Environmental Protection

Energy White Paper Tells How to Overcome Barriers

CalCEF Innovations, the market strategy and public policy arm of the California Clean Energy Fund, has published a white paper, "New Business Models for Energy Efficiency."

The first in a series aimed at accelerating the growth of clean energy markets, the paper focuses on several business and policy-related initiatives that overcome barriers to adoption in residential, small commercial, and small industrial existing buildings markets.

Innovations is piloting two models that can speed execution of energy efficiency measures by combining individual projects, technologies, service offerings, and investments into larger and more profitable deals. The white paper is available for download at http://www.calcef.org/innovations/activities/nbm-eir.htm.

"Public and private support for energy efficiency is stronger than ever, but goodwill and ad hoc financing products are not enough to make a significant and lasting impact," said Bob Hinkle, founder and chief executive officer of Metrus Energy. "We want mainstream commercial finance to play in this market." Metrus is a start-up company that develops and finances energy efficiency projects at large commercial, industrial, manufacturing, and institutional facilities through efficiency services agreements (ESA). Under Metrus' ESA structure, customers can avoid all capital outlay associated with the implementation of an energy efficiency project, enabling off-balance sheet accounting treatment for energy efficiency assets, with their repayment based on a cost per avoided unit of realized energy savings.

Written by Entrepreneurs-In-Residence Bob Hinkle and Steve Schiller, the ideas proposed in the white paper are an outgrowth of the second annual "Energy Efficiency Tech Impact Summit." At the summit, significant discussion arose around the energy loading order in California. "The official loading order in California calls for energy efficiency to be first in line but that is not always the case," commented Steve Schiller.

"Because of issues such as the lack of direct energy cost/usage feedback consumers receive and the disconnect between tenants and landlords with respect to who pays the bills and who owns the building, more market intervention is needed to accelerate efficiency adoption. With public policies and business models that support efficiency, consumers can get a lot of bang for their buck."

The white paper lays the groundwork for the California Energy Efficiency Initiative (CEEI), which will work in concert with the California Solar Initiative to provide performance-based incentives that simplify energy efficiency investment and reduce transaction costs.

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