Energy Saving Agreement

It’s a Loan… It’s a Lease…It’s an Energy Service Agreement!

Energy Saving Agreement

Much like the beloved Superman (ok-we do love our approach), an energy service agreement (ESA) is often misunderstood, yet always there to save you (energy). An ESA is a funding mechanism for your complete energy systems: HVAC, lighting, controls, and onsite clean generation. At first glance, ESA may seem like a loan or a capital lease. It is neither!

Energy Service Agreement:

  • It is an off-balance sheet transaction. You do not own the asset or carry it on your balance sheet.
  • Prevents monthly service bills, including preventative routine and emergency maintenance.
  • It is structured to deliver energy savings. RENEW will estimate energy savings based on an energy audit to show the project’s potential. However, your payment will be based on the energy savings confirmed once the system is operational.

Unlike a lease or a loan, which are on a balance sheet and do not include maintenance, and may not deliver energy savings, the service agreement provides all of the above and then some:

  • Executing an energy service agreement is fast. Once a professional energy team surveys the project (we can recommend one), you review a simple service agreement contract, and RENEW will fund the project.
  • Executing a service agreement frees up your capital budget for your other priorities. Allowing you to focus on growing your core business.
  • Executing a service agreement positively affects your net cash flows.
  • And finally, executing a service agreement means flexibility. Perhaps you buy another building or look at additional efficiency measures. With a one-page supplement to your existing ESA, you can have those new lights, HVAC, and controls for your new building while reducing your operating expense!

The RENEW’s ESA allows businesses to focus on what they do best while ensuring that their facilities are performing at their peak with brand-new, high-efficiency equipment. In this current climate of cost control and resource allocation, the energy service agreement is the perfect solution to help businesses meet sustainability goals and keep facilities in top condition.

Microgrids Provide Greener, More Reliable & Resilient Power Source

With extreme weather events driven by climate change, the electricity grid faces a “triple challenge”—it needs to be greener, more reliable and more resilient. Use of micogrids can be the solution to this challenge.

A microgrid is a small, free-standing combination of power sources, users and the wires to connect them. In the US, microgrids are typically embedded within the larger grid. At their simplest, microgrids provide a source of power to users if the grid goes down. In that context, a microgrid can separate itself from the larger grid and provide backup power until the main grid comes back on.

An advanced microgrid provides backup power and also makes the overall grid more reliable and greener. A triple-threat microgrid is one that is based on renewable energy, uses on-site energy storage systems to make that renewable energy available when needed, and has some other cleaner power source that can provide on-site generation when the sun in not shining.

Interest in microgrids is growing fast as utilities increasingly see that a well-designed microgrid “can provide grid services — storing energy when it’s cheap, providing energy when it’s expensive, serving as backup capacity, or smoothing out frequency and voltage fluctuations.”

To date, due to a microgrid’s complexity and cost, the military has been the only steady customer. Fortunately, the growth of firms like RENEW, that can fund, own and operate a microgrid, has unlocked this market for commercial buildings. In fact, the number of microgrids nationwide is slated to grow to 7.1GW over the next five years (up from about 4 GW).

RENEW is proud to be working on its first next generation microgrid at a Massachusetts hospital. Our project will include a solar array and combined heat and power system coupled with an on-site storage system. Please contact us if you’d like to learn more.

microgrid

How Resilient is Your Building?

Resilience is “the ability to prepare for and …. withstand and recover rapidly from disruptions.” This includes “high-consequence, low-probability events.” (Source: Critical Infrastructure Security and Resilience, Presidential Policy Directive 21 (PPD-21). In the Northeast and New England, resilience is the ability to withstand and recover quickly from hurricanes, Nor’easters, Super Storm Sandy, ice storms, and other extreme weather events that cause wide-spread power outages.

Every city in the country now fears the harrowing effects of a non-resilient power grid when the streets go dark, gas stops pumping, and ATMs cease to operate. This past fall, Hurricane Maria was an all too real example of how a failing power grid affects a region’s critical infrastructure, including financial, transportation, and healthcare systems.

For buildings with elderly residents, hospitals and nursing homes, resilience is a matter of life and death. Many in the energy industry are making the case that building and portfolio owners MUST understand the current risks and options for increasing resilience. For details, see the ACEEE’s recent blog post.

RENEW believes that resilience is critical to understanding the value of, and making the case for, energy efficiency retrofits and on-site co-generation. RENEW can reliably show the Net Present Value of a building owner’s cash flows is higher doing a project now with RENEW than waiting a year or more to do it with their own capital. RENEW believes that an equally important reason to explore efficiency and co-generation is to provide resiliency to your facilities’ critical energy systems while minimizing day-to-day base load energy use via the use of highly efficient, on-site combined heat and power.

