The
full article can be read by clicking on the bottom
link.
The Goal: 100 Percent Private Energy Efficiency Financing
As the above examples demonstrate, most of the activity
in the realm of energy efficiency finance for buildings
has involved a partnership between the public and
private sectors. To truly exploit the opportunities
available, however, the private sector will have
to take the lead. The capital markets will always
be able to finance investments more efficiently and
on a larger scale than government or not-for-profit
spending. The key is to establish a self-sustaining
model that puts energy efficiency investments on
an equal playing field with investments that yield
similar risk and return ratios.
Perhaps the company that has come the closest to
making this model a reality is Transcend
Equity based
in Dallas, Texas. Transcend takes on the utility
payments of a building for 10 years. In exchange,
the building pays Transcend a payment based on its
historic utility costs and energy prices. Transcend
then make improvements on the building and pockets
any energy savings.
Unlike other systems, Transcend's business model
is based on equity, not debt. They take all the risk
and reap all the rewards. By providing their services
as truly cost-neutral for customers, the traditional
market barriers are removed.
Transcend's largest public client is Corporate Office
Properties Trust (COPT), a large mid-Atlantic REIT.
Capitalizing on the success of their relationship
with COPT, Transcend has recently begun raising money
from hedge funds to expand their business model.
If their success continues, don't be surprised if
many of the large ESCOs and banks start getting into
the act.
