From PURPA to Purposeful: How Efficiency-as-a-Service Came to Market
June 15, 2017
*PURPA was signed into law by President Jimmy Carter on November 9, 1978
What a long and winding road the energy efficiency market has traveled. From the perch of this exciting moment for efficiency-as-a-service, it is worth looking back at the efficiency milestones of the previous decades to understand just how far we have come. In the early days of energy efficiency, the focus was on conservation and just using less. In the late 1970s, the Public Utility Regulatory Policy Act (PURPA) fostered efficiency in energy production by encouraging non-utility cogeneration and smaller scale renewables. Although PURPA focused on generation, it was a key milestone representing the moment when the marketplace began to value the efficient delivery of energy resources to customers. In the 1980s, utility DSM programs were the name of the game. The ESCO industry emerged to serve these programs and financing for performance contracts soon followed. The 1990s were a time when large private power producers financed generation projects under Power Purchase Agreements (PPAs).
Once PPAs became an established financing tool, they acted as a catalyst to the as-a-service model in the clean energy world in the early 2000s. In particular, around 2005, solar PPAs created an important mind shift for customers who began to buy solar power and not solar panels. Efficiency Service Agreements (ESAs) built on solar PPAs success and began funding efficiency retrofits in 2009. ESAs kicked off the era of energy efficiency (EE) as-a-service and can be credited with the latest mind shift for end users who are now valuing efficiency as a resource by trading negawatts for kilowatts.
Metrus is proud to be a pioneer in the EE financing world. We feel we have benefited from all that has come before us in order to develop a successful financing solution that truly delivers efficiency-as-a-service to all of our customers. We continue to grow with this burgeoning market by integrating the lessons we have learned by developing, financing and operating ESA projects with Fortune 500 firms and institutional energy customers over the past eight years. First and foremost, for customers to gain all the multiple benefits and deep operational savings of efficiency-as-a-service, projects must be pay-for performance and be able to flexibly incorporate a wide range of efficiency measures including water, cogen and traditional ECMs. There is still much to do in order to unlock the full potential of the energy efficiency market.