cefac 11-1-2016 ppt slides

Clean Energy Financing Advisory Council: Small Business Energy Savings

November 1, 2016


November 1, 2016 Ryan Carney

Our Mission…

Accelerate the transition

to a sustainable world

powered by clean energy

Clean Energy Financing Advisory Council (CEFAC)

CEFAC Partners

Thanks to our CEFAC Funders


Kacia Brockman, City and County of San Francisco


Noah Proser, Pacific Gas & Electric

9

On-Bill Financing Energy Efficiency Financing from PG&E

November 1, 2016

Agenda

• Policy Context

• What is On-Bill Financing (OBF)?

• How does it work?

• Who is Eligible?

• What is Eligible?

• OBF w/o Incentive (Alternative Pathway)

• Additional Resources

Policy Context Where we are headed… • SB 350 (2015) and the Governor’s Goals:

• Double the efficiency of existing buildings by 2030

• AB 802 (2015)

• Capture ‘stranded potential’ energy savings from to-code measures and

begin using Smart Meter data for savings calculations

• High Opportunity Projects and Programs (HOPPs):

• On-Bill Finance Alternative Pathway • Residential Pay for Performance

• Retirement of Diablo Canyon Power Plant

• PG&E committed to replacing capacity with GHG-free sources

• 2,000 GWH of Energy Efficiency between 2018 and 2024

What is On-Bill Financing?

REPAYMENT

SAVINGS EQUIPMENT

0% LOAN

• On-Bill Financing is a $70M revolving loan fund (RLF), used to finance

energy efficiency projects for PG&E non-residential customers.

• The RLF uses ratepayer funds and is loaned at 0%

• As customers repay their loans, those funds can be loaned out again

• Loan payments are intended to be ‘bill-neutral,’ meaning they are based on the estimated energy cost savings from the EE project

What is On-Bill Financing?

*Government Agency Customer is defined as a tax-payer funded agency of federal, state, county, or local government that uses tax revenue to pay its PG&E energy bills. Such Customers may include, but are not limited to, public schools, state of California colleges and universities, public libraries, and government offices.

1 Government customers may combine premises in a single loan, so this may be considered a per project cap.

1

How does it work?

Things to know:

All loans are subject to

qualification

Estimated energy savings

are not guaranteed by

PG&E

Business closure or

relocation will require balance repayment on

settling bill

Projects are funded after

installation and inspection

*Some contractors will float the project costs until

project is funded

Who is eligible?

OBF is available to PG&E’s Business and Government Customers (non-residential) that meet the following conditions throughout the duration of the EE retrofit project:

1. Currently receive service at the retrofit location

2. Active PG&E account for the previous 24 months

3. Good credit standing for the past 12 months

(no 24-hour disconnection notices)

What is eligible?

OBF is available for energy efficiency retrofit projects. Eligible costs include:

• EE Measures (net of rebates/incentives) • Labor, taxes, and other directly related costs • Operations & Maintenance Plans (O&M) • Measurement & Verification Plans (M&V)

OBF may not be used to finance:

• New construction/new load; • Basic lighting (non-LED) exceeding 20% project costs • Customer’s in-house labor or project management • Distributed generation

What is eligible?

Incentive Pathway (Traditional OBF)

• Only rebated/incentivized measures

• Can combine deemed, custom, up/midstream measures

• Can accept deemed or site-specific savings calculations

• Loan only funded after all rebates/incentives approved

• Pre-Install Review required

What is eligible?

Alternative Pathway

A new way to finance EE Projects

• Any measure that saves energy!

