AEP - C2 - Week 3 Slides

CERTIFICATE PROGRAM
Developed by:
With generous support from:
WEEK 3
PROJECT FINANCE INSTRUMENTS
COURSE INSTRUCTOR:
Jack S. Nyman
Executive Director, The Steven L. Newman Real Estate Institute

Zicklin School of Business, Baruch College, The City University of New York
WEEK 3: LEARNING OBJECTIVES

Explain the various sources of funding for retrofit projects along
with the benefits and drawbacks of each
Compare the specialized energy finance instruments
Describe project metrics and their use in retrofit projects
WEEK 3: REQUIRED READINGS
The Energy Management Handbook, Chapter 25: Financing Energy

Management Projects
Energy Stars Building Upgrade Manual, Chapter 4: Financing, US EPA.
Property Assessed Clean Energy Financing: The Ohio Story, Headen,

et al. The Electricity Journal, 1-2/2011.
GE Dumps Primestar: Sustainability Needs to be Economically Sound,

The New Republic, 12/2013.
HISTORICAL SOURCES OF FINANCING:

FUNDING RETROFIT UPGRADES
A 2012 Rockefeller Foundation-DB Climate Change Advisors report
found historical financing sources for retrofits have included :
Direct investment (equity) from balance sheet / cash flows
Parent-company debt
Asset-secured debt
Energy services company (ESCO) agreements
Rebates, subsidized loans/capital
Unfortunately, each of these approaches has built-in obstacles.
Source: United States Building Energy Efficiency Retrofits: Market Sizing and Financing Models, March 2012 (Pages 35-36).
Rockefeller Foundation / DB Climate Change Advisors.
COMPARING FINANCING OPTIONS:

Purchase
Cash
Evaluation Factor
Down Payment (%)

Transaction Cost
100
---
Loan
20 to 25
Medium
Asset and
Balance Sheet
Asset
Liability
Depreciation
Tax Deductions
Depreciation
and Interest
Interest Rate
--Medium
Financing Term
--3 Years
Approval Process
Internal
Bank
Approval Time
Short
Medium
Limited to
Usually Small
Flexibility
Equipment
Projects
Value
Capital or Operating Budget
Either
Capital
Lease
Bond
Operating
Capital
0
0
0
High
--Low
Asset and
Asset and
--Liability
Liability
Depreciation Lease
Depreciation
and Interest Payments
Low
--High
10 to 20 Years
--3 to 5 Years
Referendum Internal
Lessor
Very Long
Short
Short
Usually Equipment
Large
Small
Cost + 20 to
Projects Only
Projects 40 Percent
Capital
Operating
Capital
Source: Energy Star Building Manual Chapter 4 - Table 4.2 Comparing Financing Options
Other
Performance
Municipal
Contract
0
0
Low
Medium
---
---
---
---
Low
Project Life
Lessor
Short
100 Percent
of Project
Cost
Operating
--Project Life
Internal
Short
100 Percent
of Project
Cost
Operating

Example of Purchase
Under a retrofit upgrade purchase, the entire cost of the
retrofit is paid out at the onset of the project. These high up
front costs are then recovered over the life of the upgrades.
Efficiency Retrofit Lease
Lease payments are designed to be less than the cost
savings created by the project, thereby providing customers
with cash flow savings in addition to avoiding upfront
capital costs.
Efficiency Retrofit Lease Source: http://ecoassetsolutions.com/services-2/sustainability-financing-solutions/efficiency-retrofit-lease/

LEASING VS. PURCHASING
Cash Flow
Cash Flow
Cash Flow
Year
Purchase:
Down Payment
$5,000
Repairs
$1,000 $1,500 $2,500 $3,000 $3,500 $4,000 $4,500
Loan Repayment
$10,564 $10,564 $10,564 $10,564 $10,564 $10,564 $10,564
Tax Reduction
$3,912 $3,914 $4,045 $4,024 $3,990 $3,942 $3,879
Salvage Value
$31,000
Net Cost
$12,652 $8,150 $9,019 $9,540 $10,074 $10,622 ($19,815)
NPV of Cost
$34,862
Economic:
Year
1
2
3
4
5
6
7
Repairs
$1,000 $1,500 $2,500 $3,000 $3,500 $4,000 $4,500
Tax Reduction
$3,912 $3,914 $4,045 $4,024 $3,990 $3,942 $3,879
Actual Depreciation
$10,000 $4,000 $3,000 $3,000 $3,000 $3,000 $3,000
Capital Cost
$4,400 $3,907 $3,374 $2,799 $2,178 $1,507
$783
Net Cost
$11,488 $5,493 $4,829 $4,775 $4,688 $4,565 $4,404
NPV of Cost
$31,327
Lease:
Year
1
2
3
4
5
6
7
Up Front Charges
$3,000
$3,000
$3,000
Lease Cost
$7,500 $7,500 $7,500 $7,500 $7,500 $7,500 $7,500
Tax Reduction
$2,940 $2,100 $2,380 $2,940 $2,100 $2,380 $2,940
Lease Penalty
$1,000
$1,000
Net Cost
$7,560 $5,400 $5,120 $7,560 $5,400 $5,120 $7,560
NPV of Cost
$32,564
Source: Energy Star Building Manual Chapter 4 - Table 4.2 Comparing Financing Options
FINANCING OPTIONS: EXAMPLES

