A clean energy transaction structured for commercial real estate

The Split Incentive: A Cost vs. Value Problem

Building owners want to solve the split incentive problem but can’t justify investing in energy efficiency when the financial benefit flows to tenants in the form of lower utility bills. Despite the barriers that have existed to solving the split incentive, the real problem is that the industry has focused on the cost of utility energy rather than on the value of meeting the tenant energy need.

Meeting the Tenant Energy Need

Since what tenants really care about is having their energy need met, you can use any source of energy to meet it. This includes energy efficiency, which helps meet the need while also reducing utility costs. The resulting gap between utility costs and the value of meeting the energy need creates a financial opportunity. 

EnergyRM gives building owners the tools needed to capture the clean energy financial opportunity in the form of new rent payments to the building:

An Energy Tenant™ Lease

EnergyRM’s Energy Tenant lease structure behaves a lot like a traditional tenant lease, but is designed to facilitate clean energy and energy efficiency projects. The structure pays rent to the building, increasing NOI and improving the building’s cap rate. 

Charge Tenants for Energy Value

Following an energy retrofit project, tenants continue to pay the same energy expense as they paid before the retrofit. Tenants enjoy an upgraded building for their employees and customers without paying more for energy or risking their own capital to get it. 

Energy Tenant Lease Comparison

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