B3.2 Efficiency rebate
Adopt “energy efficiency as a service” utility rebate model to direct energy savings to building owners who bear the costs of energy efficiency retrofits.
Energy efficiency as a service (EEaaS) – or simply Energy as a Service (EaaS) – is a unique model that consumers can use to pursue energy efficiency. EEaaS is similar to traditional Energy Service Agreements (ESAs) used by Energy Service Companies (ESCO) and third-party ownership models found in the solar PV industry. The process begins with an EEaaS provider establishing a customer’s baseline energy use, and identifying energy improvements. The customer then enters into an ESA with the EEaaS provider to pay back the cost of the energy improvements through a service fee charged as part of their monthly utility bill. The EEaaS provider also enters into a performance contract or power purchase agreement (PPA) with an ESCO to install and maintain the energy equipment. Typically, the customer does not pay anything upfront, pays lower utility bills even with the additional service fee, and shifts the performance risk to the EEaaS provider. Private ESCOs have been the primary providers of EEaaS to date, as it is similar to the traditional ESA model.
In what are commonly called metered energy efficiency transactions, a utility basically contracts to pay over time at the retail rate for the metered savings from energy efficiency investments in a building. (It can sell the saved power to other customers rather than having to build new generating capacity.) The MEETS Coalition’s “MEETS: The Metered Energy Efficiency Transaction Structure” gives a detailed account of various options for these deals.
The Bullitt Center building, in Seattle, has a deal like this with Seattle City Light, and the Seattle City Council has passed an ordinance authorizing a pilot in which the utility will expand the program to up to another thirty buildings. There are some more details in a recent Utility Dive post.
(See the discussion of Puget Sound Energy’s Commercial Strategic Energy Management Program in B1.17 Commercial utility outreach.
MEETS allows utilities to do deals rather like the ones done by energy services companies through energy services agreements.
The American Council for Energy Efficiency has a recent technical brief on the details of using an energy services agreement to finance efficiency upgrades. Often these are used to pay for work by an energy services company (an ESCO), like Johnson Controls or Ameresco, but according to a recent post on the ACEEE’s blog, they allow companies to finance projects off their balance sheets, while “some other similar financing strategies – such as power purchase agreements and operating leases (including many energy savings performance contracts and shared savings agreements) – that previously were off the balance sheet now need to be disclosed on company financial statements under new guidance from the Financial Accounting Standards Board (FASB)”. They’ve almost always been used with non-residential buildings, but according to the blog post there’s now one company (Sealed) that’s offering residential efficiency upgrades like this in New York State, where the financing is provided by the State’s Green Bank. They expect their services to reduce electricity use by about 5% and heating energy use by 20-25%. However, payments under a Sealed 20-year contract average roughly double the initial cost of the work, with the difference primarily covering financing costs including risk allowances, marketing and administration.