South Carolina EE Roadmap: Green Banks and On-Billenergy.sc.gov/files/view/SC Green Bank and On-Bill... · governments, NGOs and market actors to create Green Banks that increase

South Carolina EE Roadmap: Green Banks and On-Bill

March12,2020Webinar

Agenda

3:00pm Welcomeandlogistics3:05pm GreenBank101

•  JillBunting,CoalitionforGreenCapital

3:35pm On-Bill101•  WesleyHolmes,SoutheastEnergyEfficiencyAlliance

3:55pm SCco-opon-billprogram•  MikeSmith,ElectricCooperativesofSouthCarolina

4:15pm Q&A(pleasesendvia”chat”function)4:30pm Webinarconcludes

Green Banks 101

JillBuntingDeputyDirectorCoalitionforGreenCapital

SouthCarolinaEnergyEfficiencyGreenBank/On-BillWebinarMarch12,2020

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CGCisanonprofitfocusedonthedevelopment&growthofcleanenergyfinanceinstitution(akaGreenBanks)

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•  CGC,a501(c)3non-profit,partnerswithgovernments,NGOsandmarketactorstocreateGreenBanksthatincreasevolumeofcleanenergyinvestment

•  CGCdeliverson-the-groundtechnicalexpertisetodesign,start-upandhelpoperateGreenBanks

•  Helpeddesign&createmultipleGBs,whichhavecatalyzedover$2billionincleanenergyinvestment

•  CurrentlyworkinginoveradozenstatesintheU.S.

•  FounderandCEOReedHundt,formerchairmanofU.S.FCC

•  Supportedbymajorglobalfoundations

TechnicalAssistance

ThoughtLeadership

FieldSupport

GreenBankCreation

WhatisaGreenBank?

GreenBanksaremission-driveninstitutions

thatuseinnovativefinancingtoacceleratethe

transitiontocleanenergyandfightclimatechange.

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WhatisaGreenBank?

GreenBanksaremission-driveninstitutionsthatuse

innovativefinancingtoacceleratethetransitionto

cleanenergyandfightclimatechange

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GreenBanksaren’ttraditionalbanks(i.e.,theydon’ttakedeposits).“GreenBanks”areknownbyavarietyofnames,suchas

“cleanenergyfunds.”

Theyworkwithstakeholdersto1)understandlocalmarketgaps2)raisecapitalanddeploysolutionstofillthose

gaps.

WhatisaGreenBank?




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Institutionsaredurable,havecultures,areflexible,andresponsivetotherealworld.Theycanuseamixoftoolstoachievetheirgoals,andthosetoolsmayevolveover

time.

WhatisaGreenBank?




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GreenBanksusefinancing,notgrants.Financinghelpsto

maximizetheimpactofeachdollar.TheuseoffinancingmeanstheGreenBankswillfocusonmarketswherethere

ispotentialforpayback.Financingcanbedoneintandemwithothermarketdevelopmentactivities.

Today,GreenBanksarediverseingeographicscope,organizationalform,andmarketareas

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GreenBankCreatedGreenBankUnderConsideration

GreenBanksapproaching$4billionofcumulativeinvestment;now$50billionglobally

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Throughthenation'slargestgreenbank…NewYorkwillcontinuetoleadthefightagainstclimate

change

TheConnecticutGreenBankdemonstrateshow

mobilizingprivateinvestmentintoourcleanenergyeconomycanreduce

theenergyburdenonhouseholdsandbusinesseswhilecreatingjobsinour

communities$0

$500,000,000

$1,000,000,000

$1,500,000,000

$2,000,000,000

$2,500,000,000

$3,000,000,000

$3,500,000,000

$4,000,000,000

2011 2012 2013 2014 2015 2016 2017 2018

CumulativeInvestmentCausedbyGreenBanks($)

Onaverage,GreenBanksleverageapproximately$3ofprivatecapitalforeverydollarofmission-drivencapital

Lessonslearned:project“investment”canandshouldtakemanyforms

BarriertoInvestment Solution Examples

Perceivedprojectrisk Creditenhancement Providealoanlossreservecanmitigateriskandallowinvestmenttoflowatlongertermoflowerrate

Inefficienciesofscale Aggregation&warehousing

Aggregatesmallprojectstomeetscaletoattractprivatecapital

Marginaleconomics Investment Lendtoproject,inseniororjuniorposition,toimproveoveralleconomicsforinvestorsandcustomers

First-of-kindtransaction

Technicalassistance Putintechnicallegworkthatcomeswithclosingmorelabor-intensive,innovativetransactions

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Couplingcreditenhancementswithmarketdevelopmentactivityyieldsresults

