Existing D.C.-area buildings will be on the receiving end of a half-billion-dollar investment from local investor Hannon Armstrong in what may be one of the largest multi-sector efforts in the country to increase energy efficiency and combat climate change on a local level.
The brainchild of the Virginia Tech National Capital Region in Alexandria, the plan is for Pepco Energy Services to identify government and private buildings in the region that would benefit from being retrofitted with energy-efficient lighting, heating or cooling systems, or other products.
Pepco will conduct the energy audit, retrofit the buildings and guarantee the energy savings. Hannon Armstrong will finance the project, and the building will pay the investor back over a five- or 10-year period through the energy savings.
The model is not a new one — it has been around in one form or another since the 1980s — but a half-billion dollar commitment over five years is striking considering that energy services companies across the nation reported $2.5 billion total in energy efficiency investments in 2006, according to the National Association of Energy Companies (NAESCO).
“There is potential for upwards of $3 billion of annual energy savings in existing buildings in the D.C. area,” Pepco CEO David Weiss said at a news conference Monday.
The building sector accounts for 30 to 40 percent of global energy use, a recent United Nations Environment Programme studyfound.
Currently, the bulk of the nation’s energy-efficiency industry is centered on government and municipality buildings. Private-sector companies have traditionally been slow to warm to the trend.
“One theory is that the private sector demands a higher return on investment,” said Una Song, a representative for NAESCO. “These projects take a long time to implement and have a longer payback period, and the governments and municipalities have a higher tolerance for longer paybacks.”
Developer JBG is the first company to participate in the new program — 800,000-square-foot L’Enfant Plaza and 200,000-square-foot Reston International Center in Fairfax County will be energy audited and retrofitted.
“Our thinking is that we’re going to be long-term owners of a lot of these buildings,” said Jamie Nicholson of JBG. “The savings should come back to us, and we believe they will.”
