The Investor Confidence Project Is Scaling Investment in Energy Efficiency

The team behind upgrades at Maiden Lane is using ICP protocols to incorporate industry-accepted best practices and standards into its project plans along with standardized documentation to help unlock capital for efficiency.

The team behind upgrades at Maiden Lane is using ICP protocols to incorporate industry-accepted best practices and standards into its project plans along with standardized documentation to help unlock capital for efficiency.

According to the Washington, D.C.-based U.S. Energy Information Administration, residential and commercial buildings consume nearly 40 percent of U.S. energy. Efficiency retrofits are a clear opportunity for the market to improve performance, identify cost-saving opportunities and demonstrate environmental responsibility. To make these buildings more energy efficient requires roughly $279 billion of investment and would result in more than $1 trillion in energy savings over 10 years.

The U.S. retrofit industry as a whole is estimated to be in the $20-billion range. Capital remains available and there is interest in these types of projects from investors and building owners; however, energy-efficiency projects have a reputation for failing to deliver and until now there has been no recognized way to mitigate the potential investment risk. A global initiative called the Investor Confidence Project (ICP) has worked with industry leaders to create standard protocols and a certification for increasing investor and owner confidence in the expected environmental and financial returns of these efficiency retrofit projects.

ICP’s Investor Ready Energy Efficiency Certification (IREE) program provides project developers with a roadmap for developing more reliable and higher-quality projects using industry-accepted best practices. With the support of philanthropic funders and reflecting a broad stakeholder engagement process, ICP and its IREE certification were conceived, incubated, developed and deployed by the Environmental Defense Fund, New York. The program was recently integrated into the global portfolio of green business rating systems administered by Washington-based Green Business Certification Inc. (GBCI), which is the global certifying body for the LEED green-building program. As green investing continues to drive change in the building industry, GBCI’s rigorous approach to project certification is helping ICP scale investments in energy efficiency around the world.

The Maidn Lane project also has a 27 percent projected reduction in greenhouse-gas emissions.

The Maidn Lane project also has a 27 percent projected reduction in greenhouse-gas emissions.

Embracing Standardization

New York-based Time Equities, the owner of a 52-year-old commercial building in Lower Manhattan called Maiden Lane, worked with Flywheel, an international energy-management company headquartered in the U.S., to create a cost-effective project development plan to retrofit Maiden Lane’s outdated and inefficient building systems. The team worked to comprehensively reduce energy consumption, enhance infrastructure reliability and improve tenant comfort. Using ICP protocols provided Flywheel with a tool to incorporate industry-accepted best practices and standards into its project plans along with standardized documentation to help unlock capital for efficiency. In total, just over $3.67 million was invested with an annual cost savings of $525,000, resulting in a seven-year payback period and 37 percent energy savings. The project also had a 27 percent projected reduction in greenhouse-gas emissions.

The ICP protocols have proven valuable for multifamily projects, as well. Arverne View, a 1-million-square-foot multifamily complex in New York, underwent energy-efficiency upgrades as part of the New York State Energy Research and Development Authority’s (NYSERDA) Multifamily Performance Program (MPP). Bright Power, a leading energy-services company, leveraged NYSERDA MPP incentives and proposed a comprehensive retrofit that took into account energy efficiency and non-energy saving benefits to residents, staff and property. The project plan incorporated the procedural and documentation requirement of the ICP protocols and received ICP’s IREE certification, which enhances the confidence of investors and building owners in predicted project energy savings and financial performance. The project anticipated energy-based savings of $585,200, providing a simple payback period of just more than six years. The actual measured energy savings has been calculated at 31.3 percent with more than $900,000 saved to-date.

In Berkeley, Calif., a 49-unit multifamily residential building owner worked with the New York-based Association of Energy Affordability (AEA), a non-profit technical services organization specialized in energy-efficient buildings, to deliver efficiency upgrades using the ICP protocols as it pursued IREE certification. The project included installation of low-flow water fixtures, LED lighting upgrades, a boiler plant upgrade, replacement of washing machines with ENERGY STAR models, improvements to the ventilation system and more. The project also qualified for the Bay Regional Energy Network rebate program. In total, the project received $70,350 in investment, plus $36,750 in local incentives, resulting in only a four-year payback period and 25 percent energy savings.

About the Author

Panama Bartholomy
Panama Bartholomy is director of the Investor Confidence Project (ICP), a program of Green Business Certification Inc., Washington, D.C. ICP has developed a global underwriting standard for energy-efficiency projects.

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