Normally, a single commercial efficiency retrofit wouldn't make for a big news story. But a $2 million project just completed in Connecticut may be a sign of positive change within the efficiency sector.

The technical detail of the 98,000-square-foot retrofit isn't the most notable part of the story. Rather, it's how the project was underwritten.

For the first time, the Investor Confidence Project (ICP) used its protocols to leverage financing for a major project -- helping bring together technical standards and performance data into a single package. The project in Connecticut represents a small but significant step forward for streamlining efficiency projects, which often suffer from a patchwork of standards that create a bottleneck for financing.

"There's a large variance in the industry, where efficiency projects come in every kind of flavor. Investors just want it to be plain vanilla," said Matt Golden, senior energy finance consultant for ICP, in an interview. "This is the first project applying our protocols in full."

ICP used its commercial protocol for the project in Bridgeport, Connecticut. The retrofit was financed by the state's green bank under a property-assessed clean energy (PACE) program. Golden said that Connecticut eventually plans to fully adopt ICP's protocols for evaluating future projects.

ICP is a project run by the Environmental Defense Fund in partnership with insurance companies, clean energy financiers, project developers and advocacy groups. The organization's goal is similar to efforts underway in thesolarindustry: to boost project financing by creating a more streamlined process for managing documentation, evaluating project performance and assessing risk.

There are lots of similarities between solar and efficiency when it comes to standardization. Both sectors feature a highly variable set of companies developing a wide range of project types and sizes. And companies in both sectors operate within a patchwork of policies, regulations and technical standards that make documentation redundant and expensive.

But efficiency has one characteristic that makes it even harder to evaluate: it can't be measured in the same way solar generation can. 

Measuring efficiency (which really means "calculating" savings) requires a variety of methods to read baselines and find the delta between what "is" and what "would have been." That makes building owners and investors more skeptical about performance.

"Monitoring and verification as it exists is about looking backward," said Golden. "Investors don't look backward. They make the investment and live with that -- you need to define a conforming project and create a standard way to calculate the savings."

Establishing a standard protocol for M&V could give investors and project hosts more confidence about future performance. Golden said ICP's protocol was a factor in helping close the recent project in Connecticut.

"Having the validation and the approach is what gave them the confidence to move forward with the investment," he said.

Assuming ICP continues to gain traction in the industry, the protocol could open the doors for securitization in the efficiency industry -- the practice of bundling projects together and selling them off on the secondary market. In order to securitize projects, however, investors need a deep pipeline of projects and an easy way to evaluate them. Standardization could help fill a tough financing gap and leverage more projects, but going through each individual project would be impossible for institutional investors.

"If you have a portfolio worth a couple hundred million dollars, you can’t vet every single project individually. There’s no chance we have have enough engineers to do that," said Golden.

A standardized evaluation process would enable institutional investors to create "buckets" of projects with a high level of confidence in their performance risk. That could create a positive cycle that builds a stronger project pipeline, and allows energy service companies to access cheaper money to build projects.

The $2 million project in Connecticut doesn't get the industry anywhere close to securitization. But it does create a bit more momentum for standards implementation within the state, which could spill into other markets. And that's the first step toward a "plain vanilla" efficiency market -- the exact flavor investors are looking for.