This winter, ACEEE, in partnership with Energi Insurance Services, will host a second gathering of select members of the Small Lenders Energy Efficiency Community (SLEEC) in Washington, D.C. The initial SLEEC convening in October 2013 brought together small- to medium-size lenders to discuss strategies for expanding activity in the market for energy efficiency financing. Building off the success of that first meeting, the second SLEEC gathering will focus exclusively on financing in the multifamily sector […]
>” […] The goal of the upcoming SLEEC meeting is to discuss how recent developments inform the lender perspective on the size, attractiveness, and viability of the finance market for multifamily efficiency. We chose to address multifamily this year because potential savings are phenomenal at an estimated $3.4 billion per annum, and multifamily has traditionally been characterized by the label “hard to reach” due to significant barriers to entry. Single-family residential, large commercial, and MUSH (municipal, universities, schools, and hospitals) markets pose fewer barriers and have therefore been easier to approach, while multifamily is a more complex market posing greater obstacles.
The first and most commonly cited obstacle is known as the split-incentive problem: Landlords and building owners don’t always have an incentive to pursue energy efficiency improvements since their tenants would be the ones benefitting from reductions in energy bills. The next most bemoaned roadblocks are a lack of information and lack of available capital. Landlords and owners are experts at running their buildings, but may be in the dark on energy efficiency. Utilities and many loan agencies, while knowledgeable about energy efficiency, lack experience interacting with tenants. The resulting information gap inhibits energy efficiency projects from getting off the ground. This problem is exacerbated by a lack of capital, especially in the affordable housing market, where many buildings owners hold 30-year mortgages on their property with only one refinancing opportunity after 15 years. Unless building owners and potential lenders can capitalize on this small window, many projects would not have another opportunity to finance efficiency improvements for another 15 years.
Despite these barriers, there are a number of successful initiatives that are poised for impact. Perhaps the most successful is Energy Savers, a Chicago-based partnership between Elevate Energy and the Community Investment Corporation (CIC) that has retrofitted 17,500 apartments since 2008. […] Innovative programs such as these are paving the way for energy efficiency in the multifamily housing market.
A perceived lack of capital may be attributable to issues surrounding the valuation of energy efficiency from a building owner’s perspective that manifests as low demand. […] “<