As today’s colleges and universities juggle the costs of sustainability commitments, deferred maintenance, and infrastructure needs, many are finding that Efficiency as a Service (EaaS) is an effective way to meet the challenge.
One example of the EaaS model is Metrus Energy’s Efficiency Services Agreement (ESA), which offers numerous financial advantages to colleges seeking to implement efficiency measures. These include:
- Zero upfront capital expenditure
- Off balance sheet financing
- Charges only for realized energy and water savings
Second Nature helped Wells College connect with Metrus Energy in order to finance and manage the implementation of a broad array of measures, including high-performance LED fixtures; building envelope improvements; building automation system upgrades; and steam trap repair and replacement.
The Metrus ESA unlocks the potential savings of reduced campus energy, water, and maintenance demands, enabling colleges to focus their resources on their educational mission while reaping the benefits of maintenance-free upgrades across campus.
The top five questions colleges ask us about the Metrus ESA
We have a lot of projects on campus competing for capital. How might an ESA help?
A Metrus ESA enables colleges to complete larger, more impactful efficiency projects (with longer paybacks) that might not otherwise receive funding. The ESA frees up capital for other pressing projects on campus. And the ESA does not adversely impact a college’s future borrowing capacity or interfere with its existing bonds or loan agreements. It allows colleges to accelerate their sustainability achievements without impacting core operations.
What types of efficiency upgrades are eligible for an ESA?
An ESA can accommodate any building efficiency upgrade that generates savings for a college, from the installation of new LED lighting and controls to the replacement of a boiler or chiller. The ESA is an open platform, which means it places no restrictions on the type of equipment or technology included in an efficiency upgrade. Metrus’ current portfolio of ESA projects includes over 30 different types of efficiency improvements.
Is an ESA off balance sheet?
The ESA delivers efficiency as-a-service, which is fundamentally different than an on-balance sheet loan or a lease. Key factors in the accounting review of ESAs include: (1) Metrus invests its own capital into each project and is the long-term owner of the energy and water efficiency assets, (2) ESA payments fluctuate based on realized savings (just like your campus utility bill which goes up/down based on your energy use), and (3) Metrus controls and directs how the efficiency measures are designed, implemented and operated, and is paid for the economic benefits (e.g., energy savings) generated by the project.
We recently completed a solar project on campus. Is an ESA similar to a solar Power Purchase Agreement (PPA)?
Yes. Similar to a PPA, the ESA allows colleges to achieve a wide range of efficiency improvements without upfront capital investment. ESA payments are performance-based and reflect actual savings. Service charges under an ESA (e.g., $ per kWh saved) are set at a level below a college’s current utility rate.
How are savings measured?
Savings calculations are based on three key factors: (1) pre-project measurements of the efficiency of existing equipment; (2) post-project measurements of the efficiency of newly installed equipment; and, (3) fixed baseline parameters such as facility operating hours and degree days. Savings measurements occur throughout the ESA term to calculate the units of avoided energy (“negawatts”) and water use resulting from the project. Measurements are isolated to the equipment financed under an ESA so as not to overlap with other ongoing on-campus sustainability initiatives.