Joule Assets on June 18 announced that it is targeting an initial $90 million of an anticipated $270 million in funding for 10 U.S. energy efficiency and demand response contracting companies.
Opening up the mid-tier energy efficiency and demand response markets to accredited investors across the U.S., co-founders Mike Gordon and Dennis Quinn launched Joule Assets’ Energy Reduction Assets (ERA) Fund in late January. The fund enables investors to earn a share of the returns generated by energy efficiency and demand response projects carried out among U.S. small- and medium-sized businesses (SMBs).
“In a given year, a typical energy efficiency contractor may see $2 million to $3 million worth of projects stall due to a customer’s budget constraints for upgrades. The lines of credit from Joule Assets enable those small-to-mid-sized contractors to offer financing options, radically shortening sales cycles and extending their project pipelines,” Joule Assets stated in a press release.
Boosting energy efficiency among SMBs
With Joule Assets’ funding, energy and facilities information management systems and services provider NorthWrite expects to finance 50 to100 energy efficiency projects across “a spectrum of small commercial buildings, including schools, restaurants, national chains and offices” over the next 12 months, Joule Assets highlights. Said NorthWrite founder and CEO Patrick O’Neill:
“Joule Assets’ ability to offer conditional cash flows for projects is what sets it apart from standard financing options. In true partner fashion, the team at Joule helped us envision, create and work through the different financing scenarios available to us. They have a level of domain knowledge around conditional cash flows that others deeply discount or won’t even consider, which is what makes these projects possible.”
Added Joule Assets CEO Mike Gordon: “Our model, which places financing decisions in the hands of the vendors, not only empowers the small-to-midsized contractors, but it accelerates the adoption of energy reductions assets as a whole by reducing overall due diligence and transaction costs. We’re pleased to provide contractors with investment dollars that will enable them to significantly increase their deal closure rate and scale rapidly.”
Investing in “negawatts”
Apparently there is a good amount to go around by investing in energy efficiency and demand response projects and services. By monetizing the energy savings realized through contractors energy efficiency and demand response work, Joule Assets expects investors in its ERA Fund will realize investment returns of 6 to 10 percent.
Then there are additional “mezzanine returns of 5 to 15 percent and potential equity participation, totaling estimated average targeted returns of 18 percent.”
Those are some very attractive rates of return, particularly since these investments are considered relatively low risk. That may beg the question: Why aren’t banks all over this?
Nevertheless, by investing in Joule Assets’ ERA Fund, there’s a big bonus: You’d be putting investment capital to work to boost energy efficiency, reduce greenhouse gas emissions and the threats and costs of climate change at the same time.
Image credits: 1) Verrazano Narrows Bridge by Ecofriend; 2) Arrowhead Electric Cooperative