Another path on the road to energy efficiency financing

No sooner than I had published ‘A roadmap for energy efficiency financing’ outlining the different ways to finance efficiency projects then another new route on the road appears – the MEETS or Measured Energy Efficiency Transaction Structure. The MEETS relies on EnergyRM’s DeltaMeterTM which measures the difference between the baseline energy consumption and the actual consumption i.e. the energy not used – or negawatt hours – to a standard accepted by the client and the utility – in this case NEEA, the North West Energy Efficiency Alliance, which includes 140 utilities in the Pacific North West plus the Energy Trust of Oregon and the Bonneville Power Administration.

The saved energy is metered and paid for per unit saved. This provides a cash flow which can both payback investment in upgrading the building and pay a ‘rental’ to the building owner for the right to exploit the energy efficiency resource – analogous to paying a landowner rent for a wind farm or a shale gas well. Involving the utility means that the utility has a degree of control and information about its load pattern that it wouldn’t otherwise have, knowledge that has value in itself. The price paid per unit of energy saved will depend on the retail energy prices plus any incentives that are available but the base line should be the retail price as a building owner can effectively get this price by doing the project themselves.

EnergyRM is providing the meter technology, not the finance, and the investor could be the utility or a third party investor.

Energy efficiency financing has been stuck in a rut for a long while, with most people obsessing about Energy Performance Contracts – a contract form that works reasonably well in the US public sector but has a number of failings in other markets. MEETS, like the Efficiency Services Agreement from Metrus, is another innovation that offers the prospect of scaling up investment in energy efficiency.