Finally! More help for financing energy efficiency
By: SGN Staff
Quick Take: Everybody agrees that financing is the biggest hurdle to getting more energy efficiency projects underway. But everybody sits around hoping somebody else will do something about it.
Now Noesis Energy is building a "marketplace" where energy efficiency buyers can locate a variety of financing options, from loans to leases to performance contracts and more. And this initiative is more than a way to connect lenders with borrowers. It also tries to create a standard way to evaluate the ROI of efficiency projects, another stumbling block.
Here's my biggest hope -- that this approach will succeed and 1) be adopted by others and 2) also spread to other smart energy options such as distributed generation, energy storage and microgrids.
Are you aware of other novel approaches to the financing conundrum? The Comment form awaits below. - Jesse Berst
Noesis Energy, the fastest-growing energy measurement and savings website, announced that it now connects energy professionals to a syndicate of efficiency financing lenders. By bringing together energy and facility professionalsâ€”from building managers to energy consultants and manufacturersâ€”with financial institutions that specialize in efficiency lending, Noesis looks to jump-start spending on critical energy-saving investments by commercial and industrial businesses.
Noesis has signed up four energy-efficiency financing firms that, collectively, have access to billions of dollars in investment capital: BluePath Finance, Metrus Energy, TIP Capital, and Vireo Energy. The range of financing options currently offered by this initial syndicate of lenders includes capital and operating leases, efficiency services agreements (ESAs), managed energy services agreements (MESAs), and property-assessed clean energy (PACE) financing.
â€œNot unlike what is happening in the solar finance market, experts and industry groups such as the Environmental Defense Fund have identified billions of dollars that could be made available to fund projects, if there were fewer barriers to energy efficiency capital and more data about qualifying projects and opportunities,â€ said Scott Harmon, CEO of Noesis Energy. â€œLenders look for projects that will deliver a predictable ROI thatâ€™s based on thorough and grounded savings calculations. We can help our users present their projects to financiers using a standardized and scientific framework, so lenders can quickly and easily evaluate projects and confidently calculate a realistic return on their investment.â€
Ross Reida, vice president of national accounts at TIP Capital, sees the need for some reputable entity to connect energy managers with efficiency financing that banks do not currently offer. â€œMore than 50 percent of commercial building projects in the United States are for 50,000 square feet or less. These are relatively small deal sizes that most banks wonâ€™t touch. Our goal is to get these projects funded. Energy professionals who use the Noesis platform can accurately and confidently assess the return on their investments. We can offer these companies fast-turnaround financing, so they can fast-track their projects and start to take advantage of energy-saving technologies that reduce their operating costs,â€ he said.
â€œThe bottleneck is generally financing on most of the energy projects with which weâ€™re involved. Thereâ€™s a need for someone to standardize the formulas and the payback of the project, and therefore make it easier for investors to understand the risk and the reward of any given project,â€ said Larry Thrall, managing director of Vireo Energy of Malibu, California. â€œMany CFOs are looking for an off-balance-sheet solution that will help them lower their operating expenses. We provide a way to make it an operating expense and not a capital expense.â€
Since Noesis Energyâ€™s launch in July of last year, over 10,000 energy professionals â€“ from energy managers to consultants and efficiency product manufacturers â€“ have signed up and have registered over 22,000 commercial and industrial facilities. With the recent introduction of advanced tools for evaluating efficiency projects, Noesis users have introduced over 900 projects from no-cost/low-cost initiatives to lighting upgrades, building controls systems, and HVAC retrofits representing over $73 million in investments. Noesis will continue its outreach to building owners and energy professionals and encourage them to bring their projects onto Noesis, leading to both a healthy pipeline of financing opportunities for lending partners and more energy cost savings being realized by Noesis users as their projects are completed.
About Noesis Energy
Noesis Energy puts businesses in control of their energy management costs. By combining big data services, energy analytics and industry expertise, our free and premium data services help energy professionals track energy performance and identify opportunities to reduce usage and costs. Noesis Energy is backed by Black Coral Capital and Austin Ventures, and maintains offices in Austin, Texas and Cambridge, Ontario, Canada. For more information, visit www.noesisenergy.com and follow us @noesisenergy.
Jesse Berst is the founder and Chief Analyst of SGN and Chairman of the Smart Cities Council, an industry coalition.