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Please Finance My Energy Efficiency Project

(this article originally appeared in Conduit on November 13, 2014)

Ideas about financing energy efficiency projects are around every corner these days. Some are billed as silver bullets while others are clearly niche products.

Last week’s installment came at the Future Energy Conference, as a panel of five provided some nice variety and perspective. Three financiers and facilitators gave overviews of their respective approaches, and two users provided pragmatic perspective. A missing player was the utility, but you can read Stan Price’s piece, Making Markets Work For Efficiency, to learn more about Seattle City Light’s pay for performance effort.

My key take away from this session was that everything new is old again. Financing projects is still about careful technical and financial planning, credit-worthiness, appropriate leverage, strategic partners, and knowing your customer.

Jimmy Jia walked us through his approach that is based on fiscal discipline and resembles a revolving fund tailored for utilities and related expenses. The idea is fairly simple. Set aside funds to pay your utilities and to invest in improvements. As improvements are made, automatically re-invest the savings since your utility budgets are centralized in one account that is managed by Jia’s firm, Distributed Energy Management. DEM and its capital partner pay the utility bills directly, which further aligns the many utility-related expenses. On the savings side, DEM will also pursue utility incentives, and roll those savings into the master account. So in review, be proactive and create a holistic utility budget that centralizes all aspects and rewards. Read more

Crowdfunding hits real estate development

Soon after I typed up our vision of the FOD, I landed on an another favorite concept from the real estate world, although this one isn’t mine.

The folks at Fundrise have hit on a long-term frustration of mine—that real estate development is too often saved for those with loads of money, and that, in turn, these people (and corporations) are often not intimately connected to the places they are developing.

Enter crowdfunding. Fundrise jumped on it, and didn’t wait for the federal JOBS Act to be ruled on by the SEC. They made the connection to real estate on their own. Using a rarely used public offering qualified by the Securities and Exchange Commission (technically, Regulation A), Fundrise is removing several middle men and allowing everyday Americans (well, actually Virginians and DC-ians at the moment) to tangibly help revitalize their own neighborhoods. Regulation A permits small offerings to unaccredited investors for under $5 million total. For Fundrise, this means that individuals can directly invest in development projects in their own neighborhood. In theory, this will lead to more appropriate and successful projects because the local community is supporting developments through real ownership.

Check out these more lengthy pieces at Atlantic Cities and VentureBeat.

And speaking of the JOBS Act, the SEC missed its original January deadline for a draft ruleset. Now with a new SEC chair incoming, uncertainty is most certainly the theme.

Sprout Collective starts growing

More neat friends of ours are shaking things up. The Sprout Collective is doing that green jobs thing that we’re all trying to put our finger on. This trio is leveraging a big idea—the Living Building Challenge—and exporting our Northwest knowledge to any school district that is ready. They will solve school capacity issues, provide an innovative and tangible curriculum platform, and create lots of jobs. The team has designed the Seed, which is a net-zero modular classroom. Sprout will coordinate the pre-fab units with partner Method Construction. The primary elements—rainwater collection, PV panels, composting toilet—that make the Seed a Living Building will be contained in a central pod, which can then be enlarged with flanking rooms as needed. The Daily Journal of Commerce has some additional info here. And if you still need convincing, the real point of the Seed is to inspire kids towards a more sustainable future. I can’t think of a better time to simultaneously invest in our kids and the green building industry. Help the mission here if you’re so inclined.

Photo courtesy of Sprout!