Purchasing Equipment and
Services
Cash
Loans
Bonds
Leasing
Operating Leases
Capital Leases
Municipal Leases
Performance Contracting
Unconventional Opportunities
Utility Incentives
State Assistance
Foundations and Nonprofit
Organizations
Source: Energy Star Building Manual Chapter 4 (Pages 41-46)
ENERGY EFFICIENCY FINANCING SOLUTIONS

Energy Efficiency Sector
Solution / Product Type
Large Single Project
Pooled Asset Deal
Residential
Commercial R/E
Yes
N/A
Difficult
Yes
Green Campus
Yes
Renewable
Funding
Difficult
Yes
Yes
N/A
Yes?
Credit
Enhancement
Yes
Accounting
Treatment
Yes
Delaware
N/A
N/A
N/A
N/A
Yes - On Hold
Yes
With Consent
Various
Yes?
Yes?
Yes
Pari Passu
Various
Yes
Yes?
ESCO/ESA/Two Factor Credit

SEU
PACE
On-Bill Finance
Corporate /
Industrial
Yes
Various
MUSH
MUSH: Municipal and State Governments, Universities, Schools, Hospitals

SEU: Sustainable Energy Utility
Source: Marshal Salant - Energy Finance: Where We Are Market Update - 3.1-marshal-salant (Slide 4)
ENERGY EFFICIENCY FINANCING:

FINANCING PROGRAMS
Property-Assessed Clean Energy (PACE)
On-Bill Tariff
On-Bill Loan
Equipment Lease Financing
ESCO Performance Contracting
Source: United States Building Energy Efficiency Retrofits: Market Sizing and Financing Models, March 2012 (Pages 35-36).
Evaluation Factor
Description
Financing Source
Project Size
Upgrade Scope
Source of Repayment
Recipient of Energy Savings
Collateral / Security
ESA
Lender funds cost of improvements
& assumes responsibility for
payment of energy bill.
Emerging integrated developer /

investor firms seeking to use PACE
structure to fund retrofits
Private
Public and/or Private
On-Bill Loan
Utility programs funded via rate
Utility funds upgrades. Customers
pay proceeds, government funds,
repay through monthly charge tied
and/or private loans and repaid
to the meter
through monthly utility charges
Public
Public and/or Private
$250,000 to $10 Million
$2,000 to $2.5 Million
$5,000 to $350,000
$5,000 to $250,000
Extensive Retrofit
Extensive Retrofit
Property Tax Pass-Through of
Energy Savings or Tenant Recovery
Owner / Tenant
Selective Interventions
Selective Interventions
Energy Savings
Energy Savings
Owner / Tenant
Equipment; UCC1 Financing
Statement
Owner / Tenant
Equipment; UCC1 Financing
Statement
Referral to collection agency

and/or utility disconnection
Referral to collection agency

and/or utility disconnection
Energy Savings
Lender
Equipment, UCC1 Financing
Statement
Non-payment of utility bill;

discontinued service and tenant
disruption
Incremental Cost to Borrower None

Typical Term
Average 10 years
1. Property Due Diligence (DD)
2. Market DD
3. Borrower DD/Credit Quality
Underwriting Criteria / Data 4. Audits & Engineering models (inc
Required
savings calcs)
5. Construction contractor DD
6. Historic data re: energy efficiency
projects
Active energy management via
Measurement & Verification continuous remote monitoring and
Requirements
diagnostics
None. Can be transferred or
Sale Restriction
terminated
Geographic Availability
USA
Barriers Addressed
Tax Lien
On-Bill Tariff
None in US / In Australia - Low

