3 Roadblocks to Funding Energy Projects

10/01/2013 |

What will it take to get your efficiency project approved?

Proposal origin, unclear paybacks, and lack of third-party financing can deter an energy project from getting a green light, finds a survey of close to 500 energy professionals.

Trying to make an energy efficiency project a reality? Beware of funding issues that can thwart your intentions.

Noesis Energy, a provider of energy management solutions, surveyed over 470 energy professionals to identify common reasons a project proposal is rejected.

Nearly half of the energy projects proposed by energy managers and consultants, which include efficiency and distributed generation, were valued between $50,000 and $250,000.

But not all of these projects came to fruition. Here are three considerations that can impact project approval:

  1. Who proposes a project can make a difference. Energy managers have good completion rates, with 36% securing approval for half or more of their projects and 75% getting approval for at least one in four projects. Consultants do not fare as well despite originating more proposals – 50% report that fewer than one in four of their projects gets a green light.
  2. Unclear paybacks remain unaddressed. More than half the time, “not budgeted” is the reason energy projects do not get internal approval. One-quarter of the projects are also derailed by a “lack of certainty” of their estimated savings.
  3. Third-party financing wasn’t considered. Funding options such as leases or energy savings agreements (ESAs) are often not included in the proposal. Only 10% of consultants account for financing all of the time and 43% never include it. Over two-thirds of consultants claim that they don’t know enough about financing options or don’t have the time to research and find them. In turn, 60% of energy managers do not consider financing in their proposals because they aim to fund projects internally.

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