• Cannot receive a rebate or incentive

• Lighting products must be on the Qualified Products List (caioulightingqpl.com)

• Only functioning equipment is eligible for replacement

• Projects must include O&M and M&V plans

• Baseline and M&V should use customer’s meter data:

• May use PG&E’s Share My Data tool to receive Smart Meter data

• Projects must be developed by an Investor Confidence Project (ICP) Credentialed Project Developer and reviewed by an ICP Credentialed QA Provider

• PG&E Pre-Install Review optional. Work with a QA Provider to ensure the project meets Program requirements

caioulightingqpl.com

OBF_AP Process

< 1 week 2 weeks

2 months

1 month

6 months 2 weeks

Payment History Screening

Project development

Installation Apply to

PG&E and approval

Operations begins

Work with QA Provider to meet Program

requirements

QA Post-install review

No need for PG&E pre-install review!

Additional Resources

www.pge.com/OBF

Traditional OBF:

• Customer and Contractor Handbook

• Fact Sheet

• Trade Pro Application Training

Alternative Pathway:

• Contact Arup, who is supporting the program and acting as QA during the pilot and can send a copy of the draft Handbook:

• [email protected]

• [email protected]

http://www.pge.com/OBF

https://www.pge.com/includes/docs/pdfs/mybusiness/energysavingsrebates/rebatesincentives/taxcredit/onbillfinancing/handbook_obf.pdf

https://www.pge.com/includes/docs/pdfs/mybusiness/energysavingsrebates/rebatesincentives/taxcredit/onbillfinancing/fs_obf.pdf

https://pge.learnernation.com/jri4/how-to-apply-for-on-bill-financing-obf

mailto:[email protected]


THANK YOU


Miriam Joffe-Block, California Alternative Energy and Advanced Transportation Financing Authority (CAEATFA)

CALIFORNIA HUB FOR ENERGY EFFICIENCY FINANCING 25 CEFAC San Francisco Oct 28, 2016

California’s Commercial Energy Efficiency

Financing Pilots

Opportunities for Contractors, Financing Entities and Small

Businesses


CHEEF Financing: Another tool to facilitate commercial energy upgrades

Commercial PACE

On-Bill Financing (utility capital)

SBA/State Loan Guarantees

CHEEF financing

• Private capital

• Secured by equipment only

• Loans, leases, energy service

agreements

• On-bill and off-bill repayment

options

• Attractive rates and terms for

customers


o Housed in Office of

State Treasurer

o Develops market-

driven financial

assistance programs

to support State’s

energy and

environmental policy

goals.


o More attractive financing

reaching a broader customer

base enabling more EE

projects with deeper energy

savings

o Bring private capital into

energy efficiency space

o Establish a statewide

database of EE project and

financing data to spur future

investments

Pilot Program Goals:

Commercial pilots

Launching Q2/Q3

2017


CHEEF Commercial Pilot Features

Small Business

Meets SBA size restrictions, for-profits and non-profits

On Bill

Full amount of financing is credit enhanced

EE and DR only

Loan Lease & ESA

Off Bill

Part or all of financing is credit-

enhanced

EE, DR and DG

Lease & ESA

Non Residential

Any size, gov ok, non-profit ok

On Bill

No credit enhancement

EE, DR and DG

Loan, Lease, & ESA


Why should financial entities, contractors and small businesses participate in the small business pilots?

o Financial Entities - Mitigate Risk: Access $14 million in credit enhancements for small business financing

o Contractors - Close more deals and increase project scope: Attractive financing options for customers facilitates more projects and deeper energy retrofits

o Contractors and Financing Entities - o Offer convenience to customers: On-bill repayment options means 1 monthly payment

for customers: energy and financing charges

o Take advantage of lead generation: $10 million budget for marketing, training and outreach, shared among the various pilots. Cooperative marketing and co-branded collateral available.

oSmall Businesses – Access non-real estate secured financing at attractive rates and terms, to finance energy upgrades with no up front capital outlay. Access deeper energy savings and take advantage of utility rebates and incentives.


