This week, we continue our series on 2016 Summit presentations by focusing on the Financial Considerations: Leveraging the Value of Assets and Savings session, which featured speakers from Sparkfund, Rocky Mountain Institute (RMI), and Institute for Market Transformation (IMT). The full PowerPoint presentation from this 2016 Summit session is available on the BBC Solution Center. Stay tuned for the next round of Summit session recaps and don’t forget to register for the 2017 Summit, which will be hosted May 15-17, 2017 in Washington, DC.
Financial Considerations: Leveraging the Value of Assets and Savings
Multifamily housing providers face multiple challenges to financing energy efficiency projects, ranging from raising capital for projects to choosing projects that generate the biggest returns on investment.
Megan Houston from IMT and Rachel Gold from RMI discussed ways to overcome the barriers and disincentives to financing energy efficiency projects in the multifamily sector, followed by Pier LaFarge from SparkFund, who discussed one platform for connecting capital providers to potential energy efficiency customers.
Ms. Gold mentioned several innovations that could spur energy efficiency demand in the multifamily sector including:
- Creating standardized bundles of energy conservation measures, which will simplify training, customer acquisition, financing, and delivery
- Adding energy efficiency “scores” to real estate search portals
- Increasing the prevalence of energy disclosure requirements in mortgage underwriting
- Changing social norms so that energy efficiency is a standard to which all multifamily property owners aspire
Ms. Gold provided an overview of key opportunities for energy efficiency in the multifamily sector, including incorporating best practices from adjacent sectors. Ms. Houston continued the discussion with key research findings that measured commercial lending institutions’ perceptions of energy-efficiency financing demand and lending risk, along with the importance of utility benchmarking. She directed attendees to a valuable IMT resource, Catalyzing Efficiency: Unlocking Energy Information and Value in Apartment Buildings. Ms. Houston concluded by advising that, "Multifamily sector lenders and financiers are becoming increasingly familiar with building performance data. Now is a great time to capitalize on Fannie Mae and Freddie Mac programs that promote energy and water efficiency by offering preferential loan terms to projects that meet green standards."
Mr. LaFarge explained how his platform has minimized the disconnect between energy service companies, regional contractors, and equipment vendors and their potential customers by using customers' desired services to match them with a provider. Companies like SparkFund offer energy-efficiency upgrades as a service and allow customers to compare projected monthly cost savings with the cost of various upgrades.
Speakers from this session offered several lessons to attendees, some of which included:
- Energy performance data is crucial for multifamily property owners to evaluate and achieve value from energy efficiency projects.
- Improving a building's energy efficiency increases its market value beyond the project's direct financial returns by improving resident health, comfort, and privacy.
- Purchasing energy efficiency upgrades through a service contract allows customers to avoid manual effort and cost. This model of financing energy conservation measures could double the energy efficiency market by 2025.