WHITE PAPER

DECEMBER 2021

FINANCING BEHIND
THE METER ENERGY
INFRASTRUCTURE
Debunking the myth of the sustainability premium. Updated energy
infrastructure pays for itself in savings, and flexible financing options
eliminate CapEx barriers altogether.
DISCLAIMER
The contents of this document are not intended to and do not create any offer or legally
binding relations between the Parties and are subject to negotiation of fully termed
agreements. Accordingly, it is agreed that unless and until such agreements has been
executed, neither Party nor any of their respective affiliates will be under any legal obligation
of any kind whatsoever by virtue of this or any written or oral expression with respect to such
possible agreement by any of their respective directors, officers, employees, agents or any
other representative or advisors. Nothing in this document is a guarantee of any results or
performance and any references to savings, performance or improvements are for
illustrative purposes only.
Financing Behind the Meter Energy Infrastructure White Paper

THE ROAD TO NET ZERO

IS PAVED WITH SMART
INVESTMENTS
INTRODUCTION

Voices in the energy transition are asking businesses to step up. Ambitious emissions
reduction goals, such as those defined by the Paris Agreement1 and the United
Nations’ Sustainable Development Goals2 are accelerating the energy transition
across sectors. Investors, employees, and consumers increasingly call for
demonstrable action against climate change.3

But while many businesses are compelled to take action, each one faces a uniquely
complex set of barriers. Leaders realize that meeting environmental goals will require
many changes, with end-to-end solutions implemented across the entire supply chain.
A 2020 survey4 of 265 global energy and sustainability professionals revealed the
largest, most universally shared challenges:

■ Timing and pricing volatility – 46.5% report that financial risk is the
biggest challenge in the industry. These risks often stem from unpredictability
of the commodities market and financial exposure associated with infrastructure
or technology investments.

■ Lack of experience – 32.9% say that lack of access to timely information,

resources, or support surrounding energy solutions is the prevailing issue.

■ The volume of changes required – 30.5% identify the scale and

complexities of global portfolio management as the biggest hindrance to
progress.

There is growing interest in onsite efficiency and energy management systems as one
way to facilitate future-friendly responses to these challenges. Collectively referred to
as “behind-the-meter” technology, this spectrum of solutions enhances a business’s
ability to:

■ Reduce overall energy consumption ■ Meet voluntary emissions goals and LEADERS REALIZE
THAT MEETING
regulatory requirements
■ Manage utility costs, including
demand-based charges ■ Signal sustainability action to
consumers, investors, and other
ENVIRONMENTAL
■ Implement preventative maintenance
stakeholders
programs to enhance reliability and
lower costs Promote operational and grid resiliency

GOALS WILL
■

To help inform modern energy strategies for the C&I sector, this whitepaper provides
an overview of behind-the-meter infrastructure solutions, their benefits, and
REQUIRE MANY
innovative financing options available to accelerate adoption. CHANGES
1
https://unfccc.int/process-and-meetings/the-paris-agreement/the-paris-agreement
2
https://sdgs.un.org/goals
3
https://www.blackrock.com/corporate/literature/publication/blackrock-sustainability-survey.pdf
4
https://perspectives.se.com/i/1232331-insights-2020-corporate-energy-sustainability-progress-report/17?
Financing Behind the Meter Energy Infrastructure White Paper

PART 1.
VALUE
BREAKDOWN
Financing Behind the Meter Energy Infrastructure White Paper

UNDERSTANDING
BEHIND-THE-METER
SOLUTIONS
Energy management technology is an emergent field. As such, there is variation in naming conventions as each provider
brings new offerings to the market. Generally, “behind-the-meter” refers to a system’s placement relative to a building’s
electric meter.

Behind-the-meter energy solutions may refer to any type of energy management resource either located onsite or under
local control.

