The Game-Changing MEETS Model for Commercial Buildings
Ever wonder why commercial buildings, despite being huge energy users and incredibly wasteful, haven’t embraced deep energy efficiency? It’s a complex puzzle of misaligned incentives, but our latest podcast episode dives into an innovative solution: the Metered Energy Efficiency Transaction Structure, or MEETS.
The Problem: Traditionally, neither building owners nor their tenants have a strong financial incentive to invest in energy efficiency. Owners don’t want liabilities or long-term investments that benefit tenants, and tenants won’t invest in buildings they don’t own. Even utilities face a “death spiral” dilemma, as promoting efficiency means selling less of their primary product.
The MEETS Solution: Developed by long-time energy expert Rob Harmon, MEETS treats energy efficiency as a metered, sellable resource, much like solar or wind energy. It’s a transaction structure, not a subsidy or financing mechanism, designed to require no public subsidy.
Here’s how this ingenious model realigns incentives:
*Efficiency Energy: MEETS redefines efficiency as “efficiency energy” – a new form of energy that can be accurately measured and traded.
*Energy Tenant (Developer): An energy developer (like an ESCO) becomes an “energy tenant” within the building, signing a long-term agreement (e.g., 20 years). Crucially, they pay rent to the building owner, turning the efficiency project into an asset (income stream) for the owner, not a liability.
*Building Owner: Gains rental income, a better building, and capital improvements without taking on new liabilities.
*Utility: Buys the “efficiency energy” directly from the energy tenant via a Power Purchase Agreement (PPA), just like they would from a wind or solar farm. The utility then sells this efficiency energy to the building’s occupants on their retail energy bill. This means the utility sells the same total quantity of “energy” (a mix of traditional and efficiency), without needing to pay up-front incentives for commercial efficiency.
*Investors: Now have a credit-worthy utility as a counterparty (via the PPA), attracting significant private capital that was previously hesitant to invest in building efficiency.
*Tenants: Pay roughly the same energy bill but benefit from a more comfortable, healthier, and better-performing building16….
The Impact: MEETS overcomes critical barriers, enabling deep efficiency retrofits in large commercial buildings. It creates local, skilled labor jobs and transforms buildings from grid liabilities into grid assets (e.g., thermal batteries that can store and discharge energy). This model aligns energy efficiency with broader goals like electrification and grid stability, paving the way for a more resilient and sustainable energy future.
The model was pioneered in Seattle, with the Bullitt Center as a key pilot, and Seattle City Light’s “Energy Efficiency as a Service (EEaS)” program is now bringing MEETS to more buildings, demonstrating its real-world viability.
Listen to the full episode to learn more about how MEETS is poised to revolutionize energy efficiency and help us achieve our climate goals!