Introducing Energy Efficiency as a Service
By Steve Avadek, Director and Global Head of Sustainability, Citi Realty Services
December 17, 2014 09:22 AM
This post is the first in a series about Citi employees who are enabling progress within Citi and in their cities and communities. Follow the conversation in social media using the hashtag #ProgressMakers
I joined Citi Realty Services several years ago for the opportunity to have a positive impact for the environment on a global scale. After all, Citi has a presence in 100+ countries around the world. But a recent project has shown me that my impact extends even beyond Citi, because our culture of helping clients by simplifying complex situations applies no matter what part of Citi we work in.
A study we conducted a few years ago at one of Citi's data centers showed that installing an on-site gas-turbine power generator could significantly reduce the facility's emissions and increase efficiency.
This shows just how vital energy efficiency projects are. Yet high upfront costs and long payback mean they're often passed over or given a low priority.
Because Citi is committed to "running green" and reducing its environmental impact, I wanted to find a solution - one that would work for us and for other corporations with similar opportunities. I recruited colleagues from accounting, finance, the Asset Finance Group in Markets, operations and legal. We encountered hurdles, but we found solutions--Citi's culture of communication and innovation kept us going.
We call our approach "Energy Efficiency as a Service." It's a "pay as you go" concept, similar to how corporations lease office equipment like copiers. Here's how it works: A third party desiring to invest in green projects is contracted to finance all the upfront costs of a new generator using a combination of equity and debt, and owns it outright. That company then contracts an energy services provider to operate the generator, and we buy the power on a long-term contract at a set rate.
With this approach, we have no upfront costs. As soon as the switch is turned on the new natural gas-fired generator, we begin to save, because the contracted electricity will be cheaper--and cleaner--than municipal grid power. That's a holy grail for corporate executives with a mandate to pursue operational efficiencies.
This single improvement for one of our data centers will keep some 4,155 metric tons of CO2 emissions out of the atmosphere. That's equivalent to removing 3,200 cars each year
from our highways. We plan to scale this across multiple data centers worldwide to further reduce Citi's impact and further refine the product.
Thanks to colleagues across businesses and functions who worked together to not only solve a problem but then turn the solution into a new financial product, our clients can also unlock opportunities for energy efficiency, and multiply the environmental benefits for all of us.
© OECD/IEA 2013 World Energy Outlook, IEA Publishing. License: https://www.iea.org/t&c/termsandconditions/
*Tagged as: sustainability, progressmakers, progress makers, innovation, green energy, energy efficiency, data center