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Energy Efficiency Projects Will Benefit from Aggregated Business Models, According to New CalCEF Innovations White Paper

9/9/2009 4:53:24 PM

Financial, Technological and Geographic Aggregation Key to Unlocking EE Potential

Financial, Technological and Geographic Aggregation Key to Unlocking EE Potential

SAN FRANCISCO—June 9, 2009— CalCEF Innovations, the market strategy and public policy arm of the California Clean Energy Fund, today announced that it has published a white paper, “New Business Models for Energy Efficiency.” The first in a series aimed at accelerating the growth of clean energy markets, the paper focuses on several business and policy-related initiatives that overcome barriers to adoption in residential, small commercial and small industrial existing buildings markets. Innovations is piloting two models that can speed execution of energy efficiency (EE) measures by combining individual projects, technologies, service offerings, and investments into larger and more profitable deals.

“Public and private support for energy efficiency is stronger than ever, but goodwill and ad hoc financing products are not enough to make a significant and lasting impact,” said Bob Hinkle, founder and CEO of Metrus Energy. “We want mainstream commercial finance to play in this market.” Metrus is a start-up company that develops and finances EE projects at large commercial, industrial, manufacturing, and institutional facilities through efficiency services agreements (ESA). Under Metrus’ ESA structure, customers can avoid all capital outlay associated with the implementation of an energy efficiency project, enabling off-balance sheet accounting treatment for EE assets, with their repayment based on a cost per avoided unit of realized energy savings.

Penned by Entrepreneurs-In-Residence Bob Hinkle and Steve Schiller, the ideas proposed in the white paper are an outgrowth of the second annual “Energy Efficiency Tech Impact Summit.” At the summit, significant discussion arose around the energy loading order in California. “The official loading order in California calls for EE to be first in line but that is not always the case,” commented Steve Schiller. “Because of issues such as the lack of direct energy cost/usage feedback consumers receive and the disconnect between tenants and landlords with respect to who pays the bills and who owns the building, more market intervention is needed to accelerate efficiency adoption. With public policies and business models that support efficiency, consumers can get a lot of bang for their buck.” The white paper lays the groundwork for the California Energy Efficiency Initiative (CEEI), which will work in concert with the California Solar Initiative to provide performance-based incentives that simplify EE investment and reduce transaction costs.

“Customer acquisition costs are a major hurdle in wide-scale implementation of energy efficient retrofits, and new partnerships between utilities and efficiency providers could achieve economies of scale and the necessary cost-effectiveness to encourage mass market adoption,” said Paul Frankel, managing director at CalCEF Innovations. “Our EIRs have outlined business solutions to overcome these and other roadblocks encountered in our transition to a more energy efficient, clean energy economy. Over the last several decades, California has triumphed in keeping energy use per capita flat while simultaneously growing to become one of the largest economies in the world.”

About CalCEF Innovations
The mission of CalCEF Innovations is to address issues impacting the long-run transformation of the energy system towards sustainability, including the formation of enterprises, the continued flow of capital into technologies and infrastructure, and the design of markets and policy strategies for the sustainable energy transition. CalCEF Innovations leads the California Clean Energy Fund’s development of novel finance, policy, and technology mechanisms to accelerate the growth of clean energy markets through a variety of programs and activities. These include our Entrepreneurs-in-Residence program developing solutions to key market and policy issues, academic and industry affiliations such as the UC Davis Energy Efficiency Center, the Clean Tech Open Alumni Program, and our innovation partnerships with university, national and private research labs. Through our ongoing Convening Series, our Annual Conference, and Executive Education for Policy Makers, CalCEF Innovations also initiates timely conversations across policy, technology and finance that are absent in the evolving debate around cleantech and climate change.