CalCEF Innovations Reveals New Financial Models for Energy Efficiency That Pay The Way

Part Two in Whitepaper Series Examines No-First Cost Financing for Energy Efficiency Retrofitting

SAN FRANCISCO—February 11, 2010— CalCEF Innovations, the market strategy and public policy arm of the California Clean Energy Fund (CalCEF), today announced the release of the second white paper in its Energy Efficiency (EE) series: “Energy Efficiency Paying the Way: New Financing Solutions Remove First Cost Hurdles.” Through a case-study approach, the CalCEF Innovations report serves as a playbook for uncovering EE financing options, including the aggregation of individual projects, technologies and service offerings into inventive, larger and more attractive retrofit investment opportunities.

“EE will play a crucial role in achieving President Obama’s pledge to cut greenhouse gas emissions by 17% by 2020, but the lack of customized financing options that enable project development severely limits the immense potential EE offers,” said Bob Hinkle, report author and CEO and founder of Metrus Energy. “By eliminating the first cost impediment to energy retrofits, we open up new avenues for  a wide range of energy end-users to access the benefits of energy efficiency.”

In “Energy Efficiency Paying the Way: New Financing Solutions Remove First Cost Hurdles (hyperlink to report),” CalCEF Innovations provides policy-makers, regulators, and private sector firms with an extensive analysis of newly deployed no-first-cost financing options. The six programs evaluated include:

  • Clean Energy Works Program: A city-wide initiative in Portland, OR providing comprehensive financing through long-term loans and technical assistance to local homeowners.
  • Property Assessed Clean Energy (PACE):  Government programs, such as the highlighted Palm Desert, CA initiative, offer property owners 20-year loans for EE that are repaid through property tax assessments.
  • On-bill Financing: San Diego Gas & Electric’s program is an example of the 100% financing terms for EE that small and medium-sized customers receive with loan repayments included on the regular utility bill.
  • Utility Aggregated EE Deployment: Ice Energy partners with utilities to deploy large numbers of Thermal Energy Storage units under a single financing structure at no cost to customers.
  • Efficiency Services Agreement: Metrus Energy offers large industrial and commercial customers a PPA-like solution to finance and implement EE projects with repayment based on a cost per avoided unit of realized energy savings.
  • Managed Energy Services Agreement: Transcend Equity finances and implements EE upgrades at commercial buildings and takes responsibility for repaying a customer’s utility bill.

The mission of CalCEF Innovations is to identify and impact issues impeding the long-run transformation of the energy economy towards sustainability, and according to managing director Paul Frankel, financing of EE retrofits is an integral hurdle to overcome: “We’ve uncovered a critical gap in the EE sector, where the deployment of retrofits is not at pace with the large potential for profits—both economical and environmental—due to a perceived cost-prohibitive barrier to entry. Energy efficiency can pay back, three or four times on its investment in a relatively short time frame when strategic financing and aggregated deployment strategies are implemented.”

A founding father of EE policy in the US and life-long advocate of energy conservation, Art Rosenfeld, PhD is a CalCEF board member and recently retired Commissioner of the California Energy Commission and Emeritus Professor of Physics and the University of California, Berkeley. According to Rosenfeld, “Energy efficiency should be the foundation of our clean energy infrastructure. Simply stated, we should first uncover and implement all savings opportunities – from implementing intelligent lighting and control systems to adding insulation and upgrading HVAC systems. The work undertaken by CalCEF Innovations sheds light on reliable financing solutions that overcome the first-cost barriers to efficiency that have hindered substantial energy savings for far too long.”

This report, published as part of CalCEF Innovation’s Entrepreneurs in Residence (EIR) program, follows the March 2009 release of “New Business Models for Energy Efficiency” highlighting business and policy-related initiatives to increase the adoption of EE.

About CalCEF Innovations

The mission of CalCEF Innovations is to address issues impacting the long-run transformation of the energy system towards sustainability, including the formation of enterprises, the continued flow of capital into technologies and infrastructure, and the design of markets and policy strategies for the sustainable energy transition. CalCEF Innovations leads the California Clean Energy Fund’s development of novel finance, policy, and technology mechanisms to accelerate the growth of clean energy markets through a variety of activities. These include our Entrepreneurs-in-Residence program, academic and industry affiliations such as the UC Davis Energy Efficiency Center, the California CleanTech Open Alumni Program, and our innovation partnerships with university, national and private research labs. Through our ongoing Convening Series, our Annual Conference, and Executive Education for Policy Makers, CalCEF Innovations also initiates timely conversations across policy, technology and finance that are absent in the evolving debate around cleantech and climate change.