Michael Meehan

©2013 Zerofootprint - Company Confidential

The Future of Financing Energy Efficiency

University of Pennsylvania

Michael MeehanCEO, Zerofootprint USA


First, A Story…


So if the finance industry has been engaged in climate and energy for decades, why are we here?

Investment in energy projects requires good information. To get better information to investors, two primary challenges remain:

1. Availability of quality data2. Consumer Engagement

Energy Investment Challenges1.


Energy Sector FinancingDirect vs. Indirect2.

• Consumer Rebates• Homeowner tax

Incentives• Utility Rebates &

Incentive Programs• Low-interest loans

for consumers

• Green Energy Subsidies

• Insurance/Reinsurance

• Program underwriting

• Federal Investment programs (ATVMLP)

• Low interest loans to residential and commerical

DIRECT INDIRECT


Direct energy financing addresses the “low-hanging fruit” in the market (e.g., retrofits, Energy Star) and provides direct, tangible funding for consumer purchases. The most straightforward, but has met with limited success.

The nation’s 130 million homes account for 20% of US emissions. The technology is widely available and payback periods are known with a high degree of confidence.

So why aren’t we doing retrofits everywhere?

3. Energy FinancingDirect to Consumer


Engaging energy consumers (e.g., tenants) is the key to acquiring the data required to make investment decisions. If you can’t engage them, the returns on investment rapidly decrease.

Energy IntelligenceStarting with the Consumer

$ Budgeted

$10 Million

$5 Million

Declining Returns within Engagement Programs

$300K

Successful Implementations / Time

$4.7 Million

(47%)


Retrofitting costs real money, and the market has a data problem.

•Costs are high: $10-15K per home ( x 130M homes = $2T)•Direct financing schemes are not uniform and are often not marketed appropriately.•Lack of actionable data – smart meters, APIs, closed utility systems provide data, but do not engage consumers•Leads to a lack of investor confidence in the data from energy projects, especially in residential

Direct Energy FinancingChallenges


Large-scale energy efficiency projects offer more suitable investment vehicles but have their own challenges.

•Complexity begins at the lowest levels (meters, HVAC systems, building controls, smart homes, etc)•Problem is compounded by complex systems to get the data: buildings management systems, closed utility systems, etc.•Few standards for the communication of data (beyond the building such as Zigby, etc)

•But some successful funding models• US Dept of Housing and Urban Dev (HUD) offers

creditworthy borrowers for EE upgrades (not homeowners)

• Federal Housing Admin (FHA) PowerSaver Program ($25M)

4. Indirect Energy Financing


This push for "open" energy data will enable the financial sector to more accurately assess risk in energy projects, whether we're talking about insuring ESCOs, federal backing of energy efficiency projects, or supporting the reinsurers.

•White House Open Data Initiative•Green Button (Dept. of Energy)•App platforms for Energy Star (NYSERDA)•Mostly for commercial applications, consumers aren’t engaged in energy

When consumers are engaged on energy, then it’ll be the right time to fund it directly. Until then, indirect investment vehicles are less risky.

Energy IntelligenceOpen Energy Data


Leveraging quality data for intelligent investing in indirect energy financing.Federal funding to insure the consistent returns in operating cost reductions of energy efficiency projects (rather than the reductions themselves) and packaging these insured savings (indirect).

Underwrite ESCO-driven energy efficiency projects to increase lender confidence in the projects, while allowing ESCO profitability.

Better consumer engagement on energy to promote direct financing.Until now, data hasn't existed in a place where companies that have an incentive to engage people on energy could use it. This is why open energy data like Green Button is so exciting. This is the first time in US History that the data has been available for investment analysis. These new “Apps for Energy” will promote investment through better data.

5. Energy Intelligence StrategiesBringing Better Data to the Energy Investment Discussion


Michael MeehanCEO, Zerofootprint USA

[email protected]

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Michael Meehan