Carbon Trust loan loss reserve of 3
yrs P&I
Recourse / Guarantee
Remedy for Non-Payment
PACE
SI, LC
Foreclosure
Higher tax assessment less energy
savings and any recoveries
Typically 5-10 Years
1. Property Due Diligence (DD)
2. Market DD
3. Borrower DD/Credit Quality
4. Audits & Engineering models (inc
savings calcs)
5. Construction contractor DD
6. Historic data re: energy efficiency
projects
Specific to each program /
governmental guidelines and
requirements
None. Obligations remain with
property
20 US States
SI, D
Financing Costs (P&I) funded

through utility bill less energy
savings
5 to 10 Years
Loan application fee, payments to

financing entity, less energy savings
2 to 10 Years
1. Customer payment history Customer for 2 years, no

disconnections in past year
2. Energy Audit
1. Strong customer payment history

2. Good customer credit quality
3. Energy audit
Pre / Post Inspection
Pre / Post Inspection
34 US States
Must payoff loan prior to property

sale
7 US States
SI, D, LC, ST
SI, D, LC, ST
Tariff stays with the property
**SI = Split Incentive; D = Data; U = Underwriting; LC = Lack of Collateral; L = Legal; UTC = Uncertainty of Tax Credits / Incentives; ST = Small Ticket Item
FINANCING MODELS:
PROPERTY ASSESSED CLEAN ENERGY (PACE)
Description:
Municipal governments offer a specific bond to

investors and then turn around and loan the
money to consumers and businesses to put
towards an energy retrofit. The loans are
repaid over the assigned term via an annual
assessment on the property tax bill. The loan
is attached to the property rather than an
individual.
Project Size:
$2,000 to $2.5 million
Typical Term:
Typically 5-10 years; Generally does not

exceed expected useful life of the
improvements
Geographic Availability:
Enabling legislation in Australia;

28 US States + DC have authorized PACE
(27 states have passed legislation, while
Hawaii permits it based on existing law)
Source: United States Building Energy Efficiency Retrofits: Market Sizing and Financing Models, March 2012 (Page 38).
FINANCING MODELS:
PROPERTY ASSESSED CLEAN ENERGY (PACE)
Graphic Source:
https://financere.nrel.gov/finance/content/funding-sources-property-assessed-clean-energy-pace-programs
PACE: ADVANTAGES & DISADVANTAGES

Advantages
Disadvantages
Allows for secured financing of

comprehensive projects
Added legal and administrative costs
Repayment obligation runs with the

land, making longer payback
schedules viable
Scale is required to reduce costs;

may not be realized in small towns.
Taps into private capital, such as the

municipal bond market
Mortgage holder approval is

required
Allows government to encourage

EE/RE without jeopardizing general
funds
In the past, the priority requirement

of PACE liens has caused conflict
with mortgagors
Source: U.S. Department of Energy, PACE Primer.
BENEFITS OF PACE FINANCING FOR

COMMERCIAL REAL ESTATE OWNERS
There are several benefits of PACE financing for commercial landlords:
No up-front costs
Immediate benefit to cash flow raises Net Operating Income
Increases value & efficiency of the property
Treated like other property taxes and assessments
No additional debt load
Source: PACE Now http://pacenow.org/about-pace/commercial-pace-programs/
PACE: THREE TYPES OF BONDS

Framework
Description
Pooled Bonds
Multiple PACE applications are bundled, and a single

bond indenture is used to fund all of the projects in
that pool
Stand-Alone Bonds
Large projects are funded by the capital raised through

an exclusive bond indenture
Owner-Arranged
Bonds
An organization establishes a direct relationship with

a lender, and a PACE arrangement is worked out on
terms that are acceptable to both parties
Source: U.S. Department of Energy, PACE Primer.
PACE: AVAILABILITY IN THE UNITED STATES
*The Federal Housing Financing Agency (FHFA) issued a statement in July 2010 concerning the senior
lien status associated with most PACE programs. In response to the FHFA statement, most local PACE
programs have been suspended until further clarification is provided.
FINANCING MODELS:
ENERGY SERVICES AGREEMENT (ESA)
Description:
Pay-for-performance financing solution that

allows customers to implement energy
efficiency projects without upfront capital
expenditure.
Project Size:
$250,000 to $10 million
Typical Term:
Typically 5-10 years; Generally does not

