A new C$50-million loan facility from the Canada Infrastructure Bank (CIB) is opening new doors for a Toronto-based Energy as a Service (EaaS) company to drive down energy demand and climate pollution in multi-residential housing.
While the CIB sets a minimum 30% emissions reduction for qualifying projects, Efficiency Capital typically aims for savings of 50% or more in “mid-market buildings” ranging from 20 to about 150 units, CEO Chandra Ramadurai told The Energy Mix in an email. One of the buildings in the CIB funding stream is expected to hit 90%.
While the company works in all types of buildings except single-family homes, “demand in the multi-residential segment is significant as many upgrades have been delayed over the years,” he wrote. Particularly in the mid-market segment, “building owners are always budget constrained and deep carbon reductions can be expensive. Getting to the first 30% is usually pretty easy, but deeper reductions require longer time frames for investments and deal terms and structures that are owner-friendly.”
Delivering those terms through a “turnkey solution for building owners” is what the new loan facility is meant to achieve, the Infrastructure Bank said in a release. Under the agreement, Efficiency Capital will become a retrofit aggregator under the CIB’s Commercial Building Retrofit Initiative, adding the new funds to its existing $62.5-million financing platform and supporting a range of tech solutions, including LED lighting, heat pump and HVAC retrofits, onsite solar, and energy storage.
Projects in the mid-market are generally in the $1 to $3 million range, Ramadurai said.
In the release, CIB CEO Ehren Cory praised Efficiency Capital for an “innovative financing approach which enables building owners to execute on major energy efficiency retrofit projects without the need for any up-front, working capital deployment.” He added that building retrofits “create near-term job opportunities for Canadians, and the long-term impact of these projects leads to the development of more resilient, energy-efficient infrastructure across Canada, ultimately reducing our GHG emissions and carbon footprint.”
“Canadian businesses and building owners are starting to make serious commitments to reduce their GHG emissions but often struggle with the allocation of sufficient capital to implement their projects at scale or across multiple sites,” Ramadurai added. Those difficulties underscore the need for “specialized capital and diverse expert teams to deliver projects that otherwise would fail to meet the internal hurdle rates of our clients.”
So far, Efficiency Capital has three projects under way in Alberta, Ontario, and New Brunswick that will together take up a small share of the CIB financing, he told The Mix: a two-building housing complex with more than 160 residential units, conversion of two century-old single-family homes to multiple units, and a small group of buildings that primarily house students. Efficiency Capital will manage the buildings and repay the CIB loan over a 10- to 20-year span, with the expectation of saving 10,000 tonnes of carbon dioxide or equivalent over the life of the projects.
He said all three projects are expected to hit the CIB’s minimum 30% emission reduction threshold, with one of them exceeding 50% and another one achieving 90%.
“While Efficiency Capital’s partnership with CIB is new, we have been doing these types of projects for over 10 years,” and “we have a pretty good understanding of some of the benefits that these projects bring, such as significant social benefits in addition to the environmental benefits,” Ramadurai wrote.
“With this partnership, we would love to demonstrate that a third-party retrofit model using Energy as a Service (EaaS) structures can be scaled up and that it provides triple-bottom line benefits—for people, planet, and profits. And we would want energy efficiency and net zero to be a mainstream asset class where funds can flow at scale.”
