New Investment Model That Will Spark Energy Efficient Upgrades

You’d be hard-pressed to find a property owner or investor opposed to the idea of making existing buildings more energy-efficient. Unfortunately, progress in this arena has often been stymied by existing incentive structures. Building owners can’t justify the cost of “deep retrofits” like swapping out boilers or furnaces when tenants typically cover utility costs and they can typically rent out a building as-is. Investors, meanwhile, are hesitant to offer the type of low-cost, long-term loans required for successful energy efficiency projects.

A Seattle municipal utility and an eco-friendly foundation are trying to shake up that paradigm. Through an innovative agreement that incentivizes energy savings for investors, Seattle City Light and the Bullitt Foundation are showing that conservation doesn’t just make good environmental sense—it makes good business sense.

The model is known as MEETS (Metered Energy Efficiency Transaction Structure). Under it, utility companies still collect the same amount of money from the owners of buildings for which investors have paid for energy efficiency renovations. Because the building will be more energy-efficient, the utility won’t have to deliver as much energy to the building, so the investor gets to pocket the energy saved as a result of the improvements. This determination is made by the energy metering system EnergyRM. Investors benefiting from the continued “efficiency generation” of the building pay building owners monthly rental payments.

In the pilot program in Seattle, the Bullitt Foundation is serving as the investor for its own building, The Bullitt Center. According to The New York Times, the center will use about one-third of the electricity of a new building constructed to city codes, meaning Seattle City Light will pay about $44,000 in energy savings to the Bullitt Foundation. “The powerful thing about this proposal is that it works best for existing buildings,” Bullitt Foundation President Denis Hayes tells The Times. According to the article, older, smaller commercial buildings account for 47 percent of all commercial real estate aside from malls.

To read The New York Times article cited in this story, click here

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