Credit enhancements allow financial entities to finance a broader set of borrowers or offer

more attractive terms

oStructured as a loan loss reserve

o5-20% value of each loan/lease/ESA reserved for lender in a trust account

oLender able to recover 90% of loss in case of credit default, provided they have funds in trust account

oNo cost to lender nor borrower


Features of CHEEF Pilots help contractors close more deals

oFlexible projects: 30% of financing can pay for non EE measures

oTenants can qualify: Borrower not required to be property owner

oProduct choices: Loans, Leases, Service Agreements

oNo industry restrictions

oNo upfront investment required of borrowers

oTerms up to 10 years

oNo restrictions on amount of lighting

oOn bill repayment option

Choice to follow the utility’s rebate and incentive guidelines for

deemed and custom measures, OR to use a for a “finance-only”

option like the OBF Alternative Pathway, utilizing Investor

Confidence Project protocols.


On Bill Repayment – but with private capital

$ $

$ $ Master Servicer

We recruit

lenders, lease

providers and

ESA providers so

customers have

options.


CHEEF Pilots offering private financing secured by equipment complements OBF and C-PACE

We think private financing can complement OBF for:

o Projects greater than $100,000 or less than $5,000

o Where the customer uses OBF for the first $100,000 of cost, but needs private capital to cover remaining costs.

o Customers wanting an equipment lease or Energy Service Agreement (ESA)

o Larger measures requiring payback longer than 5 years

o Projects that may never be “bill neutral” or won’t work with the utility’s methodology for calculating bill neutrality

o Projects with significant non energy efficiency components (up to 30% of project cost)

o Where single end use lighting > 20% of project cost

o Lighting measures on the DLC but not on the California Qualified List of Products (QLP)

o Customers needing to replace equipment urgently who can’t wait for OBF approval

o Customers wanting energy savings now who can’t wait for utility’s custom incentive approval

We think private financing can complement Commercial PACE for:

o Tenant occupants (most small business owners rent space)

o Customers not wanting a lien on their property

o Smaller projects for which a PACE transaction is too costly


Project Eligibility Parameters Summary - Proposed

Rebate/Incentive Path Finance Only Path

Contractor

Requirements

Proper licenses and insurance

Utility Requirements for

participation in programs ICP Developer Credential

Eligible Measures

Any measures eligible for

IOU/REN rebate or incentive

program. Must meet all rebate

and incentive requirements

Any energy saving measure (per CPUC

EE Policy Handbook 5.0)

Lighting must be on DLC.

QA/QC Pre-

Installation

Deemed measures: None

Custom: Follows utility custom

process; utility approval required

Utilizes Investor Confidence Protocols

3rd party QA Provider signs off on Pre-

Installation checklist

QA/QC Post-

Installation

Follows utility inspection

processes

Utilizes Investor Confidence Protocols

3rd party QA Provider signs off on Post-

Installation checklist

Data needed

Contractor/Customer send rebate

or incentive application and

information to utility

Finance Entity sends completed QA/QC

checklist to CHEEF

QA Provider sends underlying data to

utility

Financing terms, customer energy data release, borrower privacy disclosure

CHEEF invoice (high level measure and project info) and certifications

M&V and EM&V Utility and/or CPUC may choose to do M&V on the project.


Financing Parameters - Proposed oLoans, Leases and ESAs are eligible oFinancing entities set their own product terms and follow their own

underwriting; CHEEF sets minimum underwriting guidelines oLoan loss reserve contribution for each lender of 5-20% value of

each loan, lease or ESA oLenders can claim up to 90% of loss in case of a credit default oLoan loss reserve contribution on up to $1MM of small business

financing oNo cap on interest rates, but Participating financial entities must

demonstrate benefit to customers as a result of receiving a credit enhancement oFinancing entities must be regulated depositories or possess a

California Lenders License; specialty finance lenders must demonstrate organizational track record and committed capital

For full list of proposed financing and project eligibility parameters, please visit

thecheef.com/commercial

thecheef.com/commercial


We want your input on program design

oCurrently seeking input regarding:

–Financing Program Parameters

–Project Eligibility Parameters

oProposed program guidelines can be found at http://www.thecheef.com/commercial

oSend comments to [email protected] or to [email protected]

oComments due Dec 2, 2016

oOn bill repayment workshop will be held November, 2016

oWe are always happy to meet or schedule a phone call

http://www.thecheef.com/commercial

http://www.thecheef.com/commercial




Questions for you oWhat are your customers telling you? What are their financing needs?

oHow can we enable deal flow through these pilots?

oFor contractors:

–How could private financing help you get more deals done? What types of deals?

