Greenbuild aftershock part 2: Show me the money
After overcoming the initial hurdle of making the business case for sustainability initiatives to internal stakeholders, companies are often faced with the challenge of how to curate long-term projects. Fellow Better Buildings Challenge (BBC) partners Deutsche Asset & Wealth Management and Clean Fund LLC, teamed up with the Environmental Defense Fund (EDF) and the city and county of San Francisco to discuss the barriers that impede energy efficiency projects and what steps are being taken to address them.
The lack of confidence in energy savings and lack of standardized processes and documentation are two barriers that inhibit investors from providing capital for potentially innovative energy solutions.
“Our experience is that capital for investments is available. The internal ROI struggle trickles down from financial executives when a strong enough case is not made by the project team through documentation and data,” said Ron Herbst, Director of Asset & Wealth Management at Deutsche Bank.
The issue investors face is the inability to properly underwrite energy efficiency projects due to the difficulty of predicting, monitoring and verifying costs and savings—because associated common, industry-wide standards to do so do not exist. Projects use various sustainability standards, which results in various types of documentation and data types needing to be reviewed to obtain financial assistance. To address the inconsistency, Clean Fund, a specialty finance company providing Property Assessed Clean Energy (PACE) project finance, uses its own underwriting criteria to determine whether a project is suitable for financing.
The EDF’s Investor Confidence Project (ICP) is also working to ensure the need for a market standard for energy efficiency project funding is met with its Investor Ready Energy Efficiency™ trade rating. In order for a project to receive this rating, it must meet all requirements set forth in the ICP Energy Perform Protocol specific to the project type. Additionally, baselining energy usage and predicting savings; specific plans for commissioning, operations and maintenance; and measurement and verification must be included.
Ultimately, the propagation of energy efficiency projects is dependent on the ability of the market to standardize energy savings data collection and associated documentation so that investors are able to seamlessly verify the efficacy of projects in question and provide financial assistance.