Alaska Rural Energy ConferenceNew Business Models for 

Financing Energy Efficiency April 27, 2016

How the Return on Investment Drives the ESCO

Purpose:

Commons Energy seeks to achieve deep energy savings in small and medium‐sized unserved buildings in 4 market sectors serving a public purpose. 

Result: Energy, economic, and carbon gains

Method:

Four‐part set of integrated services offering comprehensive, whole‐building, client‐based solutions to existing barriers

Approach:

Deepens and extends the ESCO model of future savings to fund improvements, replacing objective of public benefit to traditional private returns

Project FinancingModel:Bundles projects into portfolios, matches “patient capital” (long term, low rates) with portfolios

Additional resources

Open source information about Public Purpose ESCO’s:www.ppescohowto.org

Commons Energy L3C (www.commonsenergy.com) 

PPESCO Overview

• “Deep energy savings for the buildings we all use”

• Underserved markets

• Unserved buildings• Project size• Project scope

Public-Purpose Markets

PPESCO Overview

• Comprehensive energy services

• “Energy‐only” or as part of new construction or rehabilitation

• Performance‐based, with full construction management

• Guaranteed energy savings

PPESCO Overview

• Energy improvements financed by energy savings

• Long‐term patient capital from mission‐aligned sources

• Term v. rate

Positive Cash Flow for Client

PPESCO Overview

• Going deeper than the traditional ESCO model

• Increase investment in building via lower ROI needs of PPESCO

Different ROI Needs Different Investment Decisions

PPESCO Overview

• Projects bundled into portfolios

• Capital aligned by affinity

• Each portfolio an LLC

• PPESCO L3C* sources capital and manages projects

* L3C = low‐profit limited liability company

PPESCO Projects

• Four market sectors – all underserved• Education• Health care• Municipal & community • Multifamily housing

• Energy projects ranging from $100,000 to $800,000

• Project types• “Energy only”• New construction / rehabilitiation

• Competition – the “but-for” test

Social Enterprise

Triple bottom line

Investors

Society Planet

PPESCO Long Term

• Multiple PPESCOs• Some level of central organization

• Quality control• Data• Financing

• Transform the market• “Mind the gap”• Access large pools of capital