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NYCEEC’s Approach to Tracking Real-World Impact

The saying goes: “you measure what you value.”

At NYCEEC, we value real-world impact. This means that, in addition to applying thorough financial and technical standards to underwrite clean energy projects, we try to track financed projects’ real-world performance to see if they actually achieve results that are in line with projected savings.

Measuring actual impact requires ongoing investment in systems and data collection long after a deal is closed—and for acquisition, pre-development or construction loans—after construction is completed. At NYCEEC, this type of long-term impact tracking is integrated into our loan documentation, portfolio surveillance, and management processes. NYCEEC utilizes an energy data tracking platform to collect actual energy use and costs.  In-house engineering staff, working in conjunction with experts at these platforms, manage the impact-tracking process.

The ability to regularly track actual project performance yields wide-ranging benefits. This includes the ability to:

  • Intervene when projects are performing below expectations
  • Learn lessons and improve underwriting for future projects
  • Refine our ability to target and support high-impact, cost-effective projects
  • Provide feedback to policymakers on the performance of certain technologies

The resulting metrics serve as guideposts in NYCEEC’s efforts to continue to grow its energy and environmental impact. Below, we explore two prime examples: NYCEEC’s energy and cost savings realization rates.

Energy & Cost Savings Realization Rates

NYCEEC’s realization rate metrics evaluate portfolio performance by dividing actual savings by projected savings. NYCEEC evaluates financed projects where the borrower agreed to share data and there is sufficient operating history. The resulting metrics help us evaluate how accurately energy and cost savings were projected during underwriting. In other words: are projects performing as well as expected?

To-date, NYCEEC projects have achieved almost all projected energy savings modeled during the technical underwriting process, for an average energy savings realization rate of 91%. These metrics are driven somewhat by older projects and technologies, which have changed relatively rapidly as markets and policy evolved in recent years. As more recent projects come “on-line” and as technologies advance, this metric will likely be impacted.

Meanwhile, NYCEEC projects have achieved an average cumulative cost savings realization rate of 99%. The cost savings realization rate tends to show greater fluctuations quarter-to-quarter than energy or greenhouse gas emissions realization rates, typically due to variable energy costs over time. For example, recent price pressure and volatility in fossil fuel markets, which led to historically high costs this past heating season, have heightened the value proposition of green measures that reduce the consumption of natural gas.

The realization rate metrics help confirm that energy and environmental impact is real, and that project economics are strong and support repayment. As noted above, tracking these metrics means that NYCEEC can look to best practices and lessons from past projects to inform future lending. They also demonstrate that energy efficiency and clean energy projects can often yield predictable returns, providing a market signal supporting green investment. Finally, they show that incorporating energy cost savings in financial underwriting is feasible when paired with strong technical underwriting

Looking Ahead

In an environment marked by large-scale public investment in clean energy, supportive policy developments, and increasing private sector activity, green lending is poised to accelerate. Tracking impact and implementing strong monitoring and evaluation practices will be a critical element in its growth. A strategic approach to measuring real-world impact is an important piece of the puzzle.

Today, green lenders “measure what they value” in different ways and according to a disparate set of standards. As green lending evolves and grows, developing common practices and a more standardized approach should help advance the field. Over time, the challenges and opportunities related to tracking and measuring impact will change as well. For example, evaluating the impact of emerging technologies may present new sources of complexity for the field to navigate. Similarly, opportunities may emerge to refine methods as energy data analytics improve.

Against this backdrop, NYCEEC will continue to build on its approach, address new challenges, and capitalize on opportunities to use this data to improve underwriting, manage project risks, and share learnings that should help grow the market.

How NYCEEC tracks actual impact

Since its inception, NYCEEC has been collecting project cost data and requesting that borrowers provide ongoing energy data to a tracking platform.  The figures presented here capture a recent 6-quarter period.

For borrowers that agree to energy monitoring, NYCEEC obtains actual energy and cost data via a third-party data collection and management platform.  The platform automatically collects energy bills for each project and performs calendar and weather normalizations as well as basic energy analysis and reporting. Through the platform, we also generate quarterly reports that include realization rates for energy, costs, and greenhouse gas emissions that NYCEEC uses to review portfolio-level trends and performance. Data for renewable energy systems are typically collected directly from the project’s web-based platform and then aggregated with the larger dataset.

Energy savings are determined by establishing a pre-implementation baseline and subtracting the post-implementation energy consumption.  The baseline includes at least 12 months of pre-implementation data.