Resilient Buildings Group and Jordan Institute Join EDF's Investor Confidence Project
Resilient Buildings Group and The Jordan Institute recently joined the Investor Confidence Project, and initiative of the Environmental Defense Council meant to spur increase confidence by investors in the value of energy efficiency and renewable energy projects.
RBG, a majority-owned for-profit subsidiary of The Jordan Institute, is mission-driven to reduce the amount of energy wasted in commercial buildings. RBG and its team of professionals have long advocated to building owner clients standards and protocols recommended by the ICP - consistent energy-use and energy-cost baseline, energy-centric construction management, commissioning, and follow-up monitoring and verification.
As RBG and Jordan Institute prepare to launch a C-PACE financing program, the ICP protocols will become important standards to ensure that energy-project perform as designed and net the financial results expected.
The Investor Confidence Project - Enabling Markets for Investor-Ready Energy Efficiency™
The Investor Confidence Project (ICP) defines a clear road-map from retrofit opportunity to reliable Investor Ready Energy Efficiency™. With a suite of Commercial and Multifamily Energy Performance Protocols in place, ICP reduces transaction costs by assembling existing standards and practices into a consistent and transparent process that promotes an efficient market, while increasing confidence in energy efficiency as a demand-side resource and resulting cash flows for investors and building owners.
Working with our many active allied organizations, the Investor Confidence Project is enabling a marketplace of building owners, project developers, finance companies, energy service providers, insurers, engineers, utilities, software companies, and a growing number of public programs and utilities.
Breaking Down Barriers to Energy Efficiency Investment
Breaking Down Barriers to Energy Efficiency Investment While there are multiple risk factors that currently impact investor participation in energy efficiency retrofitting, Asset Risk related to the resulting value of the building pre and post retrofit. Credit Risk related to the credit worthiness of the borrowing entity, that can be challenging especially in the CRE market. Performance Risk related to the chances that a project will deliver expected energy savings.
There are many efforts to overcome these risks. Disclosure and benchmarking policies are focused on accounting for energy attributes in terms of asset value. Programs like On-Bill Repayment and Commercial PACE are intended to address credit issues. The Investor Confidence Project is focused on addressing the issue of performance risk.
It has become apparent that there is wide variance in the levels of savings achieved at the meter on many projects. This is due to a lack of standardization both in how predicted savings are generated, and how projects are implemented. ICP, working with leaders from the energy efficiency finance industry and a team of renowned building scientists, has leveraged existing standards to develop Energy Efficiency Performance Protocols that can be applied to create consistency and enable investment in energy efficiency projects.
In addition to reducing variance levels, the ICP system will enable the market to much more efficiently engage origination channels to develop projects and increase deal flow.
Help ICP Enable a National Market For Energy Efficiency Investment
It’s easy to become part of our growing network for programs who have elected to join forces and align standards through ICP. The ICP team is happy to discuss what application of ICP makes most sense for your program and work to develop a go-to-market strategy customized for the unique realities of every program and location.
Once the ICP Protocols are adopted either as program requirements, or a recommended approach, we will work with you and your local stakeholders to encourage interaction between origination channels, building owners, project developers, and investors.
Please contact the ICP Team to discuss how we can help align your program with emerging national standards, a growing network of investors, and an ever expanding group of public programs.
ICP Credentials for Market Providers and Qualified Projects
The ICP Credential System combines the use of accepted standards along with authenticated providers and third party verification to create Investor Ready Energy EfficiencyTM (IREE) projects providing investors and building owners with a new level of confidence in project performance and investment returns. Such a system represents an important step forward for the industry. It is akin to the process of creating audited financials and other processes that have paved the way towards securitization and classification by ratings agencies. ICP expects that full deployment of the ICP System will be a critical component in developing a similar market infrastructure for the energy efficiency industry.
