PACE is Not Dead: New Financing Model Leads Future for Energy Efficiency Retrofits
By: Francesca Wahl
As part of its monthly EE Noon series, the Alliance hosted a brownbag seminar on July 13, 2011 to spark discussion around an innovative financing model for Property Assessed Clean Energy (PACE) focused on the commercial and industrial projects.
Co-founder of Ygrene Energy Fund, Alan Strachan, led the presentation on the Ygrene aggregate financing structure with additional input from Greg Caplan, Senior Program Manager for Alliance Associate Lockheed Martin Energy Solutions.
The Ygrene Model: Fast, No-Cost PACE Implementation
Kicking off his presentation, Strachan was quick to emphasize that investment in clean energy projects is a financing issue not a cost problem. He continued by briefly describing the traditional financing advantages of PACE for clean energy projects, such as eliminating the capital competition question and solving the split incentive problem, before delving into the details of the Ygrene model concentrating on commercial and industrial property owners.
Ygrene in partnership with Barclays Capital has developed a five step scalable process that not only has the advantage of no-cost operational implementation of PACE programs for local jurisdictions but also provides 100% private financing, without exposure to City or County general fund or other assets and no upfront cost to the property owner. While the initial short term funding for local projects is provided by a national aggregation warehouse through Barclays, the long term financing structure is via the bond market. The strengths of this particular model include a known interest rate at time of application, a $100 million aggregation warehouse available for project funding and low-risk/certainty for long term financing.
Retooling America by Investing in Energy Efficiency
According to Strachan, there are currently $1 trillion sitting on the side lines yearning to be invested. Hence, American business is poised to unleash a Retooling America campaign with the potential of over $500 billion of new capital investment for energy efficiency and renewable energy retrofits of existing buildings, plants and operations. Retooling America using 100% private financing will not only serve as an unique economic stimulus by reducing the federal deficit and acting as a strong multiplier in local economies but it also demonstrates that corporate America can profitably drive the U.S. to a clean energy economy.
Additional PACE Resources
Economic Impact Analysis of Property Assessed Clean Energy Programs (PACE) Study by ECONorthwest.