–Do you have lenders you work with already?

–When might you use a “finance-only” option and ICP protocols instead of the utility’s custom incentive approval process?

oFor Financial Institutions:

–How could access to a loan loss reserve help you provide broader access to financing or better terms?

–What do you think of our proposed eligibility guidelines for financing entities? And for borrower underwriting minimums?

–How do we balance appropriate guiderails for participation with a streamlined process?


CHEEF Commercial Pilot Development Schedule

June-December, 2016: o On Bill Infrastructure Testing

Q4 2016/ Q1 2017: o Regulation development and workshops

Q1 2017: o Regulations approved

Q1/Q2 2017: o Participating Financial Institution (PFI) and Participating

Finance Lender (PFL) enrollment o PFI/PFL System integration with CAEATFA’s Master Servicer o Potential off-bill pilot launch

Q2/Q3 2017: o On bill launch


CHEEF Office and to join our mailing list:

Tel: (916) 651-8157

Email: [email protected]

Web: www.treasurer.ca.gov/caeatfa/cheef

We want to hear from you

Miriam Joffe-Block [email protected]

916-653-3032

www.thecheef.com



http://www.treasurer.ca.gov/caeatfa/cheef



Rich Chien, City and County of San Francisco

SFEnvironment.org

New Tools for the Toolbelt: Moving projects with capital and data

Rich Chien, City and County of San Francisco [email protected]

Clean Energy Financing Advisory Council (CEFAC) Financing

Workshop

November 1, 2016

SFEnvironment.org

SF PACE: Prologis

Pier 1, San Francisco

• $1,400,000 bond issued by SF, purchased by Clean Fund

• HVAC + lighting + 200kW PV = 32% demand reduction

• Solved “spilt incentive” (savings and debt service shared w/tenants)

• Positive cash flow

SFEnvironment.org

CA PACE “Open Market”

Resi

Resi

SFEnvironment.org

BayREN C-PACE Program

• Sustainable Real Estate

Solutions (SRS)

• Contractor training

• Project development support

Optimize project scenario

for SIR*>1

ICP approach

Owner, capital provider

meetings & coordination

• “Success-based” fee

structure

• ~$16 million pipeline

*Savings-to-Investment ratio: total projected savings / total debt service over life of PACE term

SFEnvironment.org

Co-pay Microloans

• Fill cash gap for small businesses (< OBF)

• Complete more projects, improve monthly SMB cash flow, and

provide energy and financial savings

• Terms

o 0% loans to cover co-pay range $100-$4,999 for businesses that

enroll in San Francisco Energy Watch program

o Microloans repaid from energy savings, short terms (6-18 mo.),

revolve $ to loan to more customers

o Use existing program infrastructure (ECM’s, assessors,

contractors)

o Community lending partner to administer fund; will provide wrap

around credit building support, training, etc.

SFEnvironment.org

Workflow

• Project Proposal/Quotations & Propose Microloan

• Customer Acceptance/Signed Application & Loan Application

• Loan Approval & Loan Distribution (100% of co-pay +10%)

Engagement

&

Site

Assessment

Proposal

&

Quotation

&

Loan

Amounts

Customer

Acceptance

&

Loan

Application

Verification

&

Incentive

Payment

Loan

Distribution

&

Purchase

&

Installation

SFEnvironment.org

BRICR (BayREN Integrated Commercial Retrofits)

• U.S. DOE grant for SMB’s (<50K sq. ft.)