•  Challenges:Unsecuredenergyefficiencylendingperceivedasrisky;transactionsaresmall

•  Solution:–  Establishloanlossreservestogetlocallenders

comfortablewiththismarket

–  Couplefinancingwithmarketdevelopmentactivityincluding:customermarketing,contractortrainings,andlendereducationtospurdemand

–  Assurequalitythroughcontractortrainings,listofapprovedmeasures,followupverification

•  Results:Hundredsofmillionsofimprovementsfinanced;highleverageratio(upto$10:$1)

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ExampleGreenBanksPrograms:

GreenBanksinothermarketstargetstubbornbarrierstoEEadoption

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Low/no-interestpre-developmentloansunlockdeeperenergyefficiencysavings

Debtforon-billfinancingprogramsupportsenergyefficiencyandsolaradoptionbyrentersandlow-incomehouseholds

Technicalassistanceformunicipalutilitiesenablesthemtosourceaffordable,long-termcapitalforon-billprograms

NationalClimateBankwouldcreatenewsourceofcapitalforinnovativefinancingprograms

•  Receives$35billioninfederalfundstoinvestinGHGreduction–  Willusefundstocatalyzemultiplesof

privateco-investment•  Createsupto$1trillionininvestment

impact•  Uses“GreenBank”modeltocrowd-in

capital,notcompete•  BillsinSenate&House,partofCLEAN

FutureActintheHouse–  SenatebillfromSens.Markey,Van

Hollen,Blumenthal&Schatz(S2057)–  HousebillfromReps.Dingell,Tonko,

BluntRochester&Axne(HR5416)15

ThankYou

JillBunting,DeputyDirectorCoalitionforGreenCapitalwww.coalitionforgreencapital.com

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On-Bill 101

WesleyHolmesDirectorofStrategyandDevelopmentSoutheastEnergyEfficiencyAlliance

18SoutheastEnergyEfficiencyAlliance|www.seealliance.org

Wesley Holmes Director of Strategy and Development


RegionalEnergyEfficiencyOrganization

Eleven-statefootprint

Non-profit,non-partisan

TheSoutheastEnergyEfficiencyAlliance(SEEA)promotesenergyefficiencyasacatalystforeconomicgrowth,workforcedevelopmentandenergysecurity.Wedothisthroughcollaborativepublicpolicy,thoughtleadership,outreachprograms,andtechnicaladvisoryactivities.

RegionalEnergyEfficiencyOrganization

Eleven-statefootprint

Non-profit,non-partisan

TheSoutheastEnergyEfficiencyAlliance(SEEA)promotesenergyefficiencyasacatalystforeconomicgrowth,workforcedevelopmentandenergysecurity.Wedothisthroughcollaborativepublicpolicy,thoughtleadership,outreachprograms,andtechnicaladvisoryactivities.

SEEA Serves the Southeast


SEEA & Energy Efficiency Finance

EEFinanceActivities

▪  2014-2018SoutheastEnergyEfficiencyFundInvestments

▪  2014ArkansasEnergyOfficeStatewideFinancingOptionsStudy

▪  2014SoutheastEnergyEfficiencyFund

▪  2014NorthCarolinaOn-BillWorkingGroup

▪  2015SEEAwebinarwithCEOofRoanokeElectric

▪  2015SEEAconferencehighlight:TheRoanokeCenter

▪  2016SEEAconferencehighlight:OuachitaElectric

▪  2017SEEALearningCircleforInclusiveFinancing

▪  2019SoutheastTariffedOn-BillCohort

EnergyEfficiencyFinanceGoal

Expandtheavailabilityandaccessibilityofcapitaltomakeenergyefficiencyinvestments

Solutionsthatworkforanyone–regardlessofincome,creditscore,orrenterstatus–arebetterforeveryone.

WhyOn-BillFinancing?

•  864distributioncooperativesnationally•  Over40Millionmembers•  Over$40Billioninelectricitysalesannually•  Morethan230co-opsthesoutheast


Understanding the Terminology

▪  On-Bill Financing (OBF) is an energy efficiency retrofit financemechanism whereby the upfront cost of energy savingimprovementsandequipmentisfundedbytheelectricutility,andratepayers are able to pay down the cost through a monthlypaymentontheirelectricbill.

▪  On-Bill Repayment (OBR) provides the same service and,typically,followsthesameprocessasOn-Billfinance,butcapitalisprovided,and loansareserviced,throughathirdpartysuchasabankorcreditunion.

▪  On-Bill Tariff (OBT) is a model of on-bill financing whereinvestment in the energy performance of built infrastructure isrecognized as a system reliability investment and the utilityutilizes their established authority to add tariffs for systeminvestmentstoconsumerbillsasthecollectionmechanism.


