pace 2.0 restructuring pace programs team crown joules

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PACE 2.0 Restructuring PACE programs Team Crown Joules

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Page 1: PACE 2.0 Restructuring PACE programs Team Crown Joules

PACE 2.0

Restructuring PACE programsTeam Crown Joules

Page 2: PACE 2.0 Restructuring PACE programs Team Crown Joules

PACE’s primary goal is funding

1. Provide low-interest financing for economical demand-reduction home improvements.

2. Do not burden property owners with personal lien.

Page 3: PACE 2.0 Restructuring PACE programs Team Crown Joules

PACE interacts directly with owners

Page 4: PACE 2.0 Restructuring PACE programs Team Crown Joules

Obstacles facing PACE

1. Property lien

2. Scale of energy demand reduction

3. Administrative burden

Page 5: PACE 2.0 Restructuring PACE programs Team Crown Joules

Proposed PACE 2.0

Page 6: PACE 2.0 Restructuring PACE programs Team Crown Joules

Proposed PACE 2.0, continued 2

Financing

Program approval

Auditing

Page 7: PACE 2.0 Restructuring PACE programs Team Crown Joules

Proposed PACE 2.0, continued 3

Identify efficiency opportunities

Submit project proposals

Implement approved proposals

Page 8: PACE 2.0 Restructuring PACE programs Team Crown Joules

Proposed PACE 2.0, continued 4

Accept improvements

Page 9: PACE 2.0 Restructuring PACE programs Team Crown Joules

Proposed PACE 2.0, continued 5

Major advantages of new PACE program:

1. Economy of scale

2. Allocative efficiency

3. Streamlined administration and publicity

4. Credit-worthiness

5. No interference with mortgage liens

Page 10: PACE 2.0 Restructuring PACE programs Team Crown Joules

Proposed PACE 2.0, continued 6

Major advantages for utilities:

1. Increased return opportunity

2. Access to attractive financing

3. Decreased demand-side risk

Page 11: PACE 2.0 Restructuring PACE programs Team Crown Joules

Proposed PACE 2.0, continued 7

Major advantages for property owners:

1. Free or low-cost property upgrade

2. Increased rental value

3. Immediate energy cost savings

4. No interference with mortgage liens

Page 12: PACE 2.0 Restructuring PACE programs Team Crown Joules

Incentives are balanced

Low administrative burden to state

Return bonuses to utilities

Low liability and default risk to utilities

Low/zero up-front cost to property owners

Page 13: PACE 2.0 Restructuring PACE programs Team Crown Joules

Key levers for optimizing PACE 2.0

Financing

Implementation

Program qualifications

Outreach

Page 14: PACE 2.0 Restructuring PACE programs Team Crown Joules

Case example

Approved program:

Building: 200,000 sq. ft. office building (cold climate)

Total cost of retrofit: $400,000

Energy demand reduction: 35%

PACE loan to utility: $320,000

Interest rate: 5%

Annual payment: $55,302 (7 payment periods)

Page 15: PACE 2.0 Restructuring PACE programs Team Crown Joules

Case example, continued 2

Energy demand reduction:

Annual energy cost, before: $410,000 ($2.05 per ft^2)

Annual energy cost, after: $266,500 ($1.33 per ft^2)

Annual savings: $143,500

Annual bonus payment to utility: $71,750 (50% of savings) for 7 periods

Net profit to utility: $16,448 annually

Rate of return to utility: 10%

Page 16: PACE 2.0 Restructuring PACE programs Team Crown Joules

Case example, continued 3

Distribution of return:

Rate of return to utility: 10%

Rate of savings to property owner: 18% (and greater after payback period)

Rate of return to PACE: 5%

Page 17: PACE 2.0 Restructuring PACE programs Team Crown Joules

PACE 2.0 will target specific markets

Tailored for regulated electricity markets

Targets large property owners

Aligns interests of utilities with all demand-side

reductions (efficiency, distributed generation)

Page 18: PACE 2.0 Restructuring PACE programs Team Crown Joules

Considerations for PACE 2.0

Minimum standards for PACE proposals?

How to distribute risk?

Minimum incentive to engage owners?

Page 19: PACE 2.0 Restructuring PACE programs Team Crown Joules

Recap: PACE 2.0