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© 2012 SEIA© 2012 SEIA

Connecticut C‐PACE ProgramGrowing Renewable Energy and Jobs in

Connecticut

Jessica BaileyDirector of Commercial & Industrial PACEClean Energy Finance andInvestment Authority

© 2012 SEIA

About SEIA• Founded in 1974• U.S. National Trade Association for Solar Energy

• 1,000 member companies from around the world• Members from across 50 states• Largest companies in the world as well as small installers

• Our Mission: Build a strong solar industry to power America• Our Goal: 10 gigawatts (GW) of annual installed solar capacity in

the U.S. by 2015

C-PACE:A financing tool for building owners

Clean Energy Finance and Investment Authority

Who is CEFIA?

Help ensure Connecticut’s energy security and community prosperity by realizing its

environmental and economic opportunities through clean energy finance and investments.

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

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.

Private capital provides 100%

upfront, low‐cost, long‐term funding

Repayment through property taxes

A senior PACE lien is put on the property and stays regardless

of ownership

CRE Owners Face Barriers to Upgrades

REFERENCESEE Indicator – NA 2010, Johnson Controls and International Facilities Management Association (IFMA)

PACE Addresses Key Barriers

REFERENCESEE Indicator – NA 2010, Johnson Controls and International Facilities Management Association (IFMA)

PACE is around the country

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

C-PACE Advantage for Owners

Near term plan to sell?

Lack of funding?

Cannot assume more debt?

Insufficient payback/ROI?

Split incentives?

Uncertain savings/technical expertise?

Tax obligation fixed to property

100% upfront, 20 year financing

Assessments may qualify as OPEX

Positive cash flow in year 1

Assessment/savings pass to tenants

Technical underwriting / SIR>1

C-PACE Advantage to other stakeholders

Capital Providers

• Low risk investment opportunity• Senior lien• Secure repayment mechanism (taxes)

• Legal and technical structure administered by CEFIA

Mortgage Lenders

• Improves Building Financials/Risk• Lowers OPEX• SIR>1• No acceleration

• Creates a more attractive building for occupants and owners

• Finances deferred maintenance needs

Municipalities

• Creates economic development & jobs

• Reduces energy costs for businesses

• Reduces pollution

CEFIA’s Role in C-PACE

•Publish Guidelines November 2012•Onboard Municipalities•Website launched (www.c‐pace.com)

Design Program

•Technical Underwriting•Marketing & Outreach•Work with Existing Mortgage Lenders

Administer Program

•Qualify Capital Providers•Offer Credit Enhancement tools (as needed)• Provide capital (as needed)•Develop warehouse / bonding authority (Q2 2013)

Attract Private Capital

Municipalities Opted into C-PACE

Coming Soon: Cheshire, East Granby, East Haddam, Fairfield, Hamden, Manchester, Meriden, New Haven, Plymouth, Torrington, Waterbury, Wethersfield

▪ Avon▪ Beacon Falls▪ Bridgeport▪ Coventry▪ Durham▪ East Hartford▪ Greenwich▪ Hartford▪ Middletown▪ Norwalk

HartfordWest Hartford

BridgeportNorwalkSimsburyStamfordStratford

Southbury

▪ Old Saybrook▪ Putnam▪ Simsbury▪ Southbury▪ Stamford▪ Stratford▪ Tolland▪ West Hartford▪ Westport▪ Wilton▪ Windham

Municipalities Opted into C-PACE



Southbury

30% C&I Market

C-PACE Opportunities in Connecticut



Southbury

Customers Apply Into C-PACE



Southbury

Contractors Register Online



Southbury

Contractor & Customer Matchmaking



Southbury



Design Program


Administer Program



C-PACE Partners do Technical Underwriting



Southbury

3rd Party Administrator: Buonicore Partners

Program Expertise: Buonicore Partners• Milford, CT• Modeled Energy Profile of CT• Nationwide PACE experience

Technical Expertise:Celtic Energy

• Glastonbury, CT• $1bn of energy‐related projects• Experience with large commercial end‐users, utilities, and government

Real Estate Expertise:

Sustainable Real Estate Solutions

• Trumbull, CT• Benchmarking Database• Industry leader in building energy performance assessment

Application Review: Two Paths▪ Full Assessment – Whole Building Analysis

– Begin with a Level I screening step (by CRE owners consultant), designed to cost effectively identify projects with compelling savings & ROI

– Proceed to Level II/III audit when significant savings potential exists. Determine the optimized bundle of ECMs, calculate project cost, projected energy savings & key financial metrics

▪ Fast Track – Designed for buildings where prior energy audits have been

completed including ECM recommendations, but failed to get implemented due to owner inability to self‐fund the project

– Less technically complex projects (single ECM)– Pre‐approved projects under utility EE incentive/rebate programs

▪ Developed in light of other PACE and leading CRE energy retrofit finance programs around the country

▪ Incorporates three established industry protocols– ASTM Building Energy Performance Assessment (BEPA) Standard E2797‐11 for baseline energy use data collection and analysis

– ASHRAE Level 1, 2, 3 Energy Audit Guidelines to identify ECMs and project energy savings

– International Performance Measurement & Verification Protocol (IPMVP) for energy savings measurement and verification

▪ Underwriting methodology is technically sound, standardized, reliable & fully‐transparent

Application Review: Technical Standards

The Challenge

▪ Multiple interdependent stakeholders have divergent interests

The Solution

▪ C‐PACE’s transparent,

▪ unbiased technical & financial underwriting: – align interests

– remove barriers

– close deals!

