Metered Energy Efficiency Transaction Structures (MEETS)
There are well established, widely understood reasons why deep energy retrofits are difficult for the commercial real estate market:
- Most building owners pass through their building’s energy costs to their tenants — so owners see no direct benefit from investing in efficiency improvements.
- Even when building owners do pay the energy bills, commercial building owners can only “harvest” those savings for as long as they own the building — their planning horizon is typically ~5 years.
- Tenants are unlikely to invest in a building they do not own, and are unlikely to continue occupying long enough to recognize substantial savings.
In a MEETS transaction, the utility bills the building for both the traditional energy consumed and the metered energy efficiency. This (total) energy bill is then paid as it normally would be, by the building tenants in most cases. This allows the utility to pay not just an “incentive” for energy efficiency, but to value the energy itself. Put another way, the utility no longer loses the retail revenue associated with energy efficiency, changing the economics of the transaction for all parties.
Under MEETS, energy efficiency is treated transactionally like energy generation. This allows the use of a traditional Power Purchase agreement between the utility and the party providing the capital for the retrofit.
Key Elements of a MEETS framework include:
- The yield from metered energy efficiency from a customer facility is delivered to the utility – not the facility.
- The utility bills the facility, at retail, for the metered efficiency yield of which the utility took delivery.
- The metering is done through a dynamic baseline meter that meets utility resource grade standards.