A new energy efficiency company seeks to invest up to $50 million in projects that reduce energy and water use bills over the next five years.
Commons Energy is a for-profit subsidiary of Burlington-based Vermont Energy Investment Corp., a nonprofit energy efficiency organization that owns the state’s efficiency utility, Efficiency Vermont.
The company, which launched early this year, is providing technical and financial assistance for projects that reduce utility costs at public-purpose buildings, such as affordable apartment complexes, health care facilities, schools, municipal buildings and places of worship.
According to Logan Brown, director of project operations for Commons Energy, these buildings have not received much attention from traditional energy-saving companies, who instead focus on larger buildings.
“I think these customers are underserved not because they’re risky, but just because the projects are too small, and there’s not traditionally a lot of money to be made in serving these small customers,” he said.
One of the company’s first projects is at the Union Square Apartments, a low-income apartment complex in Windsor. Commons Energy plans to install a biomass furnace, hoping the savings will allow the organization to expand affordable housing. The company says it is also finalizing energy performance contracts for two other projects in Washington, D.C., and Maryland.
Eric Schmitt is director of asset management for Housing Vermont, a Burlington-based affordable housing nonprofit group. The organization owns the building in a partnership with the Windham and Windsor Housing Trust.
Schmitt said heating oil, which Housing Vermont includes in the rent, is one of the organization’s most volatile costs.
The price of heating oil jumped to $4.60 per gallon in July 2008. That year heating costs jumped from 10 percent to 20 percent of the organization’s total costs. As a result, rents went up $35 dollars per month on average.
“The volatility of fuel oil, especially since 2008, has really created difficulty for us,” Schmitt said. “A 10 percent hike in one year creates a huge challenge for us.”
Propane and heating oil prices are down from November of last year, but these traditional heating fuels still cost more than pellets for heat, according to the Department of Public Service’s fuel price report.
Schmitt said the organization spends on average about $60,000 per year on oil to heat the four-story apartment building with a basement. Schmitt said any savings will be put aside to build up reserves. The savings can also be used to increase rent stability, he said.
Commons Energy will install two wood pellet heating boilers and new, energy-efficient circulator pumps, which will carry the warm water throughout the building. The project also includes a bin to hold wood pellets and an auger to carry the pellets to the boilers.
Brown estimates the project will cost $270,000. But from year one, the company vows all investments on part of the property owner will be a net positive. After Housing Vermont pays loan debts and fees to Commons Energy, the company estimates Housing Vermont will save $10,000 in the first year.
Once the project is paid off, Brown estimates it will save Housing Vermont $23,000 annually.
Energy Commons is offering so-called “patient capital,” or long-term investments that aim to further an organization’s mission rather than turn a quick profit.
The John D. and Catherine T. MacArthur Foundation invested $5 million in the company to focus on multifamily housing. In total, the company has $6.5 million, which includes money from investors such as the High Meadows Fund, the Kresge Foundation, the National Housing Trust, the Vermont Community Fund and the Vermont Housing and Conservation Board.
Brown said Energy Commons is required to pay back the investments.
Energy Commons aims to kickstart the growth of public-purpose energy saving companies across the United States.
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