exceed expected useful life of the
improvements
Nationwide (United States)
Source: United States Building Energy Efficiency Retrofits: Market Sizing and Financing Models,
March 2012 (Page 38). Rockefeller Foundation / DB Climate Change Advisors.
FINANCING MODELS:
ENERGY SERVICES AGREEMENT (ESA)
Source: http://www.energyrealplay.com/?page_id=96
ESA PROVIDERS: METRUS ENERGY
Source: www.metrusengery.com
FINANCING MODELS:
ON-BILL TARIFF
Description:
On-bill tariffs are actually attached to the meter, so

that when a customer moves, the next customer at
that meter continues to repay the financing. On-bill
tariffs are significantly more complicated to set up,
but they allow a longer financing term.
Project Size:
$5,000 to $350,000 (depending on size of bill,

nature of customer, etc.)
Typical Term:
5 to 10 years
Available in up to 34 US States
Source: United States Building Energy Efficiency Retrofits: Market Sizing and Financing Models,
March 2012. Rockefeller Foundation / DB Climate Change Advisors.
FINANCING MODELS: ON-BILL TARIFF

Government /
Utility Regulator
Energy Efficiency
Lender / Investor
Optional:
Loan to
Utility
Govt or rate
payers
subsidize loan
Enabling
utility
legislation
Optional:
Principal and
Interest
Repayment
Utility
Company
Payment for
building upgrade
Money Flow
Services/Agreements
Security/Remedy
Utility
Disconnect
UCC Filing
Repays Loan on Utility Bill (P&I)
Energy
Contractor
Prequalified by utility
Retrofit Products
and Services
Energy
Savings
Property Owner
No upfront cost
Tariff stays with meter
Source: United States Building Energy Efficiency Retrofits: Market Sizing and Financing Models, March 2012. Rockefeller
Foundation / DB Climate Change Advisors.
BENEFITS OF ON-BILL TARIFFS

The US Department of Energy describes some pros and cons of On-Bill Tariffs:
Advantages
Savings are paired directly with
repayment on the same bill
Capital may be raised from a
variety of sources;
Agreements can be structured
to meet the needs of different
markets;
The repayment is effectively a
secured revenue stream, as
failure to pay can result in
utility disconnection;
Past bill repayment can be used
as a proxy for credit; and
On-bill tariffs allow for longerterm investments
Disadvantages
Utilities may be reluctant to

take on the role of financing
entity
Exposure to consumer
lending laws and changes to
billing systems may be
required when companies
do
Complexity
Source: http://www1.eere.energy.gov/wip/solutioncenter/financialproducts/onbillrepayment.html
FINANCING MODELS: ON-BILL LOAN
Description:
Utility programs funded via rate payer

proceeds, government funds and/or
private loans and repaid through monthly
utility charges. Loan repayment is tied to
the customer, so must be repaid at
property sale.
Project Size:
$5,000 to $250,000
Typical Term:
2 to 10 years
Available in up to 7 US States
FINANCING MODELS: ON-BILL LOAN

Government /
Utility Regulator
Enabling
utility
legislation
Govt or rate
payers
subsidize loan
Energy Efficiency
Lender / Investor
Arrange deal
for lender,
terms, etc.
Loan
Repayment
Utility
Company
Payment for
building upgrade
Optional:
Principal and
Interest
Repayment
Money Flow
Services/Agreements
Security/Remedy
Alternative Funding Path
Utility
Disconnect
UCC Filing
Repays Loan on Utility Bill (P&I)
Energy Contractor
Prequalified by utility
Retrofit
Products
And
Services
Energy
Savings
Property Owner
No upfront cost
Loan repaid if property sold
Payment for building upgrade
Source: United States Building Energy Efficiency Retrofits: Market Sizing and Financing Models, March 2012 (Page 45). Rockefeller Foundation / DB Climate Change Advisors.
BENEFITS OF ON-BILL LOANS

Very similar to personal or business loans -- when the customer
moves, it must repay the full loan.
Offers one of the most practical solutions to energy financing: the
savings are seen on the same bill as the repayment.
The model has proven to be a good fit for programs serving the
small commercial and MUSH markets.
MUSH: Municipal and State Governments, Universities, Schools, Hospitals
Source: http://www1.eere.energy.gov/wip/solutioncenter/financialproducts/onbillrepayment.html
FINANCING MODELS:
EQUIPMENT LEASE FINANCE
Description:
Bank backed by government

