As the country struggles to find solutions to high unemployment and rising energy use, energy efficiency continues to emerge as an attractive antidote. Two recent papers explore the barriers and solutions to creating a rapidly expanding building efficiency market. Environmental Defense Fund published an excellent overview of the market players and the financing barriers and opportunities, while the Institute for Market Transformation produced the most comprehensive look yet at how communities are embracing energy ratings and disclosure policy to transform markets. Here’s a summary:
Environmental Defense Fund captures the issues and opportunities in their latest report Show Me the Money: Energy Efficiency Financing Barriers and Opportunities. Whether you are just getting your feet wet in the energy efficiency space or are a seasoned practitioner, you will learn something from EDF’s insights. The report starts with clear definitions of the difference between an Energy Service Company (ESCO), Energy Service Provider (ESP) and financier. It highlights barriers across vertical markets including the Municipalities, Universities, Schools and Hospitals (MUSH), commercial, industrial markets. EDF then explores and lucidly explains the various financing options from self financing to Energy Service Agreements (ESA) and Managed Energy Services Agreement (MESA). In the barriers section it highlights many of the common issues noted by the EEI survey including split-incentives, data and financing. A few insights that are less commonly discussed include that in fact plenty of capital exists ready to fund good opportunities but that the industry and other stakeholders must do a much better job stimulating demand through incentives, education and marketing.
The Institute for Market Transformation released a study analyzing current building energy rating and disclosure programs, an approach that many hope will rapidly create the demand sought for in the EDF report. In Building Energy Transparency: A Framework for Implementing Commercial Energy Rating & Disclosure Policy, IMT dives deep into programs in 8 cities and 2 states, including NYC, DC and California. This is a must-read for anyone doing business in these markets or policy makers in other jurisdictions looking to learn from early adopters. The programs range from government disclosing their buildings Energy Star scores all the way to requiring commercial building owners to publicly release the Energy Star score of their buildings. Most programs leverage the DOE/EPA free Portfolio Manager tool. Through market transparency, these policy makers believe better educated consumers will force building owners to act, ultimately driving up the relative value of more efficient properties. If you are looking for information beyond what’s covered in this report, check out the latest info at IMT’s excellent site buildingrating.org.
Craig Isakow is committed to making a difference through clean technology. He currently works for Johnson Controlsin the Global Energy and Sustainability Group. To learn more about IMT’s report, listen to Craig’s podcast with its lead author Andrew Burr on the Institute for Building Efficiency’s website.