On-Bill Financing Program Differences

On-BillLoan(Utilityor3rdPartySponsored)

On-BillTariff

Tied to the property owner

Traditional loan underwriting

Available only to property owners

No utility service disconnection

Generally not transferable

Tied to the meter Bill payment history Available to any utility customer Disconnection for non-payment

Transferable (with consent)


Southeast On-Bill Programs

▪  Arkansas▪  HomeEnergyLendingProgram(HELP)(UtilityLoan)▪  HELPPAYS(Tariff)

▪  Georgia▪  HomePlusLoanProgram(3rdPartyLoan)

▪  Kentucky▪  How$martKY(Tariff)

▪ NorthCarolina▪  UpgradetoSave(Tariff)

▪  SouthCarolina▪  HelpMyHouse(UtilityLoan)

▪  Tennessee▪  AppalachianElectric(Tariff)


Typical Improvements

§  Ductsealing

§  Airsealing

§  Insulation

§  Programmablethermostats

§  HVACsystemreplacement

ThreeModelsInAction

Ruralcommunitiesareleadingthewayoninclusivefinancing,andareofferingassistance.


Georgia: HomePlus ▪  On-BillModel:3rdPartyLoanRepayment▪  StartDate:▪  2014(Pilot2010-2013)

▪  ParticipatingUtilities:▪  Current–8(Pilot:24)▪  NumberofLoanstoDate:▪  Since2014:~270(Pilot:1500)

▪  AverageLoanSize:~$7,000▪  InterestRate:7.9%(Pilot:0%)▪  TotalInvestment:~$5Million+▪  ImplementationSupport:GEMCCreditUnion

Jackson

WaltonGreyStone

Coweta-Fayette


South Carolina: My House

▪  On-BillModel:UtilitySponsoredLoan

▪  StartDate:2011

▪  ParticipatingUtilities:4

▪  NumberofLoanstoDate:794

▪  AverageLoanSize:$10,000

▪  TotalInvestment:~$7Million+

▪  ImplementationSupport:KWSavings

LittleRiver

SanteeAiken


Ouachita EMC: HELP PAYS

▪  On-BillModel:Tariff

▪  StartDate:2016▪  NumberofParticipatingUtilities:1

▪  FinancedProjectsToDate:▪  500+Residential,Institutional

▪  30SolarProjects▪  AverageInvestment:$5,600(single-family)

▪  TotalInvestment:~$5M+

▪  ImplementationSupport:EEtility


______________

______________

______________

_

Metric HomePlus HelpMyHouse

HELPPAYS

Number of Participating Utilities 8 4 1Financed Projects To Date 270 794 500+Start Date 2010 2011 2016Average Investment $5,000 $10,000 $5,600Interest Rates 6.5-7.9% 3.75-5% 4.5%Total Investment $1.35M* $5Million+ $5Million+Rate of Default <1% <1% <1%

ProgramAttributesCredit Determination (Score vs Bill

History) Score Score/Bill Bill

Non-utility Implementer Support X X XLien on Equipment Over$5k

Accessible to renters X X

Program Comparison

Demographic Snapshots


Morethan90%ofpersistentpovertycountiesintheU.S.areservedbyelectriccooperatives.


Demographic Snapshot

•  Located in Southwest Arkansas Delta Region •  8500 meters, mostly Residential •  Housing stock between 50 and 100 years old •  Average household median income of ~$29K (AR average is

~$42k.)

•  Provided Home Energy Loan Program (HELP) from April 1, 2015 – December 31, 2015

•  Converted to tariff model HELP PAYS in April 2016


HELP vs HELP PAYS

▪  ParticipationTripled▪  HELP(Loan)EnrollmentApr–Dec2015▪  70SingleFamilyHomes

▪  HELPPAYS(Tariff)EnrollmentApr–Dec2016▪  118SingleFamilyHomes▪  82MultifamilyUnits▪  2Commercial

▪  AverageInvestmentDoubled▪  HELP=$2,280▪  HELPPAYS=$5,600

▪  TotalInvestmentTripled▪  HELP=$500,000▪  HELPPAYS=$1.6Million+($500kto2Commercial,acollegeandmunicipality)


Demographic Snapshot:

•  Located in Northeast North Carolina •  14,500 meters, mostly Residential •  Average household median income of ~$39K (NC average is

~$47k.) •  48% spend over $200/month (30% is National Co-op

average)

•  Provided loan program in 2014

•  Converted to tariff model (Upgrade to Save) in July 2015


Loan Model vs Tariff Model

▪  ParticipationIncreased▪  LoanProgramEnrollment▪  1000targeted/15%Showedinterest▪  “Handful”qualified/<.1%participated

