The Investor Confidence Project (ICP) is pleased to announce the launch of the ICP Quality Assurance Provider Credential, ICP Quality Assurance Checklists, and the ICP Quality Assurance Specification. This is the final major component of the Investor Ready Energy Efficiency™ certification system which is poised to increase investor confidence.

The energy efficiency industry has always been hampered by the inability for investors, especially the building owner, to be able to “bank” on predicted project returns that have been verified for authenticity by independent parties.  Currently, the calculation of potential savings are controlled by the developers and due diligence activities to verify them by third parties are typically skipped due to the time and cost required to re-engineer one-off projects with disparate engineering methodologies and documentation.  In the commercial sector, this issue has been one of several issues which have severely inhibited the realization of the vast potential for energy savings and associated financial gains.

Today this means that building owners and investors now more economically employ an industry developed a methodology to achieve consistent due diligence results when evaluating projects.  Perhaps more importantly, tomorrow this development will enable a combination of programs, software, and integrated engineering reviews to drastically reduce the time and costs associated with underwriting projects.  Instead of multiple iterations of time consuming manual engineering efforts - soon a  click of a button will analyze the underlying engineering, calculations, and assumptions of projects against data-driven benchmarks and other criteria to flag areas that require additional scrutiny.  This automation of the technical review process will be further enhanced by integration  with public programs, utilities, and investors  ICP is already working with its Credentialed Software Providers, as well as key utility and regional programs, to bring this concept to reality.  The integration of automation, the ICP system, and engineering review will ultimately provide the scale to develop a verifiable asset class of Investor Ready Energy Efficiency™ projects that will be key to enabling secondary markets and securitization for the energy efficiency sector.

The European Commission is putting its weight behind an initiative designed to increase private investment in energy efficiency, the Investor Confidence Project (ICP). ICP is accelerating the development of a global energy efficiency market by standardizing how energy efficiency projects are developed and energy savings are calculated.

In late February, the European Commission released a landmark report on energy efficiency in Europe that was 18 months in the making, and it had ICP all over it. The report, Energy Efficiency – the first fuel for the EU Economy, was issued by the Energy Efficiency Financial Institutions Group (EEFIG), a group of financial and energy efficiency leaders and building owners convened by the European Commission and United Nations Environment Programme Finance Initiative.

Earlier that same month, the European Commission awarded a €1.92 million grant to the European version of the project, ICP Europe. The grant will pay for a consortium of companies to:

• Develop ICP’s project protocols for the European market;
• Work with financial institutions to embed them into their financing process; and
• Organize National Steering Groups in five countries: (Austria, Bulgaria, Germany, Portugal and the U.K.) to take the protocols to markets in those countries.

To cap it off, the European Commission’s main energy website unveiled a newFinancing Energy Efficiency web page that listed ICP Europe as a recommended initiative; it was the only initiative listed not related to the European Commission.

We get it! We feel loved and trust us, it’s mutual.

Introduced in November 2014, Environmental Defense Fund’s ICP Europe has been gaining momentum among the European public and private sectors, and financial and engineering communities have recognized the need for the type of standardization offered by our Energy Project Protocols and professional credentialing system.

EEFIG (not an exotic Mediterranean fruit)

Comprised of more than 200 individuals from over 100 organizations, including Deutsche Bank, ING, Allianz, BNP Paribas, the European Property Federation, and EuroACE, EEFIG highlighted ICP six times in their report, calling us a “model initiative” and recommending that Europe develop a “standardization and performance tracking initiative (e.g. building on the Investor Confidence project) that supports the development of standard processes and open-sourced buildings energy usage database.”

EEFIG surveyed members of the group to identify the major drivers of energy efficiency finance supply and demand, and the survey showed standardization as the top driver for both supply and demand of finance, an issue at the heart of ICP’s efforts.

EEFIG also identified other drivers that are directly being addressed by ICP Europe, including “increased investor confidence and change in risk perception, transaction costs/ simplicity, measurement, reporting and verification and quality assurance, lender's approach to risk assessment, risk-return targets, availability of data, price of energy and the challenge of aggregating projects.” The ICP protocols and process provide clear pathways for developers, building owners and investors to address these exact issues.

Europe-specific protocols on the way

The EEFIG report went beyond identifying barriers to investment by offering a series of recommendations to government authorities and market players. The development of a European ICP was recommended as a specific “to-do” a number of times in the following sections: “Strong, Stable and Well-enforced Regulatory Framework,” “Clear Business Case, Leadership and Awareness at Key Decision Maker Level,” “Standardization,” “Development of Easy-to-Use Standards for All Steps in EE Investment Process.”

