80 Energy Project Financing: Resources and Strategies for Success
our problem. He said, “Shirley, you folks must learn to fish from the
fish’s point of view.”
To fish from the fish’s point of view, we must first realize that top
management is interested in delivering promised results, be it educa-
tion, patient care, or selling widgets. Second, we need to be aware that
management is “facility blind.” Management can walk the corridors but
seldom see the facility until something goes wrong. Third, such details
as “energy” are just noise—a small irritating noise for someone else to
deal with.
If we are to get the “fish’s” attention, we must talk their language
and make the case in their terms. For them to bite, the bait on the hook
must make energy efficiency (EE) a solid business opportunity.
It is essential that we provide our “fish”: (1) an effective cost/
benefit analysis procedure, which compares the net benefits of energy
efficiency to increased production; (2) a new perspective of energy
savings as a percentage of the bottom line; and (3) energy efficiency
and conservation as a very cost-effective delivery system for meeting
environmental mandates—a way to make money while reducing emis-
sions.
Probably our biggest challenge is to remind top management, as
forcefully as possible, that EE can be a self-funding endeavor. CEOs and
CFOs have a tendency to compare energy investments to other business
investments and fail to appreciate that no new money is required to
do energy efficiency work. The money needed for energy investments
is already in the budget—and it’s being spent on wasted energy. The
financing source for the EE investment is right there in avoided utility
costs—money that will go up the smokestack creating more pollution
every day that the energy efficiency measures are not taken.
All this, however, becomes much more palatable if the initial ex-
penditures are from someone else’s pocketbook—even better if there is
someone out there that will guarantee that the funds to do the energy
work will come out of avoided utility costs (the future energy savings
from the project).
With such a backdrop, it is not surprising that performance con-
tracting emerged as an attractive financing mechanism for energy work.
Imagine the jubilation when someone figured out that future energy
costs could finance the rebuilding or replacement of decrepit heating
and cooling systems. And it just got better, because the money being set
aside to fix those behemoths could now be used for something else.