• ABAG/BayREN (lead); LBNL, NREL; ICP/OpenEEMeter, Joule,

Renew Financial; cities of SF, Berkeley, Oakland

• Develop and disseminate retrofit tool that

o Describes and segments small commercial building stock in

Bay Area by physical attributes, energy assets, and other

relevant data

o Applies large scale energy modeling to identify “best fit”

buildings for serial and one-time deep retrofits (approaching

ZNE)

o Uses interface that develops project proposals and calculates

savings

o Is open source, durable, and can be updated by users

(implementers) to improve data quality over time.

SFEnvironment.org

BayREN SMB programs (draft)

• Support existing efforts;

work with new actors

and opportunities (e.g.

AB 802, private

financing)

• Customized advice and

services to enable

deeper savings

• Develop & foster

long-term relationships

• Pilot new approaches

(P4P)

SMB

Performance

Advisor

Commercial

PACE, OBF,

CHEEF Pilots

Small

Business

Co-pay

Microloans

SMB Pay for

Performance LGP’s/Energy

Watch, PG&E

programs

Water

agencies;

green business

programs; PAYS

SFEnvironment.org

© 2016 SF Environment All Rights Reserved The author of this document has secured the necessary

permission to use all the images depicted in this presentation.

Permission to reuse or repurpose the graphics in this document

should not be assumed nor is it transferable for any other use.

Please do not reproduce or broadcast any content from this

document without written permission from the holder of copyright.

Richard Chien Senior Program Specialist

[email protected]

Thank You!


Matt Golden, Investor Confidence Project

Environmental Defense Fund

Investor Confidence Project

New Reality of Grid 2.0

Solar

Output

CAISO

Power

Price

Energy Efficiency Project Barriers

Breaking Down Barriers to EE Finance

Performance

Risk

Credit

Risk

Asset

Risk

• On-Bill Repayment

• Commercial PACE

• Green Banks

• Benchmarking

• Asset Labeling

• Disclosure

Project Finance

Long-term financing

of projects based

upon the projected

cash flows of the

project rather than

the balance sheets of

its sponsors.

Energy Efficiency Today

BASELINING

• Existing Building

• Drawings

• Weather File

• Energy Usage

• Energy Rates

• Occupancy

ICP Energy Performance Protocols

SAVINGS

• Model File

• Calibration Data

• Bid Packages

• Certifications

COMMISSION

• Cx Plan

• Cx Authority

• Test Procedures

• Facilities Req.

OPERATIONS

• BMS Points

• Fault Plan

• Maintenance

Plan

MEASUREME

• M&V Model

• Regression

Model

• Adjustments

• Impact

• Baseline

Adjustments

Cx

Investor Confidence Project Protocols

Commercial Multifamily

Large Projects (project size >$1M)

Standard Projects (project size <$1M)

Targeted Projects (limited interactivity)

EPP – Standard

Commercial

EPP – Targeted

Commercial

EPP – Large

Commercial

EPP – Large

Multifamily

EPP – Targeted

Multifamily

EPP – Standard

Multifamily

Investor Ready Energy EfficiencyTM

Third-Party

Verification Project

Development

Investor Ready Energy Efficiency™

IREE is the logo in the lobby,

like LEED but for a building

retrofit project.

Join the Fun!

ICP Credentialed Project Developers and QA Providers Who: Developers, ESCOs, Energy Consultants, Installers, etc.

Why: Enhanced Credibility, Differentiation, Marketing

Opportunities

ICP Investor Network Who: Lenders, Equity Providers, Insurers, etc.

Why: Streamlined and consistent origination of qualified projects

ICP Ally Network Who: Anyone

Why: Help grow the industry by supporting standardization

ICP Technical Forums Who: Engineers, investors, program managers, etc.

Why: ICP stakeholders drive ICP’s emerging standards!

Investor Confidence Project

www.EEperformance.org

For More Information:

Matt Golden

Senior Energy Finance, EDF

[email protected]

415.902.4546

Jeff Milum

ICP Market Director

[email protected]



Question and Answer


Thank You!

cefac 11-1-2016 ppt slides

Economy & Finance