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Energy Project Financing : Resources and Strategies for Success

475 Pages · 2008 · 3.64 MB · English

  • Energy Project Financing : Resources and Strategies for Success

    Energy Project Financing:


    Resources and Strategies for Success This page intentionally left blank Energy Project Financing:


    Resources and


    Strategies for Success


    Albert Thumann, P.E., C.E.M.


    Eric A. Woodroof, Ph.D., C.E.M., CRM Library of Congress Cataloging-in-Publication Data


    Thumann, Albert.


    Energy project financing : resources and strategies for success / Albert


    Thumann, Eric A. Woodroof.


    p. cm.


    Includes index.


    ISBN 0-88173-597-3 (alk. paper) -- ISBN 0-88173-598-1 (electronic) -- ISBN


    1-4200-8386-4 (distribution by taylor & fancis : alk. paper)


    1.  Energy conservation--Finance. 2.  Industries--Energy conservation--


    Finance.  I. Woodroof, Eric A. II. Title.


    HD9502.A2T5187 2008


    658.2’6--dc22


    2008017540




    Energy Project Financing : Resources and Strategies for Success / Albert Thumann,


    Eric A. Woodroof.


    ©2009 by The Fairmont Press. All rights reserved. No part of this publication


    may be reproduced or transmitted in any form or by any means, electronic or


    mechanical, including photocopy, recording, or any information storage and


    retrieval system, without permission in writing from the publisher.


    Published by The Fairmont Press, Inc.


    700 Indian Trail


    Lilburn, GA 30047


    tel: 770-925-9388; fax: 770-381-9865


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    Printed in the United States of America


    10 9 8 7 6 5 4 3 2 1


    0-88173-597-3 (The Fairmont Press, Inc.)


    1-4200-8386-4 (Taylor & Francis Ltd.)


    While every effort is made to provide dependable information, the publisher,


    authors, and editors cannot be held responsible for any errors or omissions.


    iv Foreword


    The landscape for implementing energy efficient projects is rapidly


    changing. The need for energy project financing has never been greater.


    The factors influencing energy project financing have been brought


    about by legislation, oil prices surging past $120 a barrel, and the grow-


    ing concern for global warming.


    In December of 2007, the Energy Independence and Security Act


    was passed into law. This act promotes energy savings performance


    contracting in the federal government, and provides flexible financing


    and training of federal contract officers. The Energy Policy Act of 2005


    reauthorizes energy service performance contracting through September


    30, 2016.


    The purpose of this book is to provide the key success factors


    for structuring a finance energy project and getting it approved by top


    management. The goals of the authors are threefold: First, we want


    to explore as many financing options as possible. Second, we want to


    provide the tools to make a comprehensive financial analysis. Third,


    we want to broaden the readers’ horizons with new trends in the


    industry.


    There are many correct ways to assemble and finance an energy


    management project. The number of possibilities is only limited to one’s


    creativity. So be flexible and keep searching until you find the “win-


    win” deal for everyone.


    Albert Thumann, PE, CEM


    v This page intentionally left blank Table of Contents


    Chapter 1  Background on the Need for


    Financing Energy Projects ........................................................1


    Chapter 2  Financing Energy Management Projects ...............................3


    Chapter 3  Choosing the Right Financing for Your


    Energy Efficiency and Green Projects


    with E  S ® ...................................................................51


    NERGY TAR


    Chapter 4  Financing Energy Projects through


    Performance Contracting ........................................................79


    Chapter 5  The Power Purchase Agreement (PC for Solar) ................93


    Chapter 6  Selling Projects to Financiers .................................................99


    Chapter 7  Key Risk and Structuring Provisions for


    Bankable Transactions ...........................................................103


    Chapter 8  When Firms Publicize Energy Management


    Projects, Their Stock Prices Go Up ....................................113


    Chapter 9  Overcoming the Three Main Barriers to


    Energy Efficiency or ”Green” Projects ..............................127


    Chapter 10  Basics of Energy Project Financing .....................................139


    Chapter 11  Codes, Standards, and Legislation ......................................145


    Chapter 12  The Energy Audit ...................................................................159


    Appendix A  Economic Analysis .................................................................195


    Appendix B  International Performance Measurement


    and Verification Protocol—Vol. I .........................................277


    vii Appendix B  International Performance Measurement


    and Verification Protocol—Vol. II ........................................395


    Appendix C  Resources/Links .....................................................................457


    Index ................................................................................................................459


    viii Contributors


    CHAPTER 1, 2, 6, 8, & 9


    Eric A. Woodroof, Ph.D., CEM., CRM, shows clients how to


    make more money and simultaneously help the environment. During


    the past 15 years, he has helped over 250 organizations improve profits


    with energy-environmental solutions. He has written over 25 profes-


    sional journal publications and his work has appeared in hundreds of


    articles. Dr. Woodroof is the chairman of the board for the Certified


    Carbon Reduction Manager program and he has been a board member


    of the Certified Energy Manager Program since 1999. Dr. Woodroof has


    advised clients such as the U.S. Public Health Service, IBM, Pepsi, Ford,


    GM, Verizon, Hertz, Visteon, JPMorgan-Chase, universities, airports,


    utilities, cities and foreign governments. He is friends with many of the


    top minds in energy, environment, finance, and marketing. He is also


    a columnist for several industry magazines, a corporate trainer, and a


    keynote speaker. Eric is the founder of ProfitableGreenSolutions.com


    and can be reached at 888-563-7221.


    CHAPTER 3


    Neil Zobler, President of Catalyst Financial Group, Inc., has been


    designing energy finance programs and arranged project-specific financ-


    ing for demand side management (DSM) and renewable energy projects


    since 1985. Catalyst, a specialist in energy and water conservation proj-


    ects, has arranged financings for over $1 billion. Neil’s clients include


    U.S. EPA ENERGY STAR, the Inter-American Development Bank, over


    20 electric and gas utilities (including Con Edison Co. of NY, PG&E,


    TVA), engineering companies and vendors, and hundreds of individual


    companies and organizations. He speaks regularly for organizations


    including the Government Finance Officers Association, the Association


    of School Business Officials, National Association of State Energy Offi-


    cers, Association of Government Leasing & Finance, and the Council of


    ix


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