Solutions to Energy Efficiency Project Financing Dilemmas

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The reasons to undergo energy efficiency upgrades are, for the most part, straightforward. For some, it’s a matter of health and comfort; well lit, energy efficiency buildings can lead to more productive tenants*. For others, it’s a means to achieving environmental and sustainability metrics. While the reasons to pursue an energy efficiency project may make sense, there are still issues around what the economics may look like.

You may be thinking, “I want to be energy efficient and I understand it’s a quick payback, but I don’t want to wait years to get a return on my capital.”

The EfficiencyEdge program, offered by Direct Energy Business, may offer a solution for these financing dilemmas. The solution offers on-bill financing so energy efficiency project costs are incorporated into either an existing gas or electricity commodity agreement. There is no up-front capital expenditure, just a line item charge on their electricity bill that’s spread out over the length of the customer’s contract.

How It Works

  • Building owner engages Direct Energy Business regarding gas or electricity agreements, as well as ideas for energy efficiency projects to undertake
  • Direct Energy Business coordinates a building audit, identifying the primary needs of the facility, as well as the supply agreement that will be the most advantageous for the customer
  • Direct Energy Business calculates the efficiency project costs in conjunction with a new or existing commodity agreement
  • Customer signs commodity and EfficiencyEdge project agreement with Direct Energy Business

Example Scenario

  • At a rate of $0.08 per kWh, the owner of Building A traditionally pays $500,000 a year for electricity.
  • Taking efficiency measures, Building A will now consume 25 percent less, or $375,000, annually.
  • The cost of those upgrades yields a new per-unit rate of $0.10 per kWh; however, the 25 percent reduction allows for complete budget neutrality and no up-front capital is required.

Some Typical Examples of Building Retrofits

  • Lighting and lighting controls 
  • Automated Direct Digital Control systems (DDCs)
  • Heating, Ventilation, and Air Conditioning (includes motors and variable frequency drives)


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Customers from many industries are looking at ways to reduce their energy spend, and energy efficiency is one way to begin to reduce the demand side of the equation. I welcome anyone that has interest in our program to reach out, and I’d be happy to explain EfficiencyEdge in more detail.

For more information or questions, please contact Matt Salera at matthew.salera@directenergy.com.

About the Author: Matt works in the Advisory Services group at Direct Energy Business, where he works on managed product offerings, as well as the non-commodity offerings within DEB. Before Direct Energy, Matt was a business consultant with Deloitte Consulting, and a graduate of Allegheny College.

*Source: http://www.institutebe.com/Building-Performance-Management/Productivity-Gains-from-Energy-Efficiency.aspx

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