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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.
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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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