United States of America

Metrus Energy

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Program Type:
Asset-based lending
Program Type - Description:

One-stop shop, providing financing through private sector equity and debt and technical solution through ESCOs with performance guarantees

Target Group

Any
Cross Sectoral
Year:
2009
Ongoing:
Yes
Status:
In operation
Sponsoring Entity:
Metrus Energy
Metrus Energy finances, owns, and operates EE projects
Counterpart Entity:
Commercial Banks
ESCOs
Implementing Entity:
ESCOs
Metrus Energy
Objective:

Promote, finance and develop EE retrofit projects through provision of a procurement vehicle (partners, expertise) and funding (equity and debt) to commercial and industrial customers enabling them to finance EE projects off-balance sheet with no capital outlay by the host entity.

Barriers Addressed:
  • Access to funding / credit
  • Knowledge diffusion / public awareness
  • Optimized risk allocation between parties involved
  • Combined financial / technical solution
  • Facility-wide, and ongoing assessments to enable for deep energy savings – facilitate realization of such savings over horizons that exceed customers’ payback constraints
Financing Mechanism:

Metrus Energy provides 100% financing using a mix of equity and debt. Credit enhancement products are used when available, and the creditworthiness of the customer is taken into account. Collateral is limited to the residual value of the installed equipment.

An Energy Service Agreement (ESA) is signed between the customer and Metrus Energy (typical duration between 5 to 10 years, with periodic buy-out windows), during which the client pays a service charge to Metrus Energy based on actual project performance and energy savings (typically below the standard utility rate originally paid by the client).

Eligibility Criteria:

Targeted segment (see 10) and projects above USD 750,000

Major Activities:
  • Building automation & controls
  • Lighting retrofits & controls
  • Compressed air (leak detection & repair)
  • Utility tariff rate optimization
  • Heating, ventilation, & air conditioning (HVAC)
  • Chiller replacement & system improvements
  • Boiler replacement & system improvements
  • Pumps, fans, motors, drives
  • Cogeneration (onsite generation)
Key Results:

Typical pay-back period between 3 and 7 years.

A typical case may be illustrated by the Energy Service Agreement signed in 2010 with BAE Systems, an UK aerospace and defense contractor. Metrus Energy and BAE implemented EE measures at several BAE US facilities including equipment replacement, building automation, lighting retrofits, and operational improvements. The program produced the following outcome:

  • USD 200,000 in annual utility savings
  • 1 M kWh avoided
  • 30 k therms of natural gas avoided
  • 400 tons of CO2 avoided

Various non-energy savings (e.g. reduced maintenance expense).

Lessons Learned:
  • Knowledge diffusion is key as many opportunities to save energy are missed due to lack of access to the right technologies, partners or solutions required to address the full range of savings opportunities. Metrus Energy provides a combined financial and technical solution with performance guarantee on the equipment as a ‘one-stop shop’ for EE solutions. Metrus Energy uses its partnership network of contact to access clients
  • The lack of clarity in regulation, incentives and targets for EE programs / projects and emphasis on more expensive RE solutions undermine the realization of EE opportunities. Specific EE targets and regulation should be made clearer. Incentives equivalent to e.g., solar depreciation credits would lead to a significant expansion in EE
  • Access to credit can be an issue especially with non-recourse finance and the limited collateral available. A strong network of expertise and lending partners help to get access to debt financing. It means that the SME sector and smaller and lower credit quality customers struggle to get EE projects financed. Some of the incentives at federal, state or local level could be used to provide guarantees to lenders or elevate the priority of payments (e.g., PACE, OBR) in order to broaden access to EE funding.
  • Metrus Energy concept allows a sensible risk allocation among industrial clients, funders and installers and operators where each project participant is allocated the risk he is most suited to bear. The combination of ESCOs, ESPC and access to non-recourse debt financing allows the emergence of such a solution. In less developed markets, other support would likely be required such as third-party guarantee and/or risk-sharing facilities.
Contact:

Sam Lines, Project Development Director