RENEW has just signed an agreement for a combined co-generation/resiliency project at a large multi-family housing complex in New York City. This $11M project will provide residents and the neighborhood with a safe haven when the next storm hits. We urge you to contact us if you own or manage a building and are interested in lowering energy costs, reducing environmental footprint, improving cash flow, and increasing resilience. We want our customers to be prepared for the next “high consequence, low probability” event.

Energy Storage: A Multi-Billion Dollar Opportunity

Bloomberg New Energy Finance (BNEF) predicts that 305,000 MWh of energy storage will be installed between now and 2030. According to BNEF, the US will be the number one market for battery storage over this period.

At the utility level, storage may be used to fill the gap as aging electricity infrastructure goes offline. For example, New York has already deferred $1 billion in spending on a new substation by installing $200 million in energy storage. Utilities will also likely use storage to manage the variability of renewable power sources or to shave peak demand.

Commercial buildings will also create huge demand for energy storage by 2030. Commercial customers are already using energy storage to reduce their demand charges and many states are launching programs to catalyze these technologies and their adoption. Massachusetts’ Energy Storage Initiative (“ESI”) aims to make the Commonwealth a national leader in the energy storage market. Under the ESI, the Commonwealth has set a target of 200 MWh of storage by 2020 and announced a first round of grants in December 2017.

RENEW can help develop and fund multi-faceted energy system upgrades that include efficiency, solar, storage and combined heat and power. Such a project would provide a customer with significant savings, reduced climate footprint, the ability to manage and reduce their demand, and unparalleled resilience.

Many of our design/build partners agree the RENEW model of energy-systems-as-a-service means they can look for and develop larger projects. Freed from the constraints of having to sell into a customer’s aggressive expectations on return on investment, our partners are looking for ways to provide larger and more complete system upgrades that provide their customers with all the benefits of the next generation energy technologies.

Interested in learning more? Please contact us today.

States Rethinking Energy Marketplace

The energy marketplace is being redesigned across the country. Are energy design/build, energy procurement and energy engineering firms prepared to deliver value to their customers in this fast-changing world?

“In recent years, energy customers have become increasingly dissatisfied with their relationship with their utility. They no longer want to simply act as ratepayers, waiting for a complex bill that arrives five weeks after the first spin of their meter in the billing cycle. Instead, they want ways to manage costs, lower their carbon footprint and be active consumers in a vibrant marketplace.“  So wrote Janet Besser and Peter Kelly-Detwiller in a November 29, 2017 article in GreenBiz.

Furthermore, utilities are finding that their financial health is in jeopardy as sales decline and as consumption peaks become more unpredictable. Perhaps worse, there is a growing realization that the electricity grid is the product of an outdated regulatory framework. As noted by Besser, the current grid is inefficient to use, which drives prices up and it also fails to keep up with the tremendous potential of “a rapidly evolving generation of smart, modular, decentralized clean energy technologies.”

These pressures have triggered a wave of efforts across the country to rethink the energy marketplace. New York State has launched an initiative called RevConnect and Rhode Island has launched a Power Sector Transformation Initiative. In all, over 30 states are working to modernize their power grids.

Rhode Island is looking at “creating a multi-year structure to align utility incentives with grid efficiencies. It would focus on outcomes rather than infrastructure, place increased emphasis on customer service metrics and encourage the creation of new utility revenue streams.” New York’s Reforming the Energy Vision (REV) is working on a grid with decentralized production, more renewables and more flexibility.  REV’s core principles include enhanced customer control over their energy consumption, enabling the private sector to deliver services that customers value, enabling private capital investment and changing the way the utilities are compensated.

Capital and Complexity are the Roadblocks That RENEW Solves

Energy Efficiency Efforts Face Obstacles in New Buildings and Retrofits

November 16, 2015, By Carl Weinschenk at Energy Manager Today

Research shows that energy efficiency is important – but not paramount – to building owners and operators and that implementation of measures to cut energy use is inconsistent in both existing structures and new building designs.

In late October, Honeywell and KRC Research released a study examining the priorities of 500 building operators across the United States. The findings suggest that energy is important to them, but that several other tasks vie for their attention.

Overall, buildings are not scoring particularly well in energy efficiency: The responding buildings had an average “smart building” score of 35 out of 100. Efficiency was not at the top of the list of things managers feel are important, though it scored pretty well. Fifty-one percent of respondents consider safety “the primary gauge of a smart building.” Twenty-seven percent say that green assets are that indicator.

Also noteworthy is the gap between how energy efficiency is perceived and its current status in the field. Eighty-two percent extolled the benefits of energy efficiency, while only 53 percent of the buildings being managed were seen as “technologically advanced” enough to reap its benefits.

The unmistakable conclusion is that while the benefits of energy efficiency are wildly accepted, retrofitting them into existing buildings is a capital-intensive and difficult process that is not an easy sell. At the same time, there are other laudable goals that could take some of the focus away from energy efficiency.

