Powering On-Site Energy with PACE Financing
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Transcript of Powering On-Site Energy with PACE Financing
A Paradigm Shift in Funding
Energy Efficiency and
Renewable Energy Projects
Presented
By:
"An Energy Solutions Company"
PACE Financing
Reduce
Customer
Costs
Reduce
Investor
Risk
Reduce
Distributor
Hurdles
Close
More
Deals
Limited
Capital
Limited
Terms
Long Payback
Periods
The Answer?
PACE Property Assessed
Clean Energy
Financing
What is PACE?
• Non-Recourse financing program for
for energy efficiency, renewable, rgy
& water conservation projects
• Voluntary property improvement tax
tax assessment utilized for energy
efficiency improvement projects
• Based on one of the oldest property
improvement financing models in the
U.S.
What is PACE?
• Legislation adopted by a state
• PACE Districts created by local
governments including counties,
cities, and townships
• Provides long-term, fixed rate funding,
repaid as a property tax
• Energy savings should be greater than
annual funding cost
• Can include maintenance & end of life
replacement costs
Where is PACE?
• Originated in California in 2009
• Adopted in 32 U.S. States and the
District of Columbia
• Has expanded into other countries
Where is PACE?
Information on PACE programs
in the U.S. is available through the
PACENation and DSIRE organizations
Why PACE?
Eliminates customers costs and
conserves their capital
• No up front capital required 100% of all
project costs are covered
• Energy savings covers 100% of the annual
payments for the term of the funding
Reduces investor risk
• Property “assumes debt”, not the property
owner local government backing
• Transfers with property upon sale, does
not require payoff
Why PACE?
It’s non recourse
Some states require project to be cash
flow positive over term of funding
Some states require a performance
guarantee
Does not affect property owners credit
or borrowing power
Provides long-term, fixed rate financing
through assessment Typically 20 yrs
Increases property value, real property
improvement not personal property
Can be utilized multiple times on same
property
Savings & ROI includes maintenance
and end of life replacement costs
Covers “real property” assets including
including items like electric vehicles
Assets must remain with the property if
if sold, can also be transferred
Why PACE?
Reduces Distributor
Hurdles
Who Funds PACE?
PACE statutes allows PACE projects to
be funded through a variety of sources
Private Equity
Self Funding
Traditional Funding
Bonds
Amount available for a PACE project is
dependent on several factors and can
range from 20% to 30% of the properties
FMV
1) Property Value
2) Mortgage LTV
3) Annual Energy Spend
4) % of Value by Lender
5) PACE District % of Value
How Much is Available?
Who Qualifies for PACE?
Businesses in PACE Districts
More to come!
For-profit and non-profit commercial &
industrial businesses in most states
In most states Government & Publically
owned buildings not allowed
Business outlook is good
Property is not leveraged
(Up to 95% LTV in some cases)
Typically Projects > $250K but smaller
can be funded
Don’t own it? Get permission!
Who Qualifies for PACE?
What Technologies Can be
Financed Through PACE?
Projects That Qualify…….
Facility Upgrades
New Construction
Process Improvements
Refinancing of Prior Projects
But
Wait
There’s
More!!
f
Technology
Incentives
Tax Credits
Financing
The Success of PACE
Private College
CHP Proposal Overview
CHP Proposal Assumptions
1) Current Cost of Electricity $785,000
2) Proposed Cost of Electricity $0
3) Current Cost of Boiler Gas $230,000
4) Proposed Cost of CHP Gas $520,000
5) Current Life Cycle Cost Assumptions
10% of $230,000 Utility Cost (Maint.)
2% Annual Utility Cost Increase
5% Annual Inflation Rate Increase
6) Proposed Life Cycle Cost Assumptions
$116,000 Annual Maintenance Cost
2% Annual Utility Cost Increase
5% Annual Inflation Increase
7) Life Cycle Cost Analysis
2% Year-Over-Year Energy Cost Increase
5% Year-Over-Year Inflation Rate
7% Interest Rate
20 Year Term
CHP Proposal Assumptions
Avg. Annual Cost (Current) $1,280,754
Avg. Annual Cost (Proposed) $818,950
Avg. Annual Savings $461,804
Annual Assessment Payment $290,452
Avg. Annual Net Savings $171,352
CHP Proposal Summary 20 Year Term
Avg. Annual Cost (Current) $1,280,754
Avg. Annual Cost (Proposed) $818,950
Avg. Annual Savings $461,804
Annual Assessment Payment $290,452
Avg. Annual Net Savings $171,352
CHP Proposal Summary 20 Year Term
Annual Savings…
Avg. Annual Cost (Current) $1,280,754
Avg. Annual Cost (Proposed) $818,950
Avg. Annual Savings $461,804
Annual Assessment Payment $290,452
Avg. Annual Net Savings $171,352
CHP Proposal Summary 20 Year Term
Is Greater Than Annual Cost……
Avg. Annual Cost (Current) $1,280,754
Avg. Annual Cost (Proposed) $818,950
Avg. Annual Savings $461,804
Annual Assessment Payment $290,452
Avg. Annual Net Savings $171,352
CHP Proposal Summary 20 Year Term
Resulting in Positive Cash Flow!
CHP Proposal Financial Summary
20 Year Term
CHP Proposal Financial Summary
20 Year Term
Cash Flow Positive From Day 1!