PPESCO is an innovation of VEIC. It has been made possible by the generous support of High Meadows Fund, the Kresge Foundation, and the MacArthur Foundation.
This site offers essential, open-source information about the PPESCO concept. We welcome the involvement of organizations that want to bring their own PPESCO to market, funders and social-enterprise investors, and social entrepreneurs. It is the guidebook for what a PPESCO does, how to design a PPESCO and get it started, how to manage a PPESCO, and what to expect from a PPESCO enterprise.
VEIC plans to engage this new PPESCO community by creating a trade group, using in-person and virtual networking activities to create wider access to capital and projects, and to establish operating norms and quality standards to support the growth of the PPESCO marketplace. For readers who wish to participate in this endeavor please contact us here.
A shared environmental mission
PPESCOs share a mission that addresses an environmental imperative to reduce energy use and its corollary, greenhouse gas emissions.
The environmental imperative: Reducing energy use and greenhouse gas emissions
Three interdependent factors are adversely affecting Earth’s ecosystem: climate change, human activity, and greenhouse gas emissions. The victims of catastrophic weather events, and the communities in which these victims live, bear the brunt of this interdependence.
The common denominator for this interdependence is energy—how it is produced, how its delivery is structured, how it is used, and how it is wasted.
Is it possible to tackle rising levels of greenhouse gas emissions, and particularly carbon dioxide emissions, in a way that also makes people more energy secure, that reduces their energy burden, and doesn’t sink them into intractable debt?
PPESCOs offer an effective solution to this question.
An opportunity to make an impact on reducing greenhouse gas emissions
The building sector worldwide accounts for a third of global greenhouse gas emissions. There are two obvious and easy paths to reducing these emissions:
- Improving buildings' structures and systems
- Changing the energy use behaviors of occupants
Energy services companies (ESCOs) typically serve the large-institutional building market with a prescribed course of energy improvement projects costing $1 million or more. These projects achieve energy savings, and the building owners use the value of the saved energy to pay the debt on project loans.
Because ESCOs acquire capital from investors who want to maximize profits, they are primarily concerned with maximizing these investors’ rate of return.
PPESCOs promote an alternate, public serving mission as a way to look at building energy investments. It is an approach that puts the highest priority on reducing energy use using all cost effective measures over a long period of time. This is a new approach. It is an effective way to reduce greenhouse gas emissions. And it is an opportunity to reach hundreds of thousands of small and medium-sized buildings whose owners cannot obtain capital for energy improvement projects because the projects are not big enough, nor do they have access to the technical and operational skills required for success.
A shared economic mission
Making buildings better for low-income populations
PPESCOs serve public-purpose buildings (typically smaller properties with total project cost of between $100,000 and $800,000) in the health care, education, municipal, and multifamily affordable housing sectors. Energy improvements reduce operating costs of the buildings. They also help offset the disproportionately high costs of energy that low-income people pay—and the disproportionate effects of climate disruption on those least able to bear those effects.
By reducing energy costs throughout a building, public-purpose building owners can free up funds that would otherwise have gone to pay for energy and instead allocate them to their public-serving missions. Owners of public-purpose buildings—especially those serving low-income populations—have real difficulty in accessing capital and attractive financing. The PPESCO changes this.
PPESCO — /’peskō
A type of energy services company linked to sources of patient capital and providing whole-building energy improvements to buildings that serve a public purpose: multifamily affordable housing, municipal buildings, schools, and health care buildings.