities director for BAE Systems’ Electronic Solutions business.

“We’re addressing a large but vastly underserved market. Energy efficiency services, programs and financing options have largely been limited to the domain of the government and public sector,” said Bob Hinkle, chief executive officer of Metrus. “The Energy Services Agreement specifically targets projects at private industrial and commercial facilities and in doing so, opens up what the American Council for an Energy Efficient Economy expects to be more than a $250 billion market for efficiency upgrades in the commercial & industrial sector over the next decade.”

The California Clean Energy Fund (“CalCEF”), which promotes new business models that accelerate the growth of clean energy markets, is providing ongoing support to Metrus. According to Paul Frankel, managing director of CalCEF Innovations, “Metrus’ model, where customer repayment is based on realized energy savings, will spark a significant increase in investment in retrofits and help to accelerate the reduction of the environmental footprint of commercial and industrial buildings nationwide.”

Scott Cooney is author of Build a Green Small Business:  Profitable Ways to Become an Ecopreneur (McGraw-Hill), and coaches small businesses to use the power of sustainability as a tool to leverage positive change for their companies.  See Green Business Village for more information.

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  • mcoc

    This is the part that kills me: BAE Systems, a maker of nuclear-powered attack submarines, says it's “committed to mitigating the environmental impacts of our ongoing business….”
    I think it might take a heck of a lot more than energy efficiency to mitigate those environmental impacts.

  • mcoc

    This is the part that kills me: BAE Systems, a maker of nuclear-powered attack submarines, says it's “committed to mitigating the environmental impacts of our ongoing business….”
    I think it might take a heck of a lot more than energy efficiency to mitigate those environmental impacts.