www.peakload.org

RMUEE Finance PanelSeptember 28th 2017

Presenters:

Jeffrey King, Colorado Energy OfficeSam Whelan, Holy Cross Energy

Larry Zarker, Building Performance Institute

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Financing gaps exist in the marketplace, resulting in unfunded or underfunded clean energy projects:

• Short track record and limited data

• Small project size

• Need for market development

• Lack of capital market liquidity and maturity

• Organizational behavior

The Need for Finance

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• Increase access to capital across all economic sectors, especially the buildings sector (Commercial, Residential, & MUSH)

• Develop Public Private Partnerships capable of transforming the market

• Leverage partner network to increase attractiveness and drive demand

CEO’s Focus on Finance: Overview

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• Launch a statewide, unsecured Single-Family Residential Loan product

• Pilot a statewide, tariff-based, on-bill financing program targeting low-to-moderate (LMI) residences and/or renters

• Explore expansion into Residential PACE (R-PACE)

CEO’s Focus on Finance: Residential (Single-Family)

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RENU Overview and Background

Residential ENergy Upgrade Loan

• Low-interest, long-term loan• EE/RE Measures• FICO-based

Finance partnership between CEO and credit unions

• Open financing model• Backed by CEO loan loss reserve

Model

• Contractor-driven model• CEO to lead the design, marketing, and contractor management

Colorado Energy Office | www.colorado.gov/energy© 2011 State of Colorado

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What Can You Finance?

Energy Analysis & Monitoring

Insulation & Air Sealing

Water Heating

Space Heating & Cooling

Windows & Doors Solar

ENERGY STAR

AppliancesLighting

*Full list of eligible measures available on www.corenuloan.com

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RENU Loan Rates & Terms

Loan Product Details Structure/Minimum Standards

Loan type Unsecured (UCC-1 Filing)

Loan amounts $500 to $35,000

Loan term Up to 15 years (180 months)

Loan rates Not to exceed 7.0% per year*. Fixed rate with no prepayment penalty

Underwriting Minimum 580 FICO, DTI 50% or less, income verification under certain circumstances

* For FICO scores 640 and above

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RENU Loan Process

1• Visit with customer and recommend eligible measure

2• Customer applies for the loan through Elevations Credit Union• Customer receives final approval on loan & eligible measures

3• Contractor installs approved eligible energy measures

4• Member signs the loan closing docs via DocuSign• Contractor signs affidavit and arranges payment

5• Customer enjoys upgrades; contractor paid by lender

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• Launching this Fall

• Recruit and onboard contractors

• Seeking local partnerships

www.corenuloan.com

RENU: Status & Next Steps

On-Bill Tariff Financing

Sam Whelan

HOLY CROSS ENERGY

Even with RENU, R-PACE and C-PACE, EE financing gaps still exist

• Customer class gapso Low-moderate incomeo Renters

• Major reasons for these gaps o Poor credit scoreso Inability to qualify for additional debto Split incentiveso Lack of homeownership

How can these groups access capital to install energy efficiencymeasures, save money and improve their quality of life?

On-Bill Repayment Pilot – Overview

One potential answer? On-Bill Tariff Financing

• Concepto Utility pays contractor directly for EE measure improvementso Member opts in to additional fixed tariff based on life of measure and

expected savingso Utility recovers cost of investment

• Benefitso No upfront paymento No new traditional debto Repayment is tied to utility metero Qualification based on the utility bill repayment historyo Bill-neutralityo Fixed charge repaid on utility bill monthly

On-Bill Repayment Pilot – Design

On-Bill Repayment Pilot – Design

On-Bill Repayment Pilot - Challenges

Source: Collaborative Efficiency and EESI, 2017

Source: NREL, 2017

• Statuso Partners in design phase (CEO, EESI, Energy Smart)o Green light from AG’s office to tie repayment to metero Current pause for HCE

• Next Steps o Final decision on program measureso RFP for implementation contractoro Draft customer agreementso Systems/softwareo Program launch

On-Bill Repayment Pilot – Status and Next Steps

Best Practices for Consumer Protection in Residential PACE Programs

Raising the Bar in Home Performance Contracting

What is R-PACE?

The property-assessed clean energy (PACE) model is an innovative mechanism for financing energy efficiency and renewable energy improvements on private property. PACE programs allow local governments, state governments, or other inter-jurisdictional authorities, when authorized by state law, to fund the up-front cost of energy improvements on commercial and residential properties, which are paid back over time by the property owners.

PROPERTY‐ASSESSED CLEAN ENERGY

Benefits of R-PACE• Eliminates need for upfront capital for energy improvements

• Loan obligations are repaid through future property taxes

• Loan terms of up to 15-20 years• The loan amount can stay with the home after sale• No FICO minimum score requirement• Loan amounts averaging up to $25,000• Quick approval process

Benefits of R-PACE• Over 39 states have authorizing legislation for R-PACE financing programs

• A growing number of R-PACE providers have entered the market bringing competition

• Explosive growth in California with recent legislation passed to protect consumers

• Missouri and Florida have introduced R-PACE programs

• Other states, like Colorado, are considering R-PACE• PACENation projects R-PACE to grow to $100 billion annually by 2025

PACE Nation projects R-PACE to grow to $100 billion annually by 2025.

No Energy Audit Requirements, Yet…

Note: In each of the green boxes on this and subsequent slides, ACCA, NATE, and RESNET standards and certifications may also apply.

PACENation’s New Consumer Protection Policy

Local PACE programs need a blueprint for

implementing the DOE “Best Practices Guidelines

for Residential PACE Financing Programs” by

ensuring that participating contractors

produce measurable clean energy benefits for

consumers.

www.peakload.org

Contact InfoJeffrey KingColorado Energy Officejeffrey.king@state.co.us303.866.2259

Sam WhelanHoly Cross Energyswhelan@holycross.com970.947.5423

Larry ZarkerBPILZarker@bpi.org202.256.3893