The Clean Energy Financing and Investment Authority: Creating and Managing a Green Bank Bryan Garcia, President and CEO, CEFIA

February 6, 2014

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202.777.7700 Creating and Managing a Green Bank Agenda

• Foundation for Success and Overview

• Important Decisions We Made Early On

• “Top 3” Biggest Successes

• “Top 3” Biggest Challenges Going Forward

• The Green Bank Model Works

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202.777.7700 Foundations for Success

• POLICY: State energy policy was (and is) an important focus for the Governor - sweeping energy legislation June 2011

• INDEPENDENCE: Connecticut’s green bank would become its own quasi-public organization, but with existing staff

• FUNDING: Connecticut’s green bank would take over existing sources of capital – Clean Energy Fund and RGGI allowance proceeds

• GOVERNANCE: New Entity & New Board. Board of the Clean Energy Fund – the predecessor to CEFIA – was disbanded by act of legislation that created CEFIA on July 1, 2011

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…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.

Overview Visionary Leadership

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202.777.7700 Overview Organization

• Quasi-public organization – created by PA 11-80 and successor to the Connecticut Clean Energy Fund

• Focus – finance clean energy (i.e. renewable energy, energy efficiency, and alternative fuel vehicles and infrastructure)

• Balance Sheet – currently $100 million in assets

• Support – supported by a $0.001/kWh surcharge on electric ratepayer bills that provides approximately $30 MM a year for investments, RGGI (EE and RE) about $5-$10 MM a year, federal competitive solicitations (i.e. SunShot Initiative) and non-competitive resources (i.e. ARRA-SEP), private capital, etc.

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Third Party Insurance

Special Capital Reserve Fund

On-Bill Repayment

Commercial Property Assessed Clean Energy

Energy Savings Performance Contracts

Loan Loss Reserves

Grants Loans Equity

Subordinated Debt Connecticut Green Bank

Bonding

Leases, PPAs, and ESAs

Overview Financial Tools

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202.777.7700 Important Decisions We Made Early On Decision #1 – Governance

Board of Directors

President & CEO

Bryan Garcia

Administrative Staff

(CII)

Professional Staff

(CEFIA)

Chair

Catherine Smith

DECD

Vice Chair

Dan Esty

DEEP

Secretary

Matthew Ranelli

Shipman & Goodwin

B&O

Dan Esty

DEEP

Positions Committees

Deployment

Reed Hundt

Coalition Green Capital

AC&G

Matt Ranelli

Shipman & Goodwin

REFERENCES Established Board of Directors in September of 2011 – bylaws, operating procedures, employee handbook, etc.

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202.777.7700 Important Decisions We Made Early On

Decision #2 – Who Are We (Stakeholder Views)

REFERENCES Strategic Planning Retreat at the Pocantico Conference Center (November 2011)

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202.777.7700 Important Decisions We Made Early On

Decision #2 – Who Are We (Board of Directors View)

CLEAN TECH

CLEAN ENERGY FINANCE

or

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202.777.7700 Important Decisions We Made Early On Decision #3 – What Programs Do We Keep?

Education

Training

Clean Tech

Green Bank

37 PROGRAMS

4 PROGRAMS

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202.777.7700 Important Decisions We Made Early On Decision #4 – What Are Our Goals

Support the Governor’s and legislature’s energy strategy to achieve cleaner, cheaper and more reliable sources of energy

while creating jobs and supporting local economic development

• Attract and deploy capital to finance the clean energy goals for Connecticut

• Develop and implement strategies that bring down the cost of clean energy in order to make it more accessible and affordable to consumers

• Reduce reliance on grants, rebates and other subsidies and move towards innovative low-cost financing of clean energy deployment 11

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202.777.7700 Important Decisions We Made Early On Decision #4 (cont’d)–…and Metrics of Success?