guarantee borrows at favorable
rates in capital markets to lend to
commercial banks at favorable
rates.
Project Size:
Unlimited
Typical Term:
7 to 10 years
International
FINANCING MODELS:
EQUIPMENT LEASE FINANCE
Secondary Market
Asset-secured term
loan ($)
Corporate and
Investment Bank
Potential
Securitization of
Asset-secured term
Loans into green
bonds
Equipment
Cost ($)
Equipment
OEM
Equipment
Provision
Principal and
interest
payments ($)
Energy efficient or
production
equipment SPV
Aggregated
Lease
Energy efficiency
service provider
(e.g. utility)
Aggregate lease
payments ($)
Individual
Lease
End-use
Lease
payments ($)
ENERGY PERFORMANCE CONTRACT
Organization
$15
Energy Efficiency Upgrades
are put into place
Energy
Cost
ESCO
$15
Guaranteed Savings from

Performance Contract are
split between the ESCO and
the Organization
(Paid to Utility)
$100
Annual Energy Costs are

reduced from $100 to $70
after the upgrades
Energy
Cost
(Paid to Utility)
$70
Before Energy
Efficiency Upgrade
After Energy
Efficiency Upgrade
Source: Energy Star Building Manual, Chapter 4
Energy
Savings
ENERGY PERFORMANCE CONTRACT:

(ESCO MODEL)
Description:
3rd party capital to fund upgrades

designated by turnkey providers,
generally backed by performance
guarantee. Payments tied to
savings.
Project Size:
Unlimited
Typical Term:
7 to 20 years
International

(ESCO MODEL)
Energy
Savings
+
Services
Guarantee
ESCO
Building Owner
Project
Cost

(ESCO MODEL)
Source: http://www.energyservicescoalition.org/resources/whatis.htm
Source: http://www.energyrealplay.com/?page_id=134
THREE MAJOR BARRIERS

What can prevent quality projects from being implemented?
There are a variety of reasons, including three very common barriers:
1. Insufficient Marketing (Under-marketing a projects value)
2. Insufficient Education and Collaboration (Not expanding the value
of a project)
3. Insufficient Funds (Not having a positive cash flow solution)
If a project can not overcome any of these three barriers, then it probably
wont be implemented. Focus on the projects that will.
Source: Energy Project Financing Resources and Strategies for Success. Thumann and Woodroof
BARRIERS TO ENERGY EFFICIENCY

FINANCING (MUSH)
1.
Agency or institutional policies

that fail to incentivize energyefficiency investments
2.
Inefficient agency or institutional

responses to market incentives
that require change
3.
Limited human resources to

devote to projects, including even
those that are already known to
be cost-effective
MUSH: Municipal and State Governments,
Universities, Schools, Hospitals
Photo: Citrus Zest, via Wikipedia.
PAYBACK PERIODS FOR TYPICAL

ENERGY CONSERVATION MEASURES (ECMs)
Controls
Controls retrofits and control strategies
Demand controlled ventilation
Mechanical
Variale flow primary/secondary systems with controls, VFDs
HVAC
Constant speed air handlers to variable air volume
VAV boxes, control setpoints, box flow minimums
Boiler conversions from steam to hot water
High efficiency fully condensing boilers
High efficiency VFD chiller system
Lighting
Install controls to schedule and interior systems
Convert incandescent to CFL
Replace exit signs with LED kits
Convert T12 to high efficiency T8s with electronic ballasts
Payback (yrs.)
3-4
2-5
Source: Payback source DBCCA and Transcend Equity analysis, 2011. EIA and DOE Building Data Book, 2010; DBCCA Analysis 2011. Paybacks are pre
subsidy and reflect a simple return of capital invested without additional return. Payback periods are estimates and there are no assurances that stated
payback periods will be achieved.
Source: US Building Energy Efficiency Retrofits (Page 8)
2-4
2-4
5+
5-8
6-8
8-12
2-4
1-3
<2
2-5
PAYBACK PERIODS: BY ECM

High Efficiency Fully
Condensing Boiler
Boiler Conversion
VAV Technology
T8 Lighting
New Chiller
Controls
Retrofit
Lighting Control
Variable Speed
AHUs
Variable Flow
Systems
Simple Payback in Years
CFL Lighting
LED Exit
Signs
Source: US Building Energy Efficiency Retrofits (Page 8)
WHAT IS A PERFORMANCE METRIC?

