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COSE has partnered with efficiency-services financer Metrus Energy and CalCEF, an organization focused on accelerating clean energy technologies, to create the Ohio Efficiency Resource Fund. The Ohio Efficiency Resource Fund utilizes a pioneering financial tool called an Efficiency Services Agreement (ESA) that provides otherwise hard-to-get financing for small and medium-sized businesses to make energy efficiency improvements with no upfront costs and no risk.
What’s an Efficiency Services Agreement?
An ESA is an innovative financing model that eliminates the first cost barrier often associated with efficiency improvements without impacting borrowing capacity for other capital needs. An ESA converts energy efficiency improvements into a service where building owners pay only for measured energy savings at a rate lower than their utility rate. Since this is a service and not a loan or equipment lease, the agreement is not a liability on the business’s balance sheet, and is an immediate source of positive cash flow.
How the Ohio Efficiency Resource Fund Works
The Ohio Efficiency Resource Fund signs an Efficiency Services Agreement for up to 10 years with an Ohio building owner, purchases all of the new equipment, and hires contractors to design, construct and maintain the energy-saving improvements, as well as measure energy savings on an ongoing basis. As a result, the customer sees a reduction in its total utility bill, while the building becomes more functional, productive and comfortable. The Fund recoups its investment by billing customers only for their actual realized efficiency gains. Since the useful life of the energy efficiency equipment continues well beyond the life of the contract, customers will continue to save for years to come.
Benefits of an ESA:
- Avoided capital expenditures - Customers do not pay for energy assessment, project design, project implementation or equipment costs, enabling them to conserve scarce capital funds for investment in their core business.
- Use energy savings to pay for improvements - ESA customers redirect a portion of their current utility spending, based on realized energy and operational savings, to the ESA provider to pay for efficiency improvements.
- Reduced operating costs - ESA prices are set below current utility prices which, when multiplied by the units of energy saved, results in immediate positive cash flow.
- Reduced exposure to utility price fluctuations - ESA pricing escalates at a pre-negotiated, fixed annual rate that is set below historical annual utility price increases.
- Enhanced reliability of operations - The ESA covers periodic maintenance services in order to ensure long-term reliability and performance of the project equipment.
- ESA payments treated as an operating expense - The ESA is designed to be an off-balance sheet financing solution with regular payments that are similar to a standard energy utility bill or PPA.
- Flexible & scalable financing - The ESA can be applied to a wide range of efficiency projects across a customer’s entire portfolio of facilities and it includes options to implement additional efficiency improvements during the contract term (i.e., new sources of energy savings can be added to an original ESA contract over time as technology and efficiency opportunities evolve).
COSE is currently seeking applications from Ohio owner-occupied buildings that are interested in implementing energy efficiency improvements ranging from $100,000 to $1,000,000 in total project costs. If you have a potential efficiency upgrade that would qualify.
COSE is also seeking to partner with qualified energy service contractors and other efficiency-focused service providers for this program. If you believe our ESA model can be of value to your services.