By Aparna Sundaram. Faculty advisors: Professor Tom Gladwin, Chair Professor Gautam Kaul
Abstract: Energy efficiency undertakings create cost savings and public benefits. These cost savings provide owners/managers with opportunities to earn a return on their investments. Benefits include lower electricity congestion, lower emissions, and potentially lower prices. However, there are many cases in which viable projects are known but not pursued. This research seeks to asses the role of capital markets in driving investment into non-residential building energy efficiency. Research Questions: What are the demand-side and supply-side measures that could save the most energy at the least cost? What are the impediments to investment in these measures? What are potential solutions, particularly in terms of financial instruments, products, and structures? Methodology: Secondary research In-depth interviews Conferences / trade shows Findings: Investment in non-residential building energy efficiency is taking place but not to the extent possible. When projects do attract customer attention, access to capital is a significant issue, not least because of the difficulty in collateralizing EE equipment, and most ESCOs’ lack of credit ratings. Utilities are looking to establish authoritative and lucrative positions, driven by new regulation. Capital markets financiers can seize this opportunity to leverage utilities and government partners to devise financing structures that can reallocate risk and return and drive investment into non-residential building energy efficiency.
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