Intermediated cost savings programs are programs in which a third party creates a program that helps lower the costs to the participant and splits the savings. For example, contractors who sell energy efficiency equipment and installations often take on jobs “for free” and then share a portion of the savings over time. For example, company A uses inefficient lighting in their store. A contractor may offer to complete an energy efficient lighting installation worth $1,000 that will save the company $200.00 a month in that store and will take as payment $100.00 a month for the next twelve months. In this way, the company puts no money out and immediately begins to reap savings. The contractor, by financing the installation, makes an extra $200.00.

More expensive installations, such as solar panels installed on a roof, may have similar contracts that last for several years.  In these cases the intaller routinely gets outside financing at the front end.  

The key concept in this component is the idea that the intermediary must price their product or service so that the client saves money right away.

One could imagine an analogous situation in the field of health care relating to wellness programs in which a third party offers support to employees (stress reduction classes, for example) in exchange for a share of any healthcare cost savings for the employer.  The employees could themselves be enticed with incentives.  One significant difference would lie in the fact that there is a time lag in the case of wellness programs while there isn’t in energy programs.

MMA Renewable Ventures installs and finances energy efficiency projects ranging from small private sector projects to large public installations.  They can finance the entire project with repayment schedules below the amount saved leading to a cash-flow positive situation from the start. Energy efficiency projects that MMA Renewable Ventures will finance range in size and cost, with typical private-sector facilities upgrades ranging from hundreds of thousands to more than one million dollars, and large public-sector upgrades that cost in excess of one million dollars.

Business model:  

a company that lowers the costs for another company or individual finances the cost of the intervention and then charges the client a portion of the money saved.  This leads to an immediate positive cash flow for the client.

Assumptions:

 for our purposes, the most important assumption would have to be that there are interventions that can lower costs in a timely manner with enough savings to cover the cost of the financing for the intervention, a profit for the intervener, and still leave enough savings to be an inducement for the client to take action.

• Rebalancing of Intermediation and Disintermediation