Verifying & Monitoring Savings
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Barrett Capital’s financing model integrates the verification and monitoring of the assumptions behind the projected savings to the client. If the client expects a certain level of savings, as an independent party, we are positioned to provide oversight to the process of verifying and monitoring savings.
- Verification. As part of the initial underwriting and due diligence process, prior to funding, Barrett Capital will review, and/or arrange for, an independent consulting firm to independently verify the projected savings of the Energy Services Company, generally referred to as an “ESCO”. All benchmarks and assumptions will be approved by the client and the ESCO and confirmed by Barrett Capital. As a result, we will obtain, analyze from a relative risk standpoint, and be able to share with the client a projected savings level. From the projected savings, a base level of savings (“Base Level”) will be calculated. For example, the Base Level may be set at 75% of the projected savings. The Base Level will depend on a number of factors, including the areas of projected savings (i.e. lighting, HVAC), the technology involved, building variables and, the ability to measure the savings.
It has been proven that energy savings in such areas as lighting and HVAC, for example, can be accurately measured, certified and documented. In certain instances, a small trial section can be undertaken prior to implementation of the complete project to demonstrate the savings to be attained. As noted, Barrett Capital’s independent verification and monitoring of the savings is integral to assuring you that real dollar savings will result.
In many cases, reflecting the ability to demonstrate savings and the confidence in its systems, the ESCO will guarantee a level of savings. In such an instance Barrett Capital can use this level as the basis for recovering the cost of the Energy Savings Measures (“ESM”s) it finances. Savings in excess of the Base Level amount would be shared with the client. The shared savings percentages would vary based on the economics of the ESMs and the “return on investment” to the client. In effect, the more unguaranteed savings the client is willing to accept, the more upside for the client.
- Monitoring. After the ESMs have been installed and implemented, an independent consultant arranged for by the parties and coordinated by Barrett, will begin to monitor the savings on a real time basis (daily, weekly or monthly as feasible). Should the savings deviate from the projections; the independent consultant will be able to alert the ESCO and the client, as well as to notify Barrett, so that appropriate action can be taken without delay.
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