CORE TECHNOLOGIES INCLUDE:

Energy efficiency Demand response systems

HIGH-EFFICIENCY LIGHTING OR HVAC INFRASTRUCTURE WITH USE OF ENERGY MANAGEMENT SYSTEMS TO RESPOND TO DEMAND
ADVANCED CONTROL SYSTEMS TRIGGERS OR OTHER EXTERNAL CONDITIONS DEFINED BY UTILITIES
OR GRID MANAGER

Onsite generation and storage Data collection, management and analytics

BACK-UP GENERATORS AND SOLAR ASSETS, WHICH CAN A SERVICE THROUGH CLOUD-BASED SYSTEMS TO AID IN ADAPTING
COMPLEMENT ELECTRIC VEHICLE (EV) CHARGING TO MARKET DYNAMICS AND SYSTEM DEMANDS AND HELP TRACK
SUSTAINABILITY METRICS

Energy management systems EV charging

FACILITATE DIRECT LOAD CONTROL AND BEHAVIOURAL CHARGING INFRASTRUCTURE AND SOFTWARE TO MANAGE
LOAD SHAPING CHARGING

Understanding Energy Terms

Behind-the-meter energy technologies are often referred to as Distributed Energy Resources (DERs), but this umbrella
term varies in use. The North American Electric Reliability Corporation (NERC) defines DERs as “any resource on the
distribution system that produces electricity and is not otherwise included… in the bulk electric system,” which restricts
the scope of DERs to on-site power generation and associated infrastructure and storage assets.5

On the other hand, the Smart Electric Power Alliance (SEPA) expands this definition to include technologies for direct
load control, behavioural load shaping, and energy efficiency, in addition to behind-the-meter power generation and
storage assets. SEPA acknowledges that DERs may be “used individually or in aggregate value to the grid, individual
customers, or both.”

The takeaway? Business decision makers considering their options should be aware of variation in terms, definitions,
and applications when evaluating energy partners, service providers, and expected results.

5
https://www.nerc.com/comm/Other/essntlrlbltysrvcstskfrcDL/Distributed_Energy_Resources_Report.pdf
Financing Behind the Meter Energy Infrastructure White Paper

OFTEN-OVERLOOKED
FINANCING
ADVANTAGES
The term “financing” is typically equated with debt, but energy companies
are finding new ways for financing to benefit the customer. Alternative
financing options have been made available as a means to remove financial
barriers to increased sustainability, offering advantages such as:

Pay out of your operating expense

Instead of paying for energy upgrades out of capital expenses (CapEx),
customers can pay out of operating expenses (OpEx), subject to your
accounting team’s advice. This provision removes the need for upfront
payments without accumulating debt and allows a company to deploy
capital towards their core business, maximizing returns, and optimize
debt to equity ratio. These options are sometimes packaged as
subscription-based or Energy-as-a-Service models, but terms vary.

Accelerated asset depreciation

Most businesses can benefit from cost and energy savings for years after the
infrastructure has been paid for. For example, many contracts last between
3-5 years, while infra-structure upgrades are expected to last 10-15 years.

Asset and financial risk management

Guaranteed, inclusive service agreements shield customers from
financial risk and operational disruption.

Competitive traditional financing

For some businesses, traditional Capital Lease or Loan financing options
are the best option, and Shell Energy provides highly competitive
options for customers all on the same contract, keeping things simple.

Capital
Budgeting
Costs

Subscription
Costs

Figure 1. Subscription-based or Energy-as-a-service visualization based on an

actual Shell Energy project model highlighting the facility benefits of a capped
and consistent monthly subscription payment for energy services versus traditional
Capital budgeting and unplanned maintenance and repairs cost.
Financing Behind the Meter Energy Infrastructure White Paper

OFTEN-OVERLOOKED
FINANCING
ADVANTAGES
Organizations with sophisticated energy strategies are already leveraging these benefits. The 2020 study surveying 265
global corporate sustainability professionals referenced previously found that approximately 20% typically fund energy
and sustainability projects with non-traditional financing options such as Energy-as-a-Service models. According to the
report, this group “demonstrated both the highest degree of extreme confidence as well as the most general confidence
overall when it came to achieving energy and sustainability goals.”6

Leases vs. Subscriptions

Leases can be attractive to customers looking for pay-over-time options. However, generally accepted accounting
principles (GAAP) force companies to capitalize leases as liabilities on their balance sheets, potentially impacting their
credit rating negatively.7

Subscription models maintain the benefits of monthly payment structures and reduced technology risk – but are
not treated as a liability. Instead, GAAP rules treat the subscription as an operating expense, which can impart
additional tax and credit advantages to the customer.8

6
https://perspectives.se.com/i/1232331-insights-2020-corporate-energy-sustainability-progress-report/32?
7
Financial Accounting Standards Board (“FASB”), Accounting Standard Codification (“ASC”) No. 842
8
Shell Energy and our service providers are not accounting firms and do not provide accounting advice. Please consult your own company's accounting practices for their evaluation of the subscription model.
Financing Behind the Meter Energy Infrastructure White Paper

OFTEN-OVERLOOKED
FINANCING
ADVANTAGES
WHAT RESULTS CAN BE EXPECTED?

