Increasing Investor Confidence in Efficiency
Several leading companies have signed on to boost investor confidence in energy efficiency through the Investor Confidence Project. Their participation is expected to ultimately increase investments in efficiency.
The Environmental Defense Fund’s Investor Confidence Project assembles existing standards and practices into a consistent process. The project trains developers to meet these standards and become credentialed project developers. The project aims to create a recognized “logo in the lobby” for efficiency projects that will show investors they can trust in the promised efficiency savings.
The first round of credentialed companies includes HVAC, energy services and building companies, among them Johnson Controls, Trane, Pepco Energy Services, Swinerton Builders, SCI Energy, Association for Energy Affordability, HT Lyons, Environmental Building Strategies, TRC, L & S Energy Services and Performance Systems Development.
“This is a really big deal. These companies are trendsetters in energy services,” said Matt Golden, director of the Investor Confidence Project. “These companies represent all types — HVAC, energy efficiency, and builders. We didn’t plan it this way but it’s interesting that the first class of credentialed companies touches on all types of businesses working in this space.” He noted that the turnout exceeded his expectations.
Michael Eckhart, managing director and global head of finance and sustainability at Citigroup, recently laid out the challenge in the Clean Energy Finance Forum, saying, “Energy efficiency is in a category by itself. With the exception of one company packaging energy efficiency, energy efficiency projects do not yet meet the requirements of capital markets. The industry is just too disaggregated. No two projects or contracts are alike. Securitization is not practical or possible under these circumstances. Say you have 1,000 energy efficiency projects. Standard & Poor’s would have to read 1,000 documents to assess the risk. Fees won’t pay for that level of review.”
That’s exactly the problem the Investor Confidence Project seeks to address, said Golden.
“Everyone agrees that in order for energy efficiency to get to scale, we need to standardize across all sectors. We need to make this more cookie cutter.”
“We’re training these companies to create a project that can be turned into an Investor Ready Energy Efficiency project. We’re not telling them how to build their buildings,” said Golden. The companies involved must have a professional engineer or certified energy manager on staff. When a project is credentialed, “all facets of the project have been put together following the investor confidence protocols,” he said.
It may sound pretty basic, said Golden, but investor confidence in energy efficiency will create a big leap for the resource — and the environmental and economic benefits it yields.
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