INCLUSIVE FINANCING

“Pay As You Save”

“tariff-based on-bill repayment”

“Upgrade to $ave”

“How$mart”

MAGICAL & PRACTICALTHINKING

KNOW THYSELF●

● We are nearly 30% renters (over 50% in Twin Cities)● 10% of us are experiencing poverty● The housing-cost-burdened make up 25% of us in single-family

homes, and 48% of us in multi-family buildings● If we fit the American average, 56% of us have sub-prime credit● 20% of us identify as Native, Latino, Black, African American, Asian,

or multi-racial on the census, and 80% as white

● We have some of the worst racial disparities in a country with legacies of colonization, genocide, forced assimilation, slavery, segregation, environmental and institutionalized racism that has yet to be reckoned with

● We are living in a rapidly destabilizing climate caused by human activity. Those Minnesotans in orange above are set up to experience the worst consequences climate change.

Sources: 2016 Census, https://www.census.gov/quickfacts/fact/table/MN/PST045217, CFED, http://scorecard.assetsandopportunity.org/latest/state/MN http://wapo.st/1RRyEZ4 , MNCompass http://www.mncompass.org

WHO CURRENTLY CAN SAVE MONEY WITH SOLAR AND EFFICIENCY?

THE BIG THREE: INCOME, credit, property

Low-income ratepayers subsidize high-income participation in efficiency and renewable programs if they can’t also participate

Low-income households are less likely to have [energy saving measures like] compact fluorescent bulbs and low-flow showerheads, but 25% more likely to have energy-intensive [appliances like] space heaters and 50% more likely to rely on window air conditioning units

Source: OPower, http://bit.ly/1Smd2nZ

THE BIG THREE: income, CREDIT, property

50% of U.S. renters and 20% of homeowners have a credit score less than 650

With the exception of limited capacity energy assistance programs, you must pass a credit check

The vast majority of solar options that don’t require upfront money require a credit score OR charge a premium per kwh

Credit: Urban Institute, http://urbn.is/1VkRTMv

• Average American moves every 8.5 years* (more frequent for low-income, and people of color), which is shorter than most payback periods for most substantial energy savings measures

• Split incentive for both landlord and tenant to make upgrades: landlord holds property rights, tenant pays for energy

Photo: fizz_in_space via Flickr

*(between age 20 and 80); Source: FiveThirtyEight: http://53eig.ht/1RRMqt1

THE BIG THREE: income, credit, PROPERTY

HOW CAN WE ADDRESS ACCESS?

INNOVATIVE SOLUTIONS TO CREDIT & UPFRONT COST

Photo: Joe via Flickr

=

• Remove credit barrier to financing by using alternative

criteria, like on-time utility bill repayment

RATEPAYER PROTECTION

• Meter-tied allows “pay as you save” to stay with property

• Non-utility capital

• Loss reserve holds utility and ratepayer harmless

• Users cover administrative costs

BROAD SCOPE

+

• Community engagement and institutional culture

HOW DOES INCLUSIVE FINANCING DO THIS?

INCLUSIVE FINANCING BASICS

HOW IT WORKS DURING REPAYMENT

Utility or capital provider

ContractorEnergy Customer

upfront cash

savings and comfort from efficiency and

renewables

monthly payments less than savings

5% LOWER BILL

INCLUSIVE FINANCING

HOW IT WORKS AFTER REPAYMENT

Energy Customer at upgraded property

~25% lower bills with full savings

from improvements Energy as needed

Utility

INCLUSIVE FINANCING

BENEFITS

Source: Clean Energy Works

3.0% 0.3%10%

Default Rate

10%

50%

100%

50%

STRUCTURING PAYS REPAYMENT TERMS

100%

100%

25%

15%

WHERE HAS THIS MODEL BEEN USED?

PRECEDENTS

Commission-approved tariffs

Existing programs

Midwest Energy

NH Elec. Co-op

Roanoke Elec. Co-op

How$mart KY

Several co-ops using tariffs serve disproportionately

low-income customers

Central Elec. PowerOuachita Electric

Clean Energy Works Portland

IMPORTANT QUESTIONS,BEST PRACTICES

“ALL COST EFFECTIVE MEASURES ARE ALREADY BEING DONE”

“FINANCING ISN’T THE MAIN REASON PEOPLE DON’T PARTICIPATE”

“WE’RE DOING JUST FINE”

“REBATES ARE THE ONLY WAY TO COVER INCREMENTAL COST OF FURNACES/ BOILERS”

(or common misconceptions)

COMMUNITY AT THE HELM

Photo: Soulardarity, member-based community energy organization based in Highland Park, MI

WORKFORCE DEVELOPMENT

Photo: Contractor works on wall insulation

ACCOMPANYING POLICY THAT SUPPORTS EXISTING COMMUNITY

Current rate of adoption

<1% of housing stock per year for whole building retrofits

both Single-Family & Multi-Family across Minneapolis

ACTION THAT MEETS OUR GOALS

of properties by 2025

75%75%

“Nothing can seem extraordinary until you have discovered what is ordinary. Belief in miracles, far from depending on an ignorance of the laws of nature, is only possible in so far as those laws are known [...] Miracles, in fact, do not break the laws of nature.”

- C.S. Lewis

Percent of savings used for repaymentRepayment term (years)

Net monthly savings

16 $15

16 $15

12 $12

STRUCTURING ON-BILL REPAYMENT TERMS

33%

POTENTIAL CAPITAL PROVIDERS

• Banks and credit unions

• Port Authorities

• Institutional investors (e.g. pension funds)

POTENTIAL LOSS RESERVE PROVIDERS

• Philanthropy (Initiative Foundations)

• Impact Investing

• Cities, towns, neighborhoods, counties

• Contractors

ENGAGEMENT

Credit: Marti Frank, California efficiency program evaluator