Steven Turner (United States of America)
Chief Legal Officer - First Sustainable LLC
Scalable Financing of Energy Efficency Retrofits - A Capital Markets Solution
The building sector accounts for 40% of all energy use in the U.S., while responsible for some 40% of all greenhouse gas (GHS) emissions. Energy efficiency measures (EEM) address sustainability concerns, but as important can measurably reduce a commercial property owner’s (CRE owner) operating costs for which energy-related costs comprise significant portion: Investments in energy efficiency upgrades have provided an average of 18 percent savings over the last decade.
Unfortunately, tight capital improvement budgets mean many private sector CRE owners are delaying – if not avoiding altogether -- investments that would significantly reduce energy consumption. By far the biggest barrier to energy efficiency retrofitting is CRE owner limited access to capital. Traditional bank financing are not providing CRE owners sufficient credit on commercially feasible terms for energy retrofit projects (as distinct from bank traditional CRE mortgage lending).
First Sustainable provides a fully-scalable innovative financing solution, merging elements of ESCO guaranteed savings contracts (energy performance contracts) with a proprietary ABS “securitization” structure, thereby unlocking access to the global capital markets, enabling CRE owner’s CAPEX costs of implementing EEMs to be covered using future energy savings rather than today’s diminished or non-existent CRE capital budgets. From an institutional investors viewpoint, First Sustainable is creating a new asset class of rated, long-term (15 – 20 year maturities) fixed income instruments with solid “sustainability” attributes.