Leveraging Impact Investment for Small- and Mid-Size Energy Efficiency Projects

Author: Bob Hinkle and Erik Birkerts

Most buildings today can achieve significant energy savings through efficiency upgrades. However, these savings remain largely untapped due to financing constraints. According to a July 2011 report on EE financing by the California Public Utilities Commission (CPUC), “Lenders tell us that many of the entities in this sector will not or cannot add debt to the balance sheet….”  Opportunity costs and long payback periods, combined with perceived credit risk are also significant barriers to implementation for a large segment of businesses. Though banks are the most common source of funding in the commercial sector, they provide relatively modest levels of financing to property owners for EE measures.  These challenges are particularly significant for small and mid-sized non-residential buildings, where energy upgrade projects typically cost less than $1 million.

In 2008, the combined U.S. commercial and industrial (C&I) building sectors accounted for over half of all US primary energy use, and approximately 10% of total global energy use. While there are approximately four million existing C&I buildings in the US, half of those are owner-occupied. CalCEF sees an opportunity to sell efficiency as a service and leverage impact investment capital to help these buildings undertake cost-effective upgrades—targeted at achieving 25% energy savings—to unlock more than $150 billion in energy savings over the next 10 years.

CalCEF intends to provide a means for business owners to implement EE projects without any upfront payments, thereby eliminating the first-cost barrier.  Instead, efficiency assets can be owned by a nonprofit EE investment fund and customers will pay for savings over time using an Efficiency Services Agreement (ESA).  This simple solution pays for capital improvements by repurposing a company’s utility operating expense in much the same way as do solar PPAs.

CalCEF intends to manage education and outreach with channel partners, who will play a vital role in unearthing and unlocking the value inherent in these disparate and invisible project opportunities.  Partners can help lead their industries through education & communication, identification of savings opportunities, and project facilitation.

The Fund is now accepting customer applications from facility owners who have efficiency retrofit projects that cost less than $1 million.



Bob Hinkle, President and CEO of Metrus Energy introduces the Efficiency Resource Fund in the below video:


The Efficiency Resource Fund taps into a massive underserved market of 4 million buildings nationwide by providing otherwise hard-to-get financing for businesses to make energy-efficiency improvements, with no upfront costs – helping unlock $150 billion in efficiency savings.


Paul Frankel, Managing Director of CalCEF discusses the market impact of the Efficiency Resource Fund in the below video:

The Efficiency Resource Fund unlocks $150 billion in efficiency savings through an innovative financing solution for some 4 million buildings nationwide – delivering customer savings, putting contractors and skilled labor to work, and providing attractive returns for impact investors.


Impact Investment for Small and Mid-Size Energy Efficiency Projects

Individual stakeholder meetings were held in place of a workshop

Resulting Action

Impact Investment for Small and Mid-Size Energy Efficiency Projects