Intro to Clean Energy Finance: BGI MBA Guest Lecture
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Transcript of Intro to Clean Energy Finance: BGI MBA Guest Lecture
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There is Nothing Special About Clean Energy
Avi JacobsonSenior Sustainable Energy CoordinatorWashington State Housing Finance [email protected]@Avi_Jacobson
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Introducing… Me
• Run the WSHFC Energy Program
• Help finance renewable energy & energy efficiency
projects
• Policy Advice
• Matchmaking
• Consulting
• All around nice guy
Growing the WA Clean Technology sector
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Introducing… You
• Backgrounds?
• Why BGI?
• Goals?
• Knowledge of energy sector?
If I am talking too fast, above/beneath you then stop me.
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Lessons of the
Sustainable Energy Program• What sustainability issue is being addressed
• What business problem does addressing it solve
• Whose problem is it?
• Business model to meet it
• Finance structure to implement it
• Debt
• Equity
• Public Private Partnerships
• Etc.
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Sustainability Problem?
• Long list of options
• You are BGI students.
• I don’t have to waste slides on this
• But I did anyway
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What business problem does addressing it solve?
• Spending too much on energy?
• Compliance Costs?
• Resource efficiency?
• You tell me…
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Whose Problem Is It?
• This is your market… does it really exist?
• Question your assumptions
• Do not be sloppy with language
• “Energy” is not the same as electricity
• Electricity is a convenient example…
• Quick & Dirty Look at Macro & Micro Trends
• Develop Hypotheses
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http://www.eia.gov/forecasts/aeo/images/figure_75-lg.jpg
Data: http://www.eia.gov/forecasts/aeo/excel/fig75_data.xls
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http://www.eia.gov/forecasts/ieo/images/figure_82.jpg
http://www.eia.gov/forecasts/ieo/images/figure_81.jpg
http://www.eia.gov/forecasts/ieo/images/figure_82.jpg
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http://www.eia.gov/forecasts/aeo/images/figure_5-lg.jpg
Figure 2.1 GTM/SEIA USMI 3Q2013 Executive Summary
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Lessons of the
Sustainable Energy Program• What sustainability issue is being addressed
• What business problem does addressing it solve
• Whose problem is it?
• Business model to meet it• Finance structure to implement it
• Debt
• Equity
• Public Private Partnerships
• Etc.
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Lessons of the
Sustainable Energy Program• What sustainability issue is being addressed
• What business problem does addressing it solve
• Whose problem is it?
• Business model to meet it• How do you make money?
• One off projects? Selling widgets? Selling service?
• Distribution channel?
• Customers?
• Let’s tinker with some ideas we put on the whiteboard earlier…
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Lessons of the
Sustainable Energy Program• What sustainability issue is being addressed
• What business problem does addressing it solve
• Whose problem is it?
• Business model to meet it
• Finance structure to implement it
• Debt
• Equity
• Public Private Partnerships
• Etc.
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Lessons of the
Sustainable Energy Program• Finance structure to implement it*
• Debt
• Equity
• Public Private Partnerships
• Etc.
* Disclaimer:
Following slides are for demonstration purposes only
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The Impact of Financial Structure on the Cost of Solar Energy Michael Mendelsohn, Claire Kreycik, Lori Bird, Paul Schwabe, and Karlynn Cory Prepared under Task No. SM10.2444
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Project Owner• Debt financing from lenders (i.e., Green Bank and
Commercial Lenders)• Receives incentives from Federal Government, as well as
state and local incentives where available• Sells Renewable Energy Credits where available• Purchases solar equipment from Manufacturers, who
provide equipment warranties• Pays Installation Partners to install the solar equipment
and provide installation warranty • Enters into PPAs/Leases with Behind-the-Meter-Hosts
Federal Government
Local Utility
Installation Partners
Solar Equipment
Manufacturers
Commercial Lenders
State and Local Governments
ROOFTOP SOLAR PV FINANCING STRUCTURE
LegendDebt FinancingEquity InvestorsProject OwnerSuppliers and CustomersIncentives Ownership RelationshipContractual Relationship
Loan Repayment
Loan Proceeds
Repayment
Financing Support
Tax Equity Investor
Property Owner
Holding Company
Green Bank
Benefits from Investment Tax Credit and Accelerated Depreciation
Renewable Energy Credits
Payment for Renewable Energy Credits and
State and Local Incentives
Incentives to be Administered
Solar Equipment and Warranties
Payment Payment Installation and Warranties
Bill Credits throughNet Metering
Excess Electricity
PV System (Lease) or Electricity Generated from
PV System (PPA)
Provides Capital and Owns [x]% of Project Owner
Provides Capital andOwns [y]% of Project Owner
Monthly Payments
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Lessons of the
Sustainable Energy Program• What sustainability issue is being addressed
• What business problem does addressing it solve
• Whose problem is it?
• Business model to meet it
• Finance structure to implement it
• Debt
• Equity
• Public Private Partnerships
• Etc.
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Avi JacobsonSenior Sustainable Energy Coordinator
Washington State Housing Finance Commission
@Avi_Jacobson