NECA National has just launched the highly anticipated Energy Conservation and Performance (E-CAP™) tool to help contractors capture more energy efficiency and renewable energy projects. Just like an energy service company (ESCO), NECA contractors can now offer performance contracting services by providing customers with flexible financing solutions and performance guarantees. All NECA contractors can access the E-CAP™ tool for free and create personalized accounts for all their project development, financing, and underwriting needs.
The market outlook for ESCOs is very positive and with the E-CAP™ tool NECA contractors can become larger players in this space. According to a study published by Navigant Research, the US ESCO market is expected to see growth into 2020 from current annual revenues of $4.9 Billion to almost $8.3 Billion. The federal sector in particular is expected to be a large contributor to this growth due in part to the Department of Energy’s Better Buildings Initiative, which aimed to provide $2 billion in energy performance contracts in 2013 alone. Further, McKinsey Consulting claims that the US economy currently needs $520 billion in energy efficiency financing to realize a $1.2 trillion return on its investment within 10 years.
Contractors using the E-CAP™ tool can provide clients with investment grade project performance guarantees and flexible project financing using third-party project investors and insurance. By embracing the E-CAP™ tool, NECA contractors can seamlessly integrate flexible financing solutions and performance guarantees into an existing sales process with a small amount of additional effort. A NECA contractor using E-CAP™ will no longer need to borrow or invest company money or worry if a project will perform as designed; because, financing is only available when the project makes financial sense and guarantees are only available when the projected energy savings are attainable. The team behind E-CAP™ will work hand-in-hand with the contractor to achieve all contractor and client goals.
While the E-CAP™ tool is made possible by a first of its kind partnership between four industry leading companies – CapX, Sustainable Real Estate Solutions, Energi, and Honest Buildings – it is non-exclusive as to the source of financing or insurance. If a contractor already has a relationship with a financing or insurance provider, that provider can also be seamlessly integrated into the E-CAP™ process. The NECA E-CAP™ tool can also be used to secure Property Assessed Clean Energy, (or “PACE”) financing. PACE is one of many financing models that the E-CAP™ tool supports and is structured so that payments towards the project investment are paid through the building’s property taxes. This financing is limited to areas were PACE legislation is enacted, however according to a recent study conducted by PACE Now, 40 states already have PACE legislation in place.
The E-CAP™ tool offers a tremendous service to building owners who traditionally have to deal with many different issues including decreasing building competitiveness, depressed asset value from deferred maintenance, unanticipated risks from environmental policy changes, uncompetitive rents and lease rates, and discounted investment returns. NECA contractors offering E-CAP™ can help building owners by financing and guaranteeing increased net operating income (NOI), increased asset value, improved environmental quality, and expanded balance sheet capacity.
There are seven steps to developing a new E-CAP™ project:
Step 1: Identify and Engage Project
After you have been qualified, you will need to identify and engage a project with the NECA E-CAP™ Project Development Agreement. This agreement is designed to protect your development efforts from uncommitted project beneficiaries.
Step 2: Generate Project Proposal
Once you have identified and engaged your project, you can begin the design and engineering process. We will provide training and access to our ASTM compliant underwriting platform to make sure that your proposals comply with market best practices.
Step 3: Underwrite Project Financing
At this stage, we will work with you and your customer to underwrite your project’s credit. You will be provided with E-CAP™ credit applications for both private and public entities reflecting underwriting best practices.
Step 4: Underwrite Project for Performance Insurance
Once your project has been approved for financing, we will begin underwriting it for an insured performance guarantee. Our insurance consulting team is dedicated to solving any of your underwriting gaps or problems.
Step 5: Select Project Funding Structure
Upon completion of your project’s underwriting for financing and performance insurance, we will issue a final term-sheet that gives you the option of a self-fund project with performance guarantee, to fund the project with conventional financing and a performance guarantee, to fund the project using performance based financing, or to fund the project with PACE financing and a performance guarantee.
Step 6: Fund and Install Project
Your project funding will commence in accordance with the agreed upon draw schedule in your project’s final agreement. The E-CAP™ tool will provide you with active updates about your project’s installation and funding draw schedule.
Step 7: Operate and Monitor Project
In the final step, the NECA E-CAP™ tool will provide you with a dashboard to actively manage your project’s measurement and verification requirements using best practices.
To learn more about this exciting opportunity visit www.neca-e-cap.com.