Water Efficiency Financing

This solution addresses financing water system retrofits in US cities for city & state government agencies, investors

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Problem Description

Efficiency improvements are often the lowest cost upgrades available to property owners. The challenge with investing in these types of projects is that building retrofits are complicated, and often the benefits distributed and can only be accrued over a long period of time. Since the 1970s, the private sector has created mechanisms to finance energy efficiency projects via Energy Service Companies (ESCOs) and Property Assessed Clean Energy (PACE) bonds designed to monetize and capture savings on energy bills over time. Now that the practice and associated financing mechanisms are well understood, the same approach can be applied to support infrastructure investments that generate similar savings, like water system efficiency retrofit upgrades and flood protection measures.

Building Blocks

Story

The biggest water efficiency gains in the built environment require structural retrofits, like installing dual plumbing systems for recycled or grey water, with high up-front costs. Financing these projects requires two types of contracts: a construction agreement with a third-party do the structural design and construction and a performance contract with an individual property owner or water utility to capture savings accrued over time. This solution applies principles of the PACE program to establish sound baseline water usage number with a reliable way to measure changes over time so all parties know if the program is working. PACE does not require a designated geographic area for funding eligibility, giving a city more flexibility to administer a broad program of upgrades.

Photos

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Resources

Contributed By

  • Elle Hempen, re:focus partners

Solution Stage

One of the 7 stages of an innovation. Learn more
STAGE SPECIALIST SKILLS REQUIRED EXAMPLE ACTIVITIES RISK LEVEL AND HANDLING FINANCE REQUIRED KINDS OF EVIDENCE GENERATED GOAL
Generating ideas2
Ideation and facilitation of creative thinking
  • Creativity methods
  • Design tools
  • Crowdsourcing
  • Open innovation
  • Awards and rewards
  • Challenge prizes
  • High failure rate should be an explicit expectation
  • Visible senior leadership essential
HIGH
  • Usually grants, occassionally convertible
LOW
A clear account of change or likely causation, supported – but not overly constrained – by evidence
An idea or set of ideas to develop and test

Key Details

Activity