In our final Quarterly Investment Monitor of 2011, I highlighted the year’s incredible upsurge of interest in energy efficiency financing, and predicted that 2012 would be a proving period when bets are placed, and programs and companies either mature or wilt. The first quarter of 2012 has already shown this to be true with the acquisition of Transcend Equity by SCIenergy, the re-repivoting of Serious Energy away from financing, and the likes of Deutsche Bank weighing in on financing in earnest with a detailed report on the subject.
Before diving into 2012, a brief review of several efficiency financing news highlights of 2011: the White House launched its $4 billion Better Buildings Challenge; Barclays, Ygrene Energy, and the Carbon War Room announced the delivery of turnkey Property Assessed Clean Energy (PACE) program development; and Serious Energy joined Metrus Energy, Transcend Equity, and other financiers by formally launching its Managed Energy Services Agreement style financing program and pivoting to providing energy efficiency as a service.
For a space with only a handful of key players, 2012 started off with two key bangs. The first is the acquisition of Transcend Equity by SCIenergy, a provider of building energy efficiency services based around its core building energy monitoring and management software platform “The SCIenergy Cloud”. As the first acquisition of an efficiency financier, the move is a strong vote of confidence in the energy efficiency finance space, which to date has seen limited traction (measured in real projects on the ground) that would showcase its scalability. The acquisition also positioned SCIenergy directly against Serious Energy by enabling it to offer energy efficiency as a service, and at no up-front cost to consumers.
The second bang is Serious Energy’s exit from the energy efficiency financing space. Just as SCIenergy moved into the space by acquiring the longest standing independent efficiency financier, Serious exited financing and went back to its foundation of building materials in February of 2012, after having offered financing for under one year. At this point, much of the company’s management has either been shuffled around or left the company entirely.
At the very least, these moves are large transitions for several key players in the efficiency financing space. Digging deeper, the Transcend acquisition looks to be a strong vote of confidence in the viability of energy service agreement financing solutions. I will be watching closely to see whether the company is able to gain traction and begin financing large portfolios of projects. As for Serious Energy, with almost $150M raised in 6 years, two major pivots, and a current focus on building materials in a down construction market, the path to success is anyone’s guess.
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