For property owners, a key selling point of energy efficiency improvements has long been that more than just saving the environment, they'll also save money.
Now, an innovative new insurance policy offered by
Jones Brown—developed with the
Toronto Atmospheric Fund (TAF)—insures against the possibility that retrofits to building do not deliver on expected savings, allowing building owners to be confident they will be able to pay off financing secured to complete the renovations.
The Toronto Atmospheric Fund has long been a pioneer in self-financing energy retrofits, and saw a need for what they're calling the Energy Savings Warranty. Fund VP Tim Stoate says his experience has taught him that there are "lots of barriers" to going ahead with energy efficiency projects for building owners. Programs that take the financial risk away from building owners help fuel the process, allowing a win-win-win situation.
"There's no cost for the capital improvements [since they pay for themselves through energy savings], there's free cash flow from the savings over and above the cost, and there's no risk to the lender [such as a bank] because the savings are insured." says Stoate. All of that is in addition to the environmental benefit of lower carbon emissions in buildings.
Stoate says this new policy is targeted at smaller owners of large buildings. Large institutions such as hospitals and universities already have access to similar policies because their credit is assumed to be rock solid. But condo boards, malls and owners of buildings such as Harbourfront Centre can now enjoy the same advantage—lowering their energy cost and actually earning a profit without putting up capital in advance.
In making the announcement, Jen Aitchison of Jones Brown estimated that the market for such a product extended to "tens of thousands" of building owners across the country. She said that building owners would not be the only ones whose fears are eased by the insurance, as it could provide banks and other lenders the confidence needed to finance large-scale building sustainability improvements.
Writer: Edward Keenan
Source: Tim Stoate, VP Impact Investing, Toronto Atmospheric Fund