• Maximize the amount of clean energy produced (or energy saved) per dollar of public funds at risk

• Amount of clean energy (i.e. energy efficiency, renewable energy, etc.) produced and deployed. Jobs created and amount of emissions reduced

• Deploy X amount of private capital leveraged by Y amount of public funds by Year Z. Total dollars of investment in clean energy

• Ratio of private capital to public funds and ratio of ratepayer funds invested in subsidies (i.e. grants) versus financing programs (i.e. loans)

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202.777.7700 Important Decisions We Made Early On Decision #5 – What Structure Do We Build?

Residential Sector

C&I Sector

Institutional Sector

Legal

Marketing

Policy

HR

IT

Operations Infrastructure Sector

Finance President and CEO

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Residential Sector

C&I Sector

Institutional Sector

Legal

Marketing

Policy

HR

IT

Finance

Operations

President and CEO

Infrastructure Sector

Marketing (Future Hire)

REFERENCES Everybody depicted in this slide, was not with the organization before May 31, 2011. Each of them is here at the Green Bank Academy.

1 2

3 4 5

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Biggest Successes #1 Rebuilt the Organization

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202.777.7700 Biggest Successes #2 Municipalities Opted into C-PACE

• Ansonia

• Avon

• Beacon Falls

• Berlin

• Bloomfield

• Branford

• Bridgeport

• Brookfield

• Canaan

• Canton

• Chester

• Clinton

• Coventry

• Danbury

• Durham

• East Granby

• East Haddam

• East Hampton

• Torrington

• Trumbull

• Vernon

• Waterbury

• Waterford

• West Hartford

• West Haven

• Westbrook

• Westport

• Wethersfield

• Wilton

• Windham

• Windsor

• Windsor Locks

• New Milford

• Newtown

• North Branford

• North Canaan

• Norwalk

• Norwich

• Old Saybrook

• Plainville

• Portland

• Putnam

• Rocky Hill

• Simsbury

• Southbury

• Southington

• Sprague

• Stafford

• Stamford

• Stratford

• Suffield

• Tolland

• East Hartford

• East Windsor

• Enfield

• Fairfield

• Farmington

• Glastonbury

• Granby

• Greenwich

• Groton

• Hartford

• Killingworth

• Manchester

• Mansfield

• Meriden

• Middletown

• Milford

• Montville

• New Britain

• New Haven

• New London

Over 80% of Connecticut is Open for Business

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$/W kW

Biggest Successes #3 Residential Solar PV

Reduced installed cost $/Watt by about 10% year-over-year since 2011

Lowered subsidy by 20% since 2011

CT Solar Lease 2 ($60 MM), CT Solar Loan ($5 MM), and Smart-E Loan ($30 MM)

Installed capacity grew 150% year-over-year since 2011

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202.777.7700 Biggest Challenges Going Forward #1

State Budget Deficits and CEFIA Balance Sheet

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202.777.7700 Biggest Challenges Going Forward #2

Collaboration with the Utilities

▪ Use of Funds – ratepayer funds vs. private capital (credit enhancement strategy of IRBs versus LLRs)

▪ Additionality – utility model of cost-effectiveness testing (i.e. free-rider and spill-over effects)

▪ Goal Congruence – energy savings + private capital to achieve deeper savings

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202.777.7700 Biggest Challenges Going Forward #3

Financial Innovation AND Marketing Innovation

Increase the attractiveness to capital providers

Increase the attractiveness to customers

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202.777.7700 The Green Bank Model Works Recap

• Green banks support the energy policy

• Organizational independence is key

• Focus on clean energy finance

• Hire the right people

• Demonstrate (then communicate) impactful results

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202.777.7700 The Green Bank Model Works Doing More, Faster and Efficiently

$220 MM

INVESTMENT

10:1 LEVERAGE

30 MW DEPLOYMENT

1,200↑ JOBS ECONOMY

250,000↓ TCO2

ENVIRONMENT

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Thank You

Bryan Garcia, President and CEO Clean Energy Finance and Investment Authority 845 Brook Street, Rocky Hill, CT Bryan.Garcia@ctcleanenergy.com (860) 257-2170 www.ctcleanenergy.com