The system is comprised of four provider credentials and the Investor Ready Energy EfficiencyTM project designation. The typical workflow when implementing the system would be that projects are developed by credentialed Project Developers, utilizing credential Software Provider applications (which is optional), and then a credentialed Quality Assurance Provider will do a third party review utilizing ICP’s QA resources. After the review, a conforming project will receive the Investor Ready Energy EfficiencyTM stamp.
The ICP Credential System is currently under development. Some of the credentials have been launched, while others are in draft form. For those that are in draft form, we will are soliciting feedback from the market so please contact us with any questions or ideas. Please refrain from using the logo or language of credentials still in draft form.
How to Integrate ICP Protocols into Public Policy and Programs
The Investor Confidence Project (ICP) can help accelerate a range of public programs focused on encouraging investment in energy efficiency. ICP can make energy efficiency programs more effective by standardizing technical requirements to a national set of protocols that align with industry best practices, software tools, and a growing number of programs. There is flexibility in how to engage ICP Protocols, enumerated below, that enable this national approach to integrate with a wide array of State, Local, and Utility efforts to spur investment in energy efficiency.The ICP Protocols provide ready-made best practices based on practical input from industry and existing technical standards. By standardizing how projects are developed and savings estimates are calculated, programs can reduce transaction costs of participants while increasing confidence in projected savings in order to encourage program adoption.
ICP Protocols provide a number of important benefits for programs including:
Adopting ICP saves each program from the expensive and time consuming process of creating and maintaining a unique set of technical project requirements. A process that is not only costly, but will also results in a patchwork of programs and projects that increase transaction costs for project developers, building owners and investors alike.
ICP Protocols can overlay just about any type of program from PACE financing and OBR, to Building Benchmarking and outreach programs such as Architecture 2030 and Better Building Challenge. ICP is applied at the point that a building owner is ready to move forward with a project. It creates a roadmap once demand has been generated, to deliver investor ready projects to a market of investors who can help get projects built, and leaves plenty of room for local innovation.
There are currently a range of programs in the marketplace, and depending on each program’s design, ICP can be applied in different ways.
1) Resource and Incentive Programs (Cost Effectiveness, SIR, or Bill Neutrality Requirements)
If a program requires a degree of cost effectiveness in order for projects to be eligible, then we strongly recommend adopting the ICP Protocols as your standard method for technical project development and measurement of savings. Having such a system in place is necessary in order to comply with this type of program requirement. This is typical for State or Utility funded programs that have a statutory requirement to spend public dollars “wisely” based on the public good associated with energy efficiency.
ICP Protocols layout a set of well vetted engineering steps and standards that makes compliance straight forward, consistent across markets, and will reduce transaction costs by standardizing the projects documentation package and quality review process.
2) Market Transformation Programs
For programs that are meant to encourage participation in energy efficiency, use private capital sources or other methods, and do not require specific levels of cost effectiveness, SIR, or bill neutrality, we suggest adopting ICP as a “recommended best practice” rather than a requirement.
By including the ICP Protocols on a program's website and communications, and through education and market outreach, a program will further the goal of a quality industry that can reliably deliver energy efficiency, help establish a marketplace with lower transaction costs, and protect building owners by ensuring they are aware of industry best practices and go into transactions with full disclosure.
Recommending ICP is an easy first step. It enables the ICP team to work with each program, developing an engagement plan that will encourage adoption of best practices by rewarding projects with access to a range of investment options and capital sources. However, it will still allow building owners to make their own investment choices based on a more complete understanding of the market.
3) Programs with Existing Technical Standards
There are many great programs out there with technical standards already in place. We understand the need to maintain consistency in existing programs, but would encourage potentially piloting ICP in parallel with comparable existing standards as a way to test the waters without creating uncertainty. We invite every program to engage without Technical Forms to gain a working knowledge of the ICP Protocols and process. As we leverage existing standards and best practices, we often find that there are more parallels than differences and we have an ongoing process that encourages feedback and iteration.
Ultimately, we think there is great utility in standardization across programs, however we are happy to work with every program to develop strategies based on program and market realities. As a simple first step please consider becoming an ICP Ally to join the conversation.