Efficiency-Services Agreements

Energy consumption is expected to increase by 50% by 2030.  Look for new delivery mechanisms for funding and financing energy conservation projects.  One firm, Metrus Energy Inc., is road testing a new financing and delivery mechanism called an efficiency-services agreement.  The agreement gets around the problem that for some commercial building owners, the problem isn't finding the money to pay for the energy conservation upgrades.  The real issue is losing the opportunity to use their cash for their core business.

Here is how Metrus structured two recent deals with BAE - - for facilities in New Hampshire and New York.  For the life of the deal, Metrus owns the new energy-efficiency equipment, not BAE.  Under the agreement, BAE continues to pay the utility bills.  But as the facilities become more energy-efficient and the bills shrink, BAE will pay Metrus an upwards-sliding see slightly less than the energy savings.  Payment becomes very much like your utility bill.

Metrus contracts with a third party to install the equipment - - in the BAE facilities its partner has been Siemens AG.  The work is guaranteed by Siemens - - they will pay Metrus if the energy savings don't materialize as expected.  Projections are that the New Hampshire facility will save over one million kilowatt-hours.

Look for more deals and delivery mechanisms like this - - the deals are both technically feasible and economically smart.