Accelerating Investment in Commercial Buildings with Energy Efficiency as a Service

In an Energy Central article, Guidehouse Insights discusses how a new financing mechanism addresses the split incentive barrier with utility participation

In a first-of-its-kind program, Seattle City Light (SCL) partnered with Gridium to deliver energy efficiency as a service (EEaaS) to more than 1 million square feet of commercial buildings. This partnership was the first to include a utility in an EEaaS agreement and addressed a long-standing split incentive barrier to energy efficiency.  

In an article for Energy Central, Sasha Wedekind, research analyst at Guidehouse Insights, discussed how expanding the standard EEaaS model to include utilities has the potential to spur growth in the commercial energy efficiency market. 

According to Wedekind, EEaaS addresses two historic barriers to energy efficiency market growth: clients’ hesitance to spend CAPEX or take on debt for efficiency improvements and the length of time required to realize ROI. However, building owners have not been incentivized to pursue energy efficiency because renters would benefit from reduced bills. 

The partnership between SCL and Gridium eliminated this barrier because it worked with the utility to redistribute savings. The utility passed the savings on to the building owner rather than the renter, which incentivized the owner to participate in the program. According to the article, it’s a win-win-win model for the vendor, utility, and owner, while being financially neutral for the renter. 

“By creating a replicable and scalable model, SCL’s program with Gridium has the potential to revolutionize how energy efficiency projects are implemented in the commercial built environment,” Wedekind said.

Read the Energy Central Article
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