The new building energy efficiency landscape is similarly mixed. The American Institute of Architects annually tracks the percentage of professionals who accept the challenge of reducing predicted energy use efficiency (pEUI) by 60 percent.

The good news is that the number taking that pledge is up. The bad news is that the actually results – reduction in pEUI – is poor. The Atlantic’s CityLab reports that the pEUI reductions outlined in plans submitted to the AIA average only 34 percent.

Andrea Love, an architect with Payette, indicates in the story what the problems are: In general, she suggests, architects are not familiar software tools available. Specially, they don’t use energy modeling software, the most potent of these tools, until too late in the process – if at all.

The general inconsistency of these efforts is illustrated by a comparison of the status of public buildings in Massachusetts and Connecticut. Massachusetts is a pacesetter, according to the American Council for an Energy-Efficient Economy:

Massachusetts has several green building programs targeted at state buildings. Executive Order 484 (2007) requires a reduction in overall energy consumption in state-owned and leased buildings (at which the state pays directly for energy) by 20% by fiscal year 2012 and 35% by 2020 (based on a fiscal year 2004 baseline). The executive order also states that all state agency new construction and major renovations over 20,000 sq. ft. must meet the MA LEED Plus green building standard and perform 20% better than the state energy code.

Conversely, Connecticut, which the Hartford Courant says is considered by various groups to be “solar power-friendly,” is failing in terms of municipal use of this potent efficiency tool:

The only working solar panels installed at the state’s more than 3,000 buildings are on a few state park toilets, ticket booths, and some state lighting fixtures, according to state official.

The bottom line is that there is low hanging fruit in energy efficiency for new buildings and retrofits. Ellen Bell, the Environmental Defense Fund’s Clean Energy Manager for the Midwest, recently posted a blog which extolled the virtues of energy saving retrofits.

Bell pointed to 77 West Wacker, a Chicago property managed by JLL that reduced its energy use by 32 percent and aims to cut 26.5 percent more by 2018. She also cited Shorenstein Properties, a San Francisco management firm that has more than 15 million square feet in its portfolio – and has an average Energy Star score of 82 out of 100.

Bell, in response to questions from Energy Manager Today, cited lack of resources, lack of tenant engagement and split incentives as the main obstacles to energy efficiency programs. Split incentives, she wrote, are situations in which the party that makes the investment is not the party that enjoys the benefits.

However, some areas offer powerful and relatively easily realized energy efficiency benefits. “There are many low-hanging fruit steps like lighting upgrades, HVAC control points, and variable frequency drives that require minimal upfront investment and have very attractive ROIs and payback periods around 18 months or less; it is often just a matter of understanding and making the business case for the upgrades. In addition, utility incentives can drive those numbers down even further if they are utilized correctly.”

Third Party Funding for Hotels and Resorts

RENEW principal Charlie Lord provides insights on the use of third party funding for hotel and resorts efficiency upgrades. In his guest column for Green Lodging News, Charlie illustrates that a hotel ownership group that decides to upgrade the lobby this year and do the efficiency project in a couple years is likely costing the hotel money.

A hotel sign reflected in the glass of the building

The Grid of Things

“We need a grid that is very interactive.” So says the Chairman and CEO of PG&E in a recent interview.  It is very interesting to watch the progress around the country, from New York to California, on designing and building a grid that can manage electricity coming in at all points in the system and can utilize the knowledge and data available from every point in the system.  At the same time, RENEW believes it is just as important to support emerging business models for funding and maintaining the resources on this grid of things.

Sustainable Cities Prioritize Energy Efficiency and New Business Models

Cities around the world have made a commitment to reducing energy use and carbon emissions. Recent research suggests that significant progress is possible-see more here-but that to get there will require prioritizing energy efficiency and making new business models possible. Emerging Green Bank models in the US (in Connecticut and New York for example) already point the way toward these new business models, as does the progress we are making here at RENEW.

HEET & RENEW Launch Innovative Efficiency Finance Program for Non-Profit Organizations

RENEW is proud to be the project development and finance partner for an innovative energy efficiency program for non-profit organizations led by HEET. HEET is an award-winning non-profit that seeks to provide energy efficiency upgrades in underserved markets.  RENEW will provide project development and project funding for retrofits in non-profit organizations using its energy services agreement and energy efficiency lease structures.  Investors in the program are impact investors seeking a competitive return and an impact on climate emissions who are also keenly interested in the powerful effect of the program in expanding the reach of participating non-profit organizations. The retrofits will reduce the operating budgets for participating organizations, allowing them to do more with their available dollars.  Read more here: http://thequincysun.com/2014/12/11/help-for-energy-hogs-launches-in-quincy/

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