pace 2.0 restructuring pace programs team crown joules
TRANSCRIPT
PACE 2.0
Restructuring PACE programsTeam 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.
PACE interacts directly with owners
Obstacles facing PACE
1. Property lien
2. Scale of energy demand reduction
3. Administrative burden
Proposed PACE 2.0
Proposed PACE 2.0, continued 2
Financing
Program approval
Auditing
Proposed PACE 2.0, continued 3
Identify efficiency opportunities
Submit project proposals
Implement approved proposals
Proposed PACE 2.0, continued 4
Accept improvements
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
Proposed PACE 2.0, continued 6
Major advantages for utilities:
1. Increased return opportunity
2. Access to attractive financing
3. Decreased demand-side risk
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
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
Key levers for optimizing PACE 2.0
Financing
Implementation
Program qualifications
Outreach
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)
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%
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%
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)
Considerations for PACE 2.0
Minimum standards for PACE proposals?
How to distribute risk?
Minimum incentive to engage owners?
Recap: PACE 2.0