The ICP Europe team will be working with members of EEFIG to implement the report’s recommendations by developing Europe-specific energy efficiency protocols, starting this May and working with EFFIG members to embed those protocols in building energy renovation programs around the European market.

For more information on ICP Europe, including how to take part in developing protocols and other tools, visit www.EEperformance.org/europe.

Assembly Bill 758 (Skinner, Chapter 470, Statutes 2009) requires the Energy Commission, in collaboration with the California Public Utilities Commission and stakeholders, to develop a comprehensive program to achieve greater energy efficiency in the state’s existing buildings.

The Energy Commission foresees implementing AB 758 in three phases. The first phase began with the American Recovery and Reinvestment Act of 2009 (ARRA) implementation period (2010-2012). The Energy Commission’s ARRA-funded pilots supported energy efficiency efforts through state and local upgrade programs, workforce training, and financing. 

Efficiency is first in the loading order for energy investment because it is cheaper than expanding electric and gas supplies. Reaching the policy goal for building energy efficiency upgrades is estimated to require investment of at least $ 8 billion per year, with private capital accounting for the majority.126 Currently, $1.4 billion a year is spent by utility ratepayer incentive funds and building owner investments. This amount is not sufficient to achieve California’s energy and climate goals, and means that solutions must leverage private capital. 

Therefore, state agencies must adopt policies and support actions that will catalyze the private market. Current finance products used for efficiency are primarily one‐off, unsecured loans with short terms and high interest. Efficiency is not typically incorporated into long‐term mortgage debt. New long-term finance programs are needed that match cash flow benefits with lower risk‐informed interest rates based on robust data from loan repayment histories of large portfolios of efficiency‐specific transactions. Essentially, efficiency needs the kinds of finance programs that the solar industry has created.  

AB 758 is proposed to achieve in 3 stages: 

Phase 1: Infrastructure Development & Implementation Plan

The California Energy Commission gathered relevant lessons learned from ARRA, researching market conditions, and working with technical support consultants to develop an understanding of the market. This Scoping Report is the result of this overall research effort and is intended to be a high-level summary of major gaps and needs in the marketplace. 

The newly released California’s Existing Buildings Energy Efficiency Action Plan defines major goals and strategies of the AB 758 program, articulate solutions for addressing needs identified in the Scoping Report, and develop a roadmap for implementation of the program

Phase 2: Market Development & Partnerships

Phase II of the program will involve implementation of the near-term activities identified in the Action Plan, including any necessary market development to support energy efficiency programs (for example, tools, workforce development, additional market analysis, etc.) A major activity in this phase will be identifying industry and agency partners and defining and developing collaborative relationships.

Phase 3: Statewide Ratings & Upgrades Requirements

This third phase of the program will help transition voluntary program approaches and market maturity into regulations when and where identified as appropriate to accomplish the goals of the AB 758 program.

A move to accelerate energy efficiency and cut carbon emissions from commercial buildings is gaining momentum in Europe, with the European Commission granting €1.9 million to fund an initiative aimed at mobilizing private capital for energy efficiency practices across Europe.

At the same time, a group of energy efficiency industry stakeholders convened by the European Commission and United Nations Environment Programme Finance Initiative called for Europe to embrace the tools and resources included in the initiative as “best practices.”

The Investor Confidence Project Europe (ICP Europe), created by the Environmental Defense Fund, works with the financial and efficiency sectors to remove barriers to investment in energy efficiency by providing tools and guidance that standardise the process of renovating a building. The European Commission is providing the grant to ICP Europe through its landmark research and innovation programme, Horizon 2020.
 
“The European Commission has made clear it sees the lack of standardisation in energy renovation projects as a hindrance to scaling investment in energy efficiency,” said Panama Bartholomy, Director, Investor Confidence Project Europe. “Thanks to this generous grant, ICP Europe can help to significantly increase investment in European energy efficiency.”

Convened by the European Commission and United Nations Environment Programme Finance Initiative to study barriers to energy efficiency finance, Energy Efficiency Financial Institutions Group (EEFIG) last week released its Energy Efficiency – the first fuel for the EU economy report, referring to ICP Europe as a best practice and needed solution. The ICP Europe team will be working with financial institutions, asset management firms, engineers, and government officials from EEFIG to implement the report’s recommendations, both Europe-wide and at the member state level.

Announced in November 2014, ICP Europe aims to boost private capital investment in European energy efficiency renovation projects to help Europe meet its goal of reducing carbon emissions from buildings by 90% by 2050. Estimates project that large-scale European energy efficiency efforts could reduce carbon emissions by 932 million metric tons, equivalent to taking nearly 200 million cars off the road, and creating more than two million jobs in the building industry by 2020.

For more information on the Investor Confidence Project Europe and to participate in this initiative, visit www.EEperformance.org/europe.