Noesis Energy, the startup that uses a combination of software analytics, online matchmaking and traditional finance to broker efficiency deals, has always modeled itself after similar companies in the solar industry.
Now Noesis is actually in the solar business itself.
According to CEO Scott Harmon, roughly one-third of the commercial efficiency projects closed on Noesis' online marketplace now include solar. The company has seen an increasing number of developers pairing small commercial solar PV projects with lighting, HVAC and building controls retrofits over the last year.
"There are a lot more hybrid proposals," said Harmon. "The economics of blending can be very attractive."
The change in demand may signal another natural course shift for Noesis. Although the company is firmly committed to the commercial and industrial efficiency space, it expects to get deeper in the solar market -- and possibly help execute battery storage projects as they become more realistic for commercial applications.
The Texas-based startup, which has raised $19 million since 2011, has gone through a couple of organic changes.
The company's first product was an online marketplace that allowed building owners to analyze their energy consumption and allowed energy service providers to use that data to bid on projects.
It wasn't long until Noesis realized that financing was the missing piece for closing small and mid-sized commercial projects. So the company pulled together a handful of financing partners to help execute proposals on the marketplace, eventually raising a $30 million fund. Harmon often cited the residential solar marketplace Clean Power Finance as a model for what Noesis was trying to build.
Based on the number of PV projects now getting integrated with efficiency retrofits, Noesis appears to have built the equivalent marketplace for the commercial and industrial market.
That could help developers in the small commercial solar market -- also known as the middle market -- which have struggled to get financing and keep pace with residential growth.
Middle market projects are typically sized between 50 kilowatts and 1 megawatt. However, the smaller companies developing these systems often don't have credit scores that might allow them to secure debt. And because of their size, they also have a hard time securing project finance. The market also suffers from a lack of standards, making it even less attractive to investors.
But what if small commercial systems could be blended together with efficiency retrofits? Harmon said a hybrid model can very often pull solar out of limbo.
Noesis does not deal with tax equity or structure power-purchase agreements. Rather, it simply offers leases. And the company's financing partners are responding.
"We have five lenders that are starting to like those deals. With very straightforward leasing, mixing solar and efficiency together, you can accelerate the combined payback to about eight years," said Harmon.
A commercial lease exclusively for solar may not be attractive to investors. But mixing it together with other building equipment retrofits can improve the payback by five or more years, he said.
Noesis is seeing three types of solar offerings: installers hiring efficiency experts; energy service professionals hiring solar installers or business development experts to help them expand; and partnerships between solar installers and traditional energy service companies.
Noesis isn't limiting itself to specific technologies. The company wants to help broker whatever types of projects building owners are asking for and project developers are providing, assuming they're within the middle market.
Behind-the-meter commercial battery storage, which could become a 720-megawatt market by the end of the decade, is another area of interest for the company. In fact, the distributed storage provider Stem is a partner on the Noesis platform.
"The market is absolutely going to shift, and we plan to be squarely in the middle," said Harmon. "That's the leading edge. It's not just efficiency -- it's energy optimization for C&I customers."