That’s part of the story of Nalin Kulatilaka, who teaches in the School of Management and is a codirector of the Clean Energy & Environmental Sustainability Initiative.

“My research is on sustainable energy investments,” Kulatilaka says. “From renewable energy sources like solar and wind to energy conservation and energy efficiency investments like building retrofits.”

The thrust of his work is to incentivize the up-front funding for green energy buildings from banks and other sources by writing a new kind of contract for the loans that fuel such changes. The contracts are intended to monetize the savings that green energy can achieve, so that the investors who put up the capital can capture some of the money saved as revenue from the project.

Recently, Kulatilaka has worked on buildings owned by the Cambridge Housing Authority in Central Square. Some were heated entirely by electricity, some were particularly leaky, and all lacked the investment capital needed for retrofits.

“My contribution there, with Professor of Earth & Environment Robert Kaufmann and a team of students, was to first assess the opportunity; to try to quantify what the savings would be by using various statistical techniques that analyze the demand patterns of the building,” he says.

“We are now designing contracts where the building owner and the tenant could share the savings. These would occur in such a way that funding could be attracted from conventional—or at least semi-­conventional—sources like large banks.”

When the parties involved can tap into the savings that come from using green energy, tenants are incentivized to conserve energy and funders see the value in providing resources to the project.

Efforts like the Cambridge example are now under way in the Back Bay and Roxbury, part of what’s now known as the Boston University Sustainable Neighborhood Lab.

While conducting doctoral work at the MIT Energy Lab in the 1970s, Kulatilaka watched the nation’s energy crisis reach a peak. His observations fueled an impulse to switch from engineering to finance. He sought an avenue to approach energy problems from a community level, to bring funding to the table by changing the concept of efficiency into a reward system.

“I come at this from the consumer, the end user,” says Kulatilaka. “The transformation of the coal into steam, and into electricity that comes through the grid, and in the lightbulb it becomes light—most of the energy is wasted toward that last part. If we can save that part, that could become the real opportunity we could harness.”