The rate of return for onsite energy infrastructure is highly individual, and depends on the facility, its location, applicable
rates and tariffs, operations, level of investment, and other factors. Nevertheless, these solutions have been proven to
significantly reduce energy consumption, which leads to lower costs as demonstrated by the following case studies.
Many systems can even be optimized to maximize cost savings according to local rates and tariffs.

CASE STUDY //
SHELL ENERGY MANAGEMENT FOR RESTAURANT CHAIN

INDUSTRY SECTOR
PROBLEM SOLUTION
QUICK SERVE CFO of a quick serve restaurant Shell Energy allows customers to
RESTAURANT chain wanted to reduce energy pay for energy management
spend and manage food safety upgrades over time instead of
6
https://www.nerc.com/comm/Other/essntlrlbltysrvcstskfrcDL/Distributed_Energy_Resources_Report.pdf
EQUIPMENT
by deploying controls and upfront. For the CFO, this meant
7
Financial Accounting Standards Board (“FASB”), Accounting Standard Codification (“ASC”) No. 842
8
LIGHTING
Shell Energy and our
sub-metering, but he did not have that he could effectively fund the
Service Providers are not Accounting Firms and do not provide Accounting advice. Please consult your own company's accounting practices for their evaluation of the sub-scription model.
the budget to pay for the project through tangible energy
equipment. and operational savings, and he
CONTRACT LENGTH would now have visibility into the
performance of critical equipment,
36 MONTHS including refrigerators.

EXPECTED ENERGY SAVINGS

$17.4 million/year RESULT

CO2 REDUCTIONS Since deploying the energy management solution to over 22,000
locations, the quick serve restaurant has seen tangible results. In addition
30,600 tons/year to saving >$17 million per year on utility bills and maintenance, he has
been able to preserve valuable, temperature-sensitive inventory, monitor
trends in site energy consumption, and assess the value of efficiency
retrofit projects.
Financing Behind the Meter Energy Infrastructure White Paper

OFTEN-OVERLOOKED
FINANCING
ADVANTAGES

CASE STUDY //
LIGHTING UPGRADE FOR FINANCIAL SERVICES FIRM

INDUSTRY SECTOR
PROBLEM SOLUTION
A leading global financial services Shell Energy allows customers to
FINANCE
firm needed to meet publicly stated pay for energy efficiency upgrades
energy reduction goals. To do so, it over time instead of upfront. For
EQUIPMENT
sought out a strategy to ensure the financial services firm, this
LIGHTING
expedited portfolio-wide adoption meant that it could effectively fund
of efficient technologies on a rolling the projects through energy and
basis, without diverting time and operational savings while meetings
CONTRACT LENGTH money away from its core business. its energy reduction targets.

120 MONTHS

EXPECTED ENERGY SAVINGS

$20,000/year RESULT
CO2 REDUCTIONS The firm used this innovative financing solution to implement LED lighting
upgrades at two facilities in Maryland. The firm now has a clear path to
2.5m lbs per year progressively upgrading other properties to meet its long-term energy
reduction targets.
Financing Behind the Meter Energy Infrastructure White Paper

OFTEN-OVERLOOKED
FINANCING
ADVANTAGES

CASE STUDY //
ENERGY MANAGEMENT FOR HOSPITAL

INDUSTRY SECTOR
PROBLEM SOLUTION
A hospital owner wanted to Shell Energy allows customers to
HOSPITAL
reduce the energy spend and gain gain asset-level insights into their
insight into site operations of its facilities and more effectively
EQUIPMENT
highest energy consuming site. manage their energy infrastructure.
SUB-METERING
However, the solution could not For the hospital, this meant that
disrupt normal business operations, they could effectively rebalance air
sacrifice patient comfort, nor handling units and compute the
CONTRACT LENGTH interfere with emergency power benefits of replacing cooling tower
systems. fans with VFDs and new controls.
60 MONTHS

EXPECTED ENERGY SAVINGS

$51,000/year RESULT
CO2 REDUCTIONS Since deploying the energy management solution, the hospital owner has
seen tangible results. In addition to saving $51,000 per year on utility
625,000 lbs/year bills and maintenance, he was able to determine that the planned
purchase of a third back-up generator was unnecessary (through a
deeper understanding of available reserve energy capacity), avoiding a
nearly $2 million capital expense.
Financing Behind the Meter Energy Infrastructure White Paper

