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PACE Programs: Enabling Investments in Clean Energy

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Repayment allocation (i.e., who gets paid first) is an issue when customers ... Characteristics of Strong Programs. Credit enhancement is critical for... – PowerPoint PPT presentation

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Title: PACE Programs: Enabling Investments in Clean Energy


1
PACE Programs Enabling Investments in Clean
Energy
  • Merrian Fuller
  • Lawrence Berkeley National Laboratory (LBNL)
  • November 18, 2009

2
Why financing is a hot topic in the U.S.
  • Savings Potential
  • Investment Needed

If 20 of EE Recovery Act funds used for
financing 1.26B 0.42 of 300
Billion Private capital is required
  • Significant commitments at the federal, state and
    local levels…
  • gt11 Billion in Recovery Act funds for EE
  • Ramp up of rate payer funding for EE
  • Federal Recovery through Retrofit plan
  • Many state and local commitments
  • Pending climate energy legislation…
  • 240 BILLION spent on residential energy in 2008
  • Assume most homes can save 20-30
  • Savings potential of 48 to 72 BILLION every
    year
  • Assume 30 million homes (27) get retrofits in
    the next 10 years
  • 10,000 average per home
  • 300 BILLION investment required
  • (over 1 TRILLION for all homes)

3
Employment Impacts
8 from direct installation
  • Assume 12 jobs per 1M investment

4 from manufacturing of parts materials
360,000 jobs sustained over 10 years
Retrofitting 30 million homes
3.6 million person-years of employment


Fewer jobs per spent for commercial projects
4
Barriers to Energy Efficiency
  • Not worth the effort (i.e. transaction costs)
  • Lack of information
  • Uncertainty about the energy savings
  • Split incentives
  • High upfront costs
  • Others…

5
If you had to buy 20 years of minutes in advance,
would you have a cell phone?
  • Ciscos PGE Bill
  • 129/ month
  • 1548/ year
  • 30,960/ 20 years
  • Ciscos iPhone Bill
  • 119/ month
  • 1428/ year
  • 28,560/ 20 years

6
EE Residential Financing Case Studies
On-Bill Loan
Conventional
  • AFCs Keystone Home Energy Loan (PA)
  • City of Cambridge
  • Efficiency Vermont
  • KEMAs California EE Loan Fund (terminated)
  • MN Center for Energy and Environment
  • NYSERDA's Energy mart Loan Fund
  • NYSERDA's HPwES Loan Program
  • Nebraska Energy Office
  • Sacramento Municipal Utility District (SMUD)
  • Vermont Gas Systems
  • Viewtech Financial Services (CA)
  • BC Hydro (terminated)
  • First Electric Cooperative (AR)
  • Manitoba Hydro
  • NW Natural Gas (terminated) (Portland)

On-Bill Tariff
  • Maui Electric Company
  • Midwest Energy (KS)
  • New Hampshire Electric Coop (terminated)

Property-Assessed Clean Energy
Paper available uc-ciee.org/energyeff/documents/
resfinancing.pdf
  • City of Berkeley

7
On-Bill Loan
Upfront
Repaid on utility bill
  • Identifies work contractor based on utility
    criteria
  • Repays financing on utility bill
  • Remaining balance must be repaid when the tenant
    moves
  • Creates approval process and project criteria
  • Provides upfront capital

8
On-Bill Tariff
Upfront
Repaid on utility bill
  • Identifies work contractor based on utility
    criteria
  • Repays financing on utility bill
  • Repayment obligation transfers with tenancy
  • Creates approval process and project criteria
  • Provides upfront capital
  • Attaches repayment obligation to the meter

9
Residential On-Bill Repayment
10
Issues with On-Bill Repayment
  • Changing billing system appears to be difficult
    for some utilities
  • Repayment allocation (i.e., who gets paid first)
    is an issue when customers partially pay their
    bills
  • Using On-Bill Repayment for improvements that
    save fuels not included on the bill may be
    confusing (i.e. if bill is electricity-only)
  • The commitment of the utility to the On-Bill
    Repayment program is critical

11
Property-Assessed Clean Energy (PACE)
Upfront
Repaid on tax bill
  • Identifies work chooses contractor
  • Repays financing as a line item on the property
    tax bill
  • Repayment obligation transfers with ownership
  • Creates financing district approval process
  • Provides upfront capital
  • Attaches repayment obligation to the building

12

13
Benefits to Cities and Counties
  • Low risk financing tool for cities and counties
  • Helps cities and counties meet their climate and
    energy goals
  • Program costs can be paid out of the financing
  • No liability or other exposure to a citys
    general fund
  • Financing mechanism well known to local
    governments and bond market
  • Promotes the green economy, creates green jobs

14
PACE Programs
Enabling legislation now exists in 15 states.
PACE How To Guide other PACE resources http//r
ael.berkeley.edu/financing
15
Legal Authority
16
Boulder County
  • Rounds one and two
  • About 10 million in projects
  • Vendors indicate significant impact/multiplier
    Average loan size 17-18k, well above estimate of
    10k
  • 20-25 under 10,000
  • EE--over half of total dollars
  • PV, windows, and insulation are top three
    measures in dollars
  • Income Qualified Loans
  • 1/3 of dollars
  • About half of loans

17
Sonoma County
18
Town of Babylon
Misc 2
Windows 2
Wall insulation 8
19
Issues with PACE
  • Often administratively difficult to set up,
    especially for limited local government staff
  • Small territory (city or county) limits scale
  • Still working on easy access to capital through
    the municipal bond market
  • Unclear how the assessment will affect property
    values

20
Characteristics of Strong Programs
  • Credit enhancement is critical for…
  • Giving access to credit for those who need it
  • Increasing the use of private capital
  • Successful programs often engage networks
    of contractors
  • Programs must carefully manage costs scale
    is important for viability
  • Make it easy for both customers AND contractors
  • Get support from the organizations and leaders
    the customer already trusts use more dynamic,
    appealing messages

21
Resources
  • Merrian Fuller mcfuller_at_lbl.gov
  • DOE Resource Portal for Financing Programs
  • http//www.eecbg.energy.gov/solutioncenter/financ
    ialproducts/default.html
  • How to Guide for PACE Programs
  • http//rael.berkeley.edu/files/berkeleysolar/HowT
    o.pdf
  • Federal Governments Policy Framework for PACE
    Financing Programs http//www.whitehouse.gov/asset
    s/documents/PACE_Principles.pdf
  • State legal authority for PACE programs is
    tracked by the DSIRE database http//www.dsireusa.
    org/incentives/index.cfm?EE1RE1SPV0ST0sear
    chtypePTFAuthsh1
  • Websites of the programs featured in this
    webinar
  • Berkeley - http//www.berkeleyfirst.renewfund.com
  • Boulder County - http//www.bouldercounty.org/bocc
    /cslp/
  • Babylon - http//ligreenhomes.com ,
    www.TheBabylonProject.org
  • Sonoma County - http//www.sonomacountyenergy.org/
    energy-improvements.php

22
Contact Info
  • Merrian Fuller
  • Lawrence Berkeley National Laboratory
  • Email MCFuller_at_lbl.gov
  • Phone 510-486-4482
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