Today in Cleantech

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Making buildings more energy efficient needs innovation — financial innovation, that is. That’s the gist of a New York Times article this morning about a major barrier to investing in quick-payback building energy efficiency upgrades, the so-called “split incentive” problem. Building owners make the capital investments required for energy efficiency, but the tenants get the benefits, in the form of lower energy bills as a portion of their rents. On the other hand, few tenants are going to make energy efficiency investments in a building they might not even occupy a year from now. That’s one reason most building energy efficiency projects are in the so-called “MUSH” market — municipalities, universities, schools and hospitals that know they’re going to be using the same buildings 10 to 20 years from now. What can innovators do to help solve the split incentive problem that’s holding back commercial building energy efficiency projects? Ideas range from “green leases” that split the costs and benefits of retrofits between owners and tenants, to new “energy services agreement” models like those from startup Metrus Energy that mimic the power purchase agreement models common in the renewable energy sector. Have any other good ideas? Feel free to send them my way, and we’ll talk.

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