M&V: Data Management Platform

Upgrades: What’s EligibleAnything that saves energy from baseline

▪ 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



Southbury

… as long as it isn’t going anywhere

▪ Combustion and burner upgrades▪ Fuel switching▪ Water conservation▪ Heat recovery and steam traps▪ Building enclosure/envelope improvements

▪ BMS▪ Renewable energy systems

Upgrades: What’s Not▪ Appliances, e.g., refrigerators, dishwashers, etc.

▪ Plug load devices▪ Vending machine controls▪ Any package of measures with a weighted average effective useful life (EUL) that does not meet or exceed the life of the loan

▪ Any package of measures that does not achieve an energy savings (over the life of the loan) to [total project] investment ratio > 1



Southbury

▪ Any measure that is easily removed/not permanently installed

▪ Any measure that does not result in improved energy efficiency

▪ Extending natural gas lines to the property line to enable a PACE‐eligible gas conversion project.



Design Program


Administer Program



Capital Partners



Southbury

Qualified Capital Providers

▪ CEFIA qualified 8 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.

Construction and Term Financing from CEFIA

▪ CEFIA authorized $20M short term facility for construction and term financing.

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$$$$$$C‐Pace Capital Provider ContractorProperty Owner

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CEFIA Town Tax Collector

Town Land Records

Property/ECMs

Lien$$$

Mortgage Holder

Notification & Consent

Assessment & C‐PACE Services Contract

Funding Agreement

Funding: Capital Flow Process

“M&V”

Financial Conduit

Agreement

Property Audit/ Energy Assessment

ContractorProperty Owner

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Mortgage Holder



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CEFIA Program Administrator

Technical Review


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CEFIA

C‐Pace Capital Provider

Funding Agreement



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CEFIA



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CEFIA


Financial Conduit Agreement

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CEFIA


Funding Agreement

Property/ECMs Financial Conduit Agreement




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Mortgage Holder

CEFIA



Funding Agreement

Town Land Records

Property/ECMs

Caveat



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Equipment &Services


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Mortgage Holder

CEFIA



Funding Agreement

Town Land Records

Property/ECMs

Caveat



CEFIA

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CEFIA


Funding Agreement

Town Land Records

Property/ECMs

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CEFIA



Town Land Records

Property/ECMs

LIEN


Funding Agreement




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Town Land Records

Property/ECMs

LIEN$$$


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Funding Agreement

Town Land Records

Property/ECMs

LIEN$$$

Financial Conduit

Agreement

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Town Land Records

Property/ECMs

Lien$$$

Mortgage Holder



Funding Agreement


“M&V”

Financial Conduit

Agreement

C‐PACE + ZREC‐LREC: The BasicsDeveloper Process:▪ Identify development property for solar PV or other clean energy installation

▪ Determine ownership / financing structure (i.e. direct purchase, lease, PPA) with property owner

▪ Submit solar (or other clean energy technology) feasibility study to CEFIA C‐PACE administrator Buonicore Partners for review and approval

– Upon approval, CEFIA will work with C‐PACE capital providers to offer up to 20‐year term financing at competitive interest rates (fixed, floating or “mini‐perm”)

▪ Submit ZREC or LREC bid into the reverse auctions run by UI and CL&P

▪ Confirm ZREC or LREC award, close on C‐PACE financing, and commence project development

C‐PACE + ZREC‐LREC: FAQDo solar (or other clean energy) PPAs / leases qualify under C‐PACE?▪ Yes. How are solar (or other clean energy) projects assessed?▪ The C‐PACE assessments paid by the property owner to the municipality will be sized to repay the capital that financed the project, as is true of all C‐PACE transactions.

▪ Any increases in municipal tax assessments based on enhanced property value will be at the discretion of the local tax assessor (“business personal property” vs. “fixture”).

Can non‐profit property owners install clean energy systems under C‐PACE?▪ Yes, a non‐profit property owner can apply for a tax ID number from their local municipality and enter into a C‐PACE transaction via a PPA structure. See following slides for more detail.

[email protected]

Jessica Bailey, Director C-PACEClean Energy Finance and Investment Authority

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