In a small press conference atop City Hall Mayor Mike McGinn with local business and civic leaders announced a new plan for energy efficiency in Seattle. The pilot project will create a 20-year model allowing for private investors to “purchase a metered energy efficiency savings,” with Seattle City Light a press release reads; In an agreement with the Bullitt Foundation.
“How do we create the opportunity for long term investments in energy efficiency in our buildings?” Mayor McGinn posits. Enter the unofficially coined ‘Seattle Plan’.
The Seattle Plan hopes to scale down the concept of the Bullitt Center — a sustainably modeled structure – for smaller buildings by promoting energy efficiency to investors through profit, and savings to homeowners. Bullitt Foundation President Denis Hayes, says the pilot program could result in 35-50% in savings for homeowners from saved energy.”It’s about performance. You only get paid for the energy you demonstrably save.” The concept of the pilot works in the following way the release reads:
Very few building owners now make the large, long-term investments needed to achieve “deep” savings of 35 to 50 percent. Yet the rates of return on such investments would be attractive to utilities and other investors that have access to cheap, long-term capital. The new pilot program aims to overcome this obstacle.
Elaborating on this Mayor McGinn explains if you pay a $100 electric bill, and reduce costs to $75, you save $25. Simple enough, but here is where it gets more complex.
The 20 year contract, if based off McGinn’s example, does not change the rate the property owner pays to Seattle City Light — the bill will always be $100 regardless of who lives there for the duration of 20 years. The plan introduces private investors in the mix, who invest in a share of energy, and in turn can payback the fee over a 20-year contract life. This is done through an energy meter that the press release says “measures the energy savings and allows it to be sold as it occurs” and “and a 20-year contract between a utility and energy efficiency investors.” A portion of the saved revenue is then returned to the property owner.
“We pay the building owner or investor, an upfront payment for that,” said City Light Superintendent Jorge Carrasco. Bill Campbell, principal at Equilibrium Capital Group adds, “What the investor buys is a blackbox with a cash flow attached.” Based around the Bullitt Center sustainable building, that opened on Capitol Hill in April. Hayes said the building is not a one-off project. Council member Mike O’Brien added his thoughts on the structure, and on how this sweeping plan will benefit Seattlites.
“This building [The Bullitt Center] is a complete outlier,” O’Brien said at the press conference. Emphasizing that “every single one of them [Seattle buildings] needs to be buildings like that.” O’Brien notes the Seattle City Council passed a climate action plan on Tuesday, and that the generally slow process of government moved quickly on this topic. He also notes, that unlike the Bullitt Center that has “no capital structure” the City plan does, and will incentivize environmentalism with profits.
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