Appendix B 293
backs financing. If a sufficient level of confidence can be achieved, the
door may be opened to “off-balance-sheet financing” where project debt
does not appear on the credit line of the host facility—historically a
major hurdle to energy efficiency project implementation.
The IPMVP is an important part of the credit equation for most
lenders since it provides an established and independent mechanism to
determine energy savings. For example, the US Department of Energy’s
Office of Energy Efficiency and Renewable Energy, in partnership with
Virginia’s Commonwealth Competition Council and New Jersey-based
M/A Structured Finance Corp. has developed a pilot program for a $50
million pooled financing program for energy efficiency projects for K-12
schools and publicly owned colleges and universities. The goal of the
program is to provide an off-balance sheet and procurement-friendly
method of financing these projects for the public sector. The guidelines
in the IPMVP have allowed participating financial institutions to lend
on the basis of the energy savings, an important consideration in an
off-balance sheet financing. The IPMVP provides the confidence and
standardization to allow these institutions to fund upgrades based on
future pooled energy savings, with borrowing “off-balance sheet” for
the academic institutions.
c) Encourage better project engineering
Since good M&V practices are intimately related to good design
of retrofit projects, IPMVP’s direction on M&V practice encourages the
good design of energy management projects. Good M&V design, and
ongoing monitoring of performance will help in the creation of projects
that work effectively for owners and users of the spaces or processes
affected. Good energy management methods help reduce maintenance
problems in facilities allowing them to run efficiently. Among the im-
provements that may be noted by complete engineering design of ECMs
is an improvement in indoor air quality in occupied space.
d) Help demonstrate and capture the value of reduced emissions from
energy efficiency and renewable energy investments.
Emissions reduced by efficiency projects include CO 2 , the primary
greenhouse gas (causing global warming), SO 2 , NOx and mercury. The
failure to include the costs/benefits of these emissions has distorted
price and market signals, and has resulted in a misallocation of energy
investments and prevented a more rational and cost-effective energy