Taking the Risk out of Energy Efficiency Projects; How BAE outsourced its energy-use upgrade.

Green upgrade: BAE Systems is using a novel payment model for a retrofit of equipment including compressors like the one above. The amount of money it pays is based on the amount of energy it saves.

Defense contractor BAE Systems is in the business of understanding extreme risks: it designs and makes a variety of technologies for war zones, from communications and surveillance systems to weapons. But it didn’t want to deal with any risks when it came time to invest in becoming more energy efficient. So the company adopted a novel strategy that kept them to a minimum.

In December BAE, which has its U.S. headquarters in Arlington, Virginia, announced a $2 million project to upgrade heating and cooling equipment, pumps, and motors and control systems at its facility in Greenlawn, New York. The company won’t be paying that price for the upgrades, however. Instead, it will pay project developer Metrus Energy an amount based on how much it saves on energy use. Crucially, Metrus will not only develop the project; it has lined up financing to pay for it, and it will pay Siemens Industry to install and maintain the equipment

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