Start-ups are spotting opportunities in schemes to incentivise home and commercial retrofit projects. We pick out some winning offers.
Serious Energy is pioneering a retrofit funding model in the US, spurred on by its success in selling solar arrays. The start-up has already snapped up some big business, including the refurbishment of all 6,514 windows in the Empire State Building, and another contract at the New York Stock Exchange. It works by assessing the current energy bill of the client, and identifying improvements to cut those costs. It then offers to pay for these improvements and to pay the energy bill, all at a reduced cost to the building owner.
So, take a building with an annual energy spend of $1 million. The owner wants to cut the operating cost, but is put off by the upfront investment and the risk that the changes won’t achieve performance targets. Serious Energy identifies energy improvements that will require a $1 million investment and that will result in 25% savings. It offers the customer a 10-year contract with a 5% Energy Bill Reduction Guarantee, so that instead of paying $1 million a year in bills, the building owner pays Serious Energy $950,000 a year. Serious Energy uses this money to implement the energy retrofit projects and manages energy performance for the duration of the contract, paying the $750,000 annual bill and using the remaining £200,000 to cover maintenance, bank and financing fees.
Californian start-up Renewable Funding was launched in 2009, to administer Property Assessed Clean Energy (PACE) loans. These loans are available for home and commercial retrofit projects, and are paid back through fixed payments as part of the property tax bill. If the owner sells the property, these payments are passed on to the buyer. Renewable Funding provides a comprehensive service to make the whole process easy, such as processing applications and providing quality assurance. “Over time, it’ll probably be a very big market, and it’ll be more than just us,” says the start-up’s founder and president, Cisco DeVries. “And that’s as it should be.”
The city of Melbourne [above], Australia, has created a new Environmental Upgrade Charge programme, to finance energy retrofits in commercial buildings, using a variation of the PACE model. Here’s how it works. The council enters into an agreement with both commercial property owners seeking up-front financing for projects that improve energy, water and environmental efficiency, and with the financial institutions willing to fund these retrofits. A private lending body advances funds to the building owner to undertake the project. The owner or occupier pays an ongoing environmental upgrade charge, levied by the council, which matches the principal and interest. Payments are then passed on to the lender. The aim is to reduce the risk associated with lending for the financial institution, and offer finance to property owners at a lower rate than commercial loans. – Andrew Brister and Anna Simpson
Photo: Davis McCardle / Digital Vision / thinkstock