Michael Meehan


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Michael Meehan

  1. 1. The Future of Financing Energy Efficiency University of Pennsylvania Michael Meehan CEO, Zerofootprint USA ©2013 Zerofootprint - Company Confidential
  2. 2. First, A Story… ©2013 Zerofootprint - Company Confidential
  3. 3. 1. Energy Investment Challenges So if the finance industry has been engaged in climate and energy for decades, why are we here? Investment in energy projects requires good information. To get better information to investors, two primary challenges remain: 1. Availability of quality data 2. Consumer Engagement ©2013 Zerofootprint - Company Confidential
  4. 4. 2. Energy Sector Financing Direct vs. Indirect DIRECT INDIRECT • Consumer Rebates • Green Energy • Homeowner tax Subsidies Incentives • Insurance/Reinsurance • Utility Rebates & • Program underwriting Incentive Programs • Federal Investment • Low-interest loans for programs (ATVMLP) consumers • Low interest loans to residential and commerical ©2013 Zerofootprint - Company Confidential
  5. 5. 3. Energy Financing Direct to ConsumerDirect energy financing addresses the “low-hangingfruit” in the market (e.g., retrofits, Energy Star) andprovides direct, tangible funding for consumerpurchases. The most straightforward, but has met withlimited success.The nation’s 130 million homes account for 20% of USemissions. The technology is widely available andpayback periods are known with a high degree ofconfidence.So why aren’t we doing retrofits everywhere? ©2013 Zerofootprint - Company Confidential
  6. 6. Energy Intelligence Starting with the Consumer Engaging energy consumers (e.g., tenants) is the key to acquiring the data required to make investment decisions. If you can’t engage them, the returns on investment rapidly decrease. Declining Returns within Engagement Programs $10 Million (47%)$ Budgeted $5 Million $4.7 Million $300K Successful Implementations / Time ©2013 Zerofootprint - Company Confidential
  7. 7. Direct Energy FinancingChallengesRetrofitting costs real money, and the market has a dataproblem.•Costs are high: $10-15K per home ( x 130M homes =$2T)•Direct financing schemes are not uniform and are oftennot marketed appropriately.•Lack of actionable data – smart meters, APIs, closedutility systems provide data, but do not engage consumers•Leads to a lack of investor confidence in the data fromenergy projects, especially in residential ©2013 Zerofootprint - Company Confidential
  8. 8. 4. Indirect Energy FinancingLarge-scale energy efficiency projects offer more suitableinvestment vehicles but have their own challenges.•Complexity begins at the lowest levels (meters, HVAC systems,building controls, smart homes, etc)•Problem is compounded by complex systems to get the data:buildings management systems, closed utility systems, etc.•Few standards for the communication of data (beyond the buildingsuch as Zigby, etc)•But some successful funding models • US Dept of Housing and Urban Dev (HUD) offers creditworthy borrowers for EE upgrades (not homeowners) • Federal Housing Admin (FHA) PowerSaver Program ($25M) ©2013 Zerofootprint - Company Confidential
  9. 9. Energy IntelligenceOpen Energy Data This push for "open" energy data will enable the financial sector to more accurately assess risk in energy projects, whether were talking about insuring ESCOs, federal backing of energy efficiency projects, or supporting the reinsurers.   •White House Open Data Initiative •Green Button (Dept. of Energy) •App platforms for Energy Star (NYSERDA) •Mostly for commercial applications, consumers aren’t engaged in energy When consumers are engaged on energy, then it’ll be the right time to fund it directly. Until then, indirect investment vehicles are less risky. ©2013 Zerofootprint - Company Confidential
  10. 10. 5. Energy Intelligence Strategies Bringing Better Data to the Energy Investment DiscussionLeveraging quality data for intelligent investing in indirect energyfinancing.Federal funding to insure the consistent returns in operating cost reductions ofenergy efficiency projects (rather than the reductions themselves) andpackaging these insured savings (indirect).Underwrite ESCO-driven energy efficiency projects to increase lenderconfidence in the projects, while allowing ESCO profitability.Better consumer engagement on energy to promote direct financing.Until now, data hasnt existed in a place where companies that have an incentiveto engage people on energy could use it. This is why open energy data like GreenButton is so exciting. This is the first time in US History that the data has beenavailable for investment analysis. These new “Apps for Energy” will promoteinvestment through better data. ©2013 Zerofootprint - Company Confidential
  11. 11. Michael Meehan CEO, Zerofootprint USAmichael.meehan@zerofootprint.net ©2013 Zerofootprint - Company Confidential