External Financing for Energy Efficiency in Retail Primers
Retail is a sector of high competition and low margins, making energy projects a critical source of cost savings. Few investments are as overwhelmingly beneficial as energy efficiency projects: they reduce operating expenses, improve budget forecasting, build confidence among socially responsible investors, and strengthen brands. However, internal capital can be difficult to acquire, even at cash-rich companies.
Whether it’s being constrained by a limited implementation timeline and budget, struggling to find access to capital, or not having the right information to communicate the full value of an efficiency project to a finance team for approval—there’s no shortage of scenarios where energy- and water-saving solutions can be left on the shelf collecting dust.
To help address some of these issues, the Institute for Market Transformation (IMT) and the Retail Industry Leaders Association (RILA), with support from the U.S. Department of Energy, have created a Guide to External Financing for Energy Efficiency in Retail. It comprises seven primers tailored to the retail sector, each focusing on a specific external energy efficiency financing mechanism. An external financing mechanism exists for nearly any company’s project and risk preferences. Facilities, operations, or sustainability managers who have never utilized external financing should explore the viability of the mechanisms presented in the guide and primers to fund future energy projects.
Featured external financing mechanisms:
- Green Bonds
- Energy Service Agreements (ESA)
- Managed Energy Service Agreements (MESA)
- Energy Performance Contracts (EPC)
- Property Assessed Clean Energy (PACE)
- On-Bill Financing/Repayment (OBF/OBR)
- Tax Increment Financing (TIF)