A metric is a standard definition of any measurable quantity, and a
performance metric is a standard definition of a measurable
quantity that indicates some aspect of performance.
A valuable and practical performance metric should:
Be measurable (or determinable from other measurements)

Have a clear definition, including boundaries of measurements
Indicate progress towards a performance goal
Answer specific questions about the performance
Source: National Renewable Energy Laboratory, http://www.nrel.gov/docs/fy06osti/38700.pdf
WHO USES PERFORMANCE METRICS?

Policy makers
Owners
Designers
Operators
Researchers
Photo: Ejay, via Wikimedia Commons
WHO USES PERFORMANCE METRICS?
THE USE OF PERFORMANCE METRICS?
Begin with goals and objectives in mind
Metrics should be a good fit for the data being analyzed
Existing buildings may offer less flexibility Focus on whats there

Photo: Brocken Inaglory, via Wikimedia Commons.
WEEK 3: IN-CLASS EXERCISES

1.
Describe the three major barriers that could hinder project

implementation. How should owners and managers take each of
these obstacles into account when evaluating proposed projects?
2.
Explain how performance metrics are used to assess the impact of

an energy-savings project. Provide three examples of established
performance metrics, and offer a situation in which each metric
would be appropriate. How might performance metrics be misused?
What caveats should investors be wary of?
3.
What kinds of energy projects deliver the fastest payback on

investment dollars? What kinds take longer to bear fruit? Can you
identify an inherent dilemma in the pattern?
WEEK 3: HOMEWORK
Consider the Imperial Building from the AEP portfolio. In a 1-2
page write-up, propose an energy-saving improvement project,
and presume that any of the financing frameworks covered by this
weeks materials are available in the Imperials jurisdiction.
Choose one of the energy-efficiency financing programs to finance
your proposal.
Explain why this financing program would be an effective way to
defray the costs of your proposed project. Note that the Imperial is
one of the oldest buildings in the portfolio, and consider how this
might influence the types of projects that may be warranted. Detail
why you chose your project and your financing approach.

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CERTIFICATE PROGRAM

With generous support from:

PROJECT FINANCE INSTRUMENTS

Executive Director, The Steven L. Newman Real Estate Institute

WEEK 3: LEARNING OBJECTIVES

Describe project metrics and their use in retrofit projects

WEEK 3: REQUIRED READINGS

The Energy Management Handbook, Chapter 25: Financing Energy

Energy Stars Building Upgrade Manual, Chapter 4: Financing, US EPA.

Property Assessed Clean Energy Financing: The Ohio Story, Headen,

GE Dumps Primestar: Sustainability Needs to be Economically Sound,

HISTORICAL SOURCES OF FINANCING:

COMPARING FINANCING OPTIONS:

Down Payment (%)

COMPARING FINANCING OPTIONS:

Efficiency Retrofit Lease Source: http://ecoassetsolutions.com/services-2/sustainability-financing-solutions/efficiency-retrofit-lease/

COMPARING FINANCING OPTIONS:

FINANCING OPTIONS: EXAMPLES

Source: Energy Star Building Manual Chapter 4 (Pages 41-46)

ENERGY EFFICIENCY FINANCING SOLUTIONS

Solution / Product Type

Large Single Project

Pooled Asset Deal

ESCO/ESA/Two Factor Credit

MUSH: Municipal and State Governments, Universities, Schools, Hospitals

ENERGY EFFICIENCY FINANCING:

Emerging integrated developer /

Public and/or Private

$250,000 to $10 Million

$2,000 to $2.5 Million

Referral to collection agency

Referral to collection agency

Non-payment of utility bill;

Incremental Cost to Borrower None

None in US / In Australia - Low

Remedy for Non-Payment

Financing Costs (P&I) funded

Loan application fee, payments to

1. Customer payment history Customer for 2 years, no

1. Strong customer payment history

Pre / Post Inspection

Pre / Post Inspection

Must payoff loan prior to property

Tariff stays with the property

Municipal governments offer a specific bond to

$2,000 to $2.5 million

Typically 5-10 years; Generally does not

Enabling legislation in Australia;

PACE: ADVANTAGES & DISADVANTAGES

Allows for secured financing of

Added legal and administrative costs

Repayment obligation runs with the

Scale is required to reduce costs;

Taps into private capital, such as the

Mortgage holder approval is

Allows government to encourage

In the past, the priority requirement

Source: U.S. Department of Energy, PACE Primer.

BENEFITS OF PACE FINANCING FOR

Source: PACE Now http://pacenow.org/about-pace/commercial-pace-programs/

PACE: THREE TYPES OF BONDS

Multiple PACE applications are bundled, and a single

Large projects are funded by the capital raised through