While the Canadian government has announced plans to focus on building retrofits as part of its economic plan, Toronto-based Efficiency Capital is providing unique solutions to the industry. The company known for leveraging financial and environmental aspects of building retrofits is providing building owners with a funding option to continue upgrades.
“Most buildings are run by a portfolio manager who could be overseeing dozens, if not hundreds, of buildings. Most of [these managers] don’t have the capacity to do retrofit upgrades,” said Chandra Ramadurai, CEO of Efficiency Capital.
The company was born of The Atmospheric Fund’s incubator program, which now operates as a strategic capital partner. Efficiency Capital works alongside commercial, industrial, and multi-residential buildings, coordinating with landlords and institutions to improve asset values by installing performance-guaranteed, energy-efficiency upgrades and reducing greenhouse gas emissions.
Over the past several years, the company has worked with 55 buildings and invested over $15 million, according to Ramadurai.
Efficiency Capital’s eFunder program a buy-back program for building owners who have recently completed efficiency retrofits. Ramadurai noted there was a lack of options available, and eFunder allows companies to free up capital to make further improvements.
“What appeals to me is that efficiency creates great return, there is a need in the market, there is money ready to flow, [and] the missing part is the middle,” he said.
ESPA covers building costs and decreases operating expenses
The company works with property owners and operators under the Energy Savings Performance Agreement (ESPA), which is a unique non-debt investment solution that covers building upgrade costs while decreasing operating expenses.
Among its projects Efficiency Capital worked with the owners of the buildings at Harbourfront Centre to install energy-efficiency measures under their Energy Savings Performance Agreement. The project amounted to $117,000, with savings being split 80:20 for the investor and overall they were able to reduce 51 tonnes of carbon emissions.
Another project undertaken by Efficiency Capital saw the installation of electricity-saving measures at six YMCA locations in the Greater Toronto Area. The equipment helped control voltage levels, therefore reducing energy costs and elongating the life of the equipment in use. The $365,000 project saw 62 tonnes of carbon emissions removed from the atmosphere.
“Instead of paying for the equipment costs upfront, we will go there, pay for the costs to install and maintain it, and we are responsible for performance,” said Ramadurai.
Most recently, it has also worked with Toronto’s WoodGreen Community Housing on a $3.4 million retrofit of several of its properties, designed to save a projected $5.7 million in energy costs over the “useful life” of the equipment.
According to Ramadurai, the ESPA investment is not considered debt; therefore, building owners do not see a balance sheet liability and a borrowing by-law is not needed. The repayment is equal to or less than the energy savings and must be repaid in full within 10 years. Once the terms are completed, the building owner retains 100 per cent of ongoing energy savings. Ramadurai said the contracts can vary, but the investment is easy given how it creates a worry-free investment for building owners and operators.
“Not everyone wants a 10-year contract, everything we do is seen as an investment; we own the equipment, we take the responsibility of performance,” said Ramadurai.
Efficiency Capital, Toronto Foundation housing project
Recently, Efficiency Capital has partnered with the Toronto Foundation, Canada’s largest community foundation, and is working with them to deliver strong mandates on improving housing in a social and environmental capacity. Due to COVID-19, Ramadurai said they’ve been able to ink deals with school boards on improving efficiency within their buildings. He noted part of the interest from both entities is not just the financial returns, but knowing they can make an impact on the environment, too.
“We measure financial return and environmental return; we predict and confirm over time the greenhouse gas saved in every single project,” he said.
Ramadurai, an engineer, certified accountant, and holder of an MBA from Duke University, finally feels he’s found his calling. He spent the early years of his career working in banking and financial services, but says he wanted to help grow a company. Doing that while also having an impact on the environment and society is important to him.
“It’s the ability to make an impact. I’ve seen poverty and more growing up. I know the impact environmental issues make on social issues, so I want to be able to put money in people’s pockets and improve the living standard,” he said.
While he’s happy with the success thus far, Ramadurai expects building retrofitting to become a major investment tool in the future similar to solar energy.
“Once the first person got it installed on their roof, everyone became more comfortable with it,” he said. “I think that will happen (with retrofits) and when it does, we will be prepared.”