▪  UpgradetoSaveEnrollment▪  250SingleFamilyHomes

▪  AverageInvestmentChange?▪  LoanProgram=$0▪  UpgradetoSave=$7,200

▪  ServiceAreaTotalInvestmentChange▪  LoanModel=$0▪  UpgradetoSave=$1.5Million+($500kto2Commercial,acollegeandmunicipality)


Why does tariff increase participation? Theories from Utilities, Implementers, Experts DownsideofLoans

▪  Difficultyqualifying(creditscore/propertyownership)▪  GeneralconsumeraversiontoloansforinvisibleEEupgrades

▪  Lowincomehouseholdsoftenalreadyburdenedwithdebtandconstrainedfinances

▪  Impactofloansonothercreditneeds(i.e.carloans)

UpsideofTariffs

▪  They’renotloans▪  Easiertoqualify▪  Transferwithproperty


Additional SEEA Resources

UtilityGuidetoTariffedOn-BillPrograms

Thisdocumentguidesthereaderthroughresourcesabouton-billfinancing,tariffedon-billprograms,andthePayAsYouSave®(PAYS)system.

WebinarSeries:InclusiveFinancingforEnergyEfficiency

AcomprehensiveseriesonInclusiveFinancingforEnergyEfficiency(EE).Thisseriesprovides8episodesfeaturingnationallyrecognizedexpertsandonthegroundprogramoperators.


WesleyHolmesDirectorofStrategyandDevelopmentwholmes@seealliance.org

SC On-Bill Programs

MikeSmithManager,ConservationandEnergyEfficiency,RetailOperationsElectricCooperativesofSouthCarolina

AModelforWeatherizingSouthCarolinaHomes

MikeSmithElectricCooperativesofSouthCarolina

Cayce,[email protected]

ON-BILLFINANCING(OBF)§  2010SouthCarolinastatelaw(Section58-37-50)allowedco-opstomoveforward

•  Loansaretiedtothemeter

•  Powercanbeshutoffforlackofpayment

•  Loanstayswithhomeifhomeissold

•  Theseprovisionseliminateneedforcreditcheck

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ON-BILLFINANCING(OBF)•  Allowsco-opmemberstofinanceenergyefficiencymeasureswithlow-interestloans

•  Loansarerepaidonmonthlyutilitybills

•  Enablesthosewithoutcashtomakeprescribedandlong-awaitedefficiencyupgrades

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2011:CentralElectric’sHMH

125homepilot

HELPMYHOUSEBASICS1.  Convenient

–  On-billrepayment(2010S.C.law)–  Improvescomfortandenergysavings

2.  ConsistentQuality–  Trained,qualifiedcontractors–  Co-opmanagesQA,QC

3.  AffordableFinancing–  Low-interestloantiedtothemeter;

Transfersifhomesells–  Nomoneydown,nocreditchecksrequired

HelpMyHouseCoreProcess

I.DofHomestobeAudited

VisualAuditbyEnergyAdvisor

ComprehensiveAuditbyBPI

CertifiedAuditor

ReviewofAuditResults

&DecisionastoCost

Effectiveness

Ifqualified,LoanProcessed&

Educationaboutsavings&loan

SelectionofContractor

Workproceedsbasedonaudit

specs

Post-auditbyBPICertifiedAuditor

KWSavingspaysContractor

Memberbeginsmakingon-billrepayments

FAST-PAYBACKIMPROVEMENTS •  Sealandinsulatehome&ductwork

•  Installvaporbarriers•  Replaceelectricfurnacesw/heatpumps

•  Repairorreplaceolderheatpumps

Results:TheHMHPilot(2011)•  ResearcheffortbyCentralElectricPower,ourG&T

•  Testingtheprogrammodel

•  8of20S.C.co-ops•  125homes

KEYFACTORS:RISKMANAGEMENT

1.  Loanstiedtopowermeter–  Transferrable–  Noneedforcreditchecks

2.  Electricbillpaymenthistory

3.  Nopay,nopower–  2010S.C.lawpermits

disconnectsfornon-paymentofutilityloans

–  Nationaldefaultratesonpowerbillsarelessthan1/10thof1%

ImprovingEnergyEfficiencyinExistingHomes

usingOn-billFinancing

MikeSmithElectricCooperativesofSouth

Carolina803-530-9996

[email protected]

Questions?

Please use “Chat” function

Thank you to our speakers!

Be safe and stay healthy!!

South Carolina EE Roadmap: Green Banks and On-Billenergy.sc.gov/files/view/SC Green Bank and On-Bill... · governments, NGOs and market actors to create Green Banks that increase

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