PART 2.
EXPLANATION
OF SHELL ENERGY
SOLUTIONS &
HOW IT WORKS
Financing Behind the Meter Energy Infrastructure White Paper

SHELL ENERGY
SOLUTIONS
FINANCIAL BENEFITS
■ Flexible payment options including ■ Long-term savings can continue to benefit
multi-year contracts with off-balance sheet businesses for years after the infrastructure has
payments and early buy out options. At the been paid for.
end of the contract, customers can either
■ Flexible contracts can expand to incorporate
purchase infrastructure for a nominal fee or
new services and products that may become
opt to continue service.
available as technologies shift and customer
■ Budgetary certainty is increased because needs grow.
O&M is included in the subscription.
■ Risk & responsibility transfer.
Unexpected repairs would otherwise contribute
All maintenance and repairs, including
to a significant degree of unpredictability.
replacement, are covered.
■ Immediate savings begin upon installation,
Guarantee that systems will perform as
and typically more than make up for monthly
■

expected, or the customer does not pay.

expenses associated with energy efficiency or
management systems.

CONSULTATION DATA COLLECTION

The Shell Energy
Solutions Process WE TALK WITH YOUR KEY STAKEHOLDERS WE WORK WITH YOUR TEAMS TO
TO UNDERSTAND THE BUSINESS UNDERSTAND THE BASELINE OF YOUR
PRIORITIES AND CONSTRAINTS AROUND SYSTEMS, INCLUDING ENERGY USAGE, PEAK
YOUR BTM UPGRADE JOURNEY DEMAND, EXISTING BAS/EMS, CURRENT
MAINTENANCE/REPAIR SPEND, AND OTHER
DATA AS APPLICABLE TO THE PRIORITIES
DISCUSSED IN STEP 1

SITE VISIT ENGINEERING INSTALLATION

CURRENT EQUIPMENT PERFORMANCE IS SHELL ENERGY AND PARTNERS DESIGN AND SHELL ENERGY AND PARTNERS INSTALL ALL
EVALUATED AND ECONOMIC ANALYSIS IS AGREE ON IDEAL SYSTEM CONFIGURATIONS FOR HARDWARE AND TEST SYSTEMS COMPREHENSIVELY.
PERFORMED TO IDENTIFY OPPORTUNITIES. WE MAXIMUM EFFICACY AND SAVINGS. A PHASED
DO NOT BLINDLY APPLY A “RIP AND REPLACE” APPROACH CAN BE DEPLOYED IF APPROPRIATE FOR
APPROACH, BUT FOCUS ON STRATEGICALLY THE SPECIFIC CUSTOMER’S SITE CONDITIONS
DRIVING SAVINGS OVER TIME. AND MARKET FORCES.

MONITOR, MAINTENANCE DATA

& GUARANTEE ANALYTICS

PREVENTATIVE AND REACTIVE MAINTENANCE IS ESTABLISH BASELINES AND ENABLE BENCHMARKING

INCLUDED, AND SYSTEM PERFORMANCE IS BETWEEN SITES TO TRACK SUSTAINABILITY AND
GUARANTEED. THIS INCLUDES DATA ANALYSIS ENABLE KPI PERFORMANCE MANAGEMENT.
AND MONITORING TO TARGET EQUIPMENT FOR
REPLACEMENT AND IDENTIFY ONGOING
OPPORTUNITIES.
ABOUT
SHELL ENERGY
SOLUTIONS

SHELL ENERGY DELIVERS A RANGE OF

BEHIND-THE-METER SOLUTIONS WITH
FLEXIBLE FINANCING OPTIONS TO SUPPORT
C&I CUSTOMERS AT EVERY STAGE OF THE
ENERGY TRANSITION.

SERVICES

■ ENERGY EFFICIENCY AND INFRASTRUCTURE UPGRADES

■ ENERGY MANAGEMENT AND DEMAND RESPONSE
■ BACK-UP GENERATION
■ DATA ANALYTICS AND PERFORMANCE MANAGEMENT
■ ONGOING AND PREVENTATIVE MAINTENANCE
■ ASSET MONITORING AND CONTROLS

LEARN MORE
LEARN MORE: SHELL ENERGY SOLUTIONS

TALK TO AN EXPERT:
SHELL.US/CONTACTSHELLENERGYY