Clean Energy Finance and Investment Authority C-PACE: A financing tool for building owners
Clean Energy Finance and Investment Authority transitioning programs away from government-funded grants, rebates, and other subsidies, and towards deploying private capital CEFIA was established in 2011 to develop programs that will leverage private sector capital to create long-term, sustainable financing for energy efficiency and clean energy to support residential, commercial, and industrial sector implementation of energy efficiency and clean energy measures. 2
Energy Challenge in Connecticut 3
Property Assessed Clean Energy An innovative financing structure that enables commercial, industrial, and multi family property owners to access financing for qualified energy upgrades and repay through a benefit assessment on their property tax. 4
PACE is around the country 5
The Customer (Building Owner): PACE Addresses Key Barriers Lack of funding? Near term plan to sell? Cannot assume more debt? Split incentives? Uncertain savings/technical expertise? 100% upfront, 20 year financing Tax obligation fixed to property Hartford West Hartford Bridgeport Norwalk Simsbury Stamford Stratford Southbury PACE assessments qualify as OPEX Assessment/savings pass to tenants Technical underwriting / SIR>1 6
Connecticut Special Session Public Act 12-2 (June 2012) Commercial, industrial & multi-family property Requires the consent of the existing mortgage lender Requires SIR>1; permanently affixed Enables municipalities to opt-in Enables CEFIA to administer a statewide program 7
Benefits to Other Stakeholders Hartford West Hartford Bridgeport Norwalk Simsbury Stamford Stratford Southbury 8
Program snapshot Program launched January 2013 2 projects closed 8 projects approved 150+ applications = over $50 million* 45 towns eligible = 55% of C&I market state-wide 170 contractors trained 10 qualified capital providers $25M in CEFIA capital
Municipalities Opted into C-PACE Avon Beacon Falls Bloomfield Bridgeport Canton Clinton Coventry Danbury Durham East Haddam East Hartford Glastonbury Greenwich Hartford Killingworth Manchester Meriden Milford Middletown New London New Milford Newtown North Branford Norwalk Old Saybrook Plainville Putnam Simsbury Southbury Southington Stamford Stratford Suffield Tolland Torrington Trumbull Waterbury Waterford West Hartford Westbrook Westport Wethersfield Wilton Windham Windsor Hartford West Hartford Bridgeport Norwalk Simsbury Stamford Stratford Southbury *Contingent upon 5/20 vote Coming Soon: Bethel, Cheshire, East Windsor, North Branford, East Granby, Fairfield, Hamden, Meriden, Milford, New Haven 10
Customers Apply Into C-PACE Hartford West Hartford Bridgeport Norwalk Simsbury Stamford Stratford Southbury 12
C-PACE Partners do Technical Underwriting Hartford West Hartford Bridgeport Norwalk Simsbury Stamford Stratford Southbury 13
Upgrades: What s Eligible Anything that saves energy from baseline as long as it isn t going anywhere High efficiency lighting HVAC upgrades New automated building and HVAC controls Variable speed drives (VSDs) on motors fans and pumps High efficiency chillers, boilers, and furnaces High efficiency hot water heating systems Combustion and burner upgrades Fuel switching Water conservation Heat recovery and steam traps Building enclosure/envelope improvements BMS Renewable energy systems Hartford West Hartford Bridgeport Norwalk Simsbury Stamford Stratford Southbury 14
How does it work? 1. Building owner engages contractor to develop scope of work; works with utilities (CEEF) to incorporate incentives 2. Owner applies to C- PACE program at www.cpace.com 3. Third party review of technical and financial details 15
How does it work? 4. C-PACE alerts municipality; lien is placed on property 5. CEFIA offers 100% upfront financing to owner 6.Project commences 16
How does it work? 7. Owner remits payment to municipality as benefit assessment charge 8. Municipality remits PACE assessment to CEFIA 9. CEFIA sells down transaction to capital provider to replenish funds 17
Capital Partners Construction and Term Financing from CEFIA CEFIA authorized $25M short term facility for construction and term financing. Qualified Capital Providers CEFIA qualified 10 capital providers through a RFI. Lending tree model Owner Arranged Financing Property owner is free to choose their capital provider from the private market. There is no government financing required. Hartford West Hartford Bridgeport Norwalk Simsbury Stamford Stratford Southbury PACE CONNECTICUT 18
Case Study: Norwalk Shopping Center Project $285,000 exterior LED lighting upgrade $450,000 solar parking canopy Financing $185,000 of lighting upgrade financed through 13 year C-PACE assessment. CEFIA providing construction financing. Solar parking canopy to be financed through a separate C-PACE assessment Impact Owner and tenants see positive cash flow year 1 Savings of $17,500 annually for lighting and $37,000 for solar. Hartford West Hartford Bridgeport Norwalk Simsbury Stamford Stratford Southbury
Case Study: Bushnell Center for the Performing Arts Project $650,000 boiler replacement Financing $384,000 of replacement financed through 20 year C-PACE assessment. $250,000 covered with grant from Department of Economic and Community Development. Impact Annual savings of $48,000 Hartford West Hartford Bridgeport Norwalk Simsbury Stamford Stratford Southbury
Lessons Learned Meeting a Savings to Investment Ratio > 1 in year one requires creative approach to financing. Data gathering takes time but transparent platform is crucial to bring all stakeholders to an agreement. Mortgage lender consent
Jessica Bailey, Director C-PACE Clean Energy Finance and Investment Authority 860.257.2888 jessica.bailey@ctcleanenergy.com www.c-pace.com