Stop ignoring free money: The Con Edison energy efficiency financing program

Tired of paying full price for your energy efficiency audits or retrofits? Well now, thanks to New York utility Con Edison’s new Commercial and Industrial (C&I) Energy Efficiency Program, building owners can save up to 50% of the upfront costs of an energy efficiency audit or 35% of the costs of a retrofit project. Con Edison has $100 million to give to building owners for these projects. Sound interesting?

We recently sat down with a sales representative for the program who is responsible for making sure all that money gets out the door, to get more details on how building owners can benefit.

Con Edison has three programs that provide cash rebates and incentives:

  1. The Equipment Rebate Program has a list of approved equipment and will pay a pre-determined amount for undertaking one of the approved measures. For example, they will pay $20 per fixture to do a lighting retrofit and replace old T12 ballasts with a new high performance T8s.
  2. The Custom Incentive Program allows for projects that energy saving measures that fall outside o the Equipment Rebate Program. Lauren said that all energy saving measures could potentially qualify for the program – if you’ve got a project, you should apply and see what rebates Con Edison has available.
  3. The third program is the Energy Technical Studies Program, which will cover half of your building energy audit, subject to a cap of $50K for electric only and $67K for electric and gas analyses.

All a building owner has to do is fill out a 2-page application.

The program has doled out about $5 million to date, with the largest project being nearly $1 million at Rockefeller Center.

Con Edison offering money to building owners for energy efficiency retrofits? Sounds great, right? What’s the catch?

Well, first, the program requires owners to still fund the majority of the project. So this isn’t a program that eliminates the many tricky funding issues related to energy efficiency projects.  If a building owner lacks the available cash, this program won’t be able to provide financing for the remainder.

Second, the program is set up so that Con Edison can only write the check to the entity that faces the utility. So if a landlord is the ultimate end customer on the monthly utility bill, then they are eligible. Depending on the set up, this could be fraught with some of the split incentive issues we are all too painfully aware of. Interestingly though, it could allow an energy efficiency developer to benefit from the program, so long as they are the utility facing customer, which is how some financing solutions, such as Transcend Equity’s Managed Energy Services Agreement (MESA) is generally set up.

Third, the program isn’t technically free – it’s just zero cost to the building.  The program is authorized through Con Edison’s sustainability measures, so ultimately the cost is borne by rate payers.  However, energy efficiency is one of the lowest cost options for reducing load and can be significantly cheaper to rate payers than construction of new power plants to meet the same amount of demand.

These issues aside, this is a great program for building owners who are looking to invest in energy efficiency retrofits at their buildings AND for rate payers looking to avoid future energy price increases. Riggs Kubiak, Director of Sustainability at leading real estate firm Tishman Speyer, told us that this program is basically like someone throwing free money at you.  Con Edison is hoping to receive authority to expand the program for the next five years, but building owners who have been thinking about energy efficiency retrofits should act now, before the program expires in December 2011.

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2 Responses to Stop ignoring free money: The Con Edison energy efficiency financing program

  1. Pingback: Creating a market for energy efficiency investment: Why securitization doesn’t matter (at least for the next 10 years) « Financing Efficiency

  2. ken cohen says:

    we have a 136 unit residential building, where the landlord supplies and pay for electric.we would like a engy audit. this is a low income development

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