CEFAC 11-1-2016 PPT Slides

Clean Energy Financing Advisory Council:
Small Business Energy Savings
November 1, 2016

November 1, 2016
Ryan Carney

Our Mission…
Accelerate the transition
to a sustainable world
powered by clean energy

Clean Energy Financing Advisory Council (CEFAC)

Kacia Brockman, City and County of San Francisco

Noah Proser, Pacific Gas & Electric

9
On-Bill Financing
Energy Efficiency Financing from PG&E
November 1, 2016

Agenda
• Policy Context
• What is On-Bill Financing (OBF)?
• How does it work?
• Who is Eligible?
• What is Eligible?
• OBF w/o Incentive (Alternative Pathway)
• Additional Resources

Policy Context
Where we are headed…
• SB 350 (2015) and the Governor’s Goals:
• Double the efficiency of existing buildings by 2030
• AB 802 (2015)
• Capture ‘stranded potential’ energy savings from to-code measures and
begin using Smart Meter data for savings calculations
• High Opportunity Projects and Programs (HOPPs):
• On-Bill Finance Alternative Pathway
• Residential Pay for Performance
• Retirement of Diablo Canyon Power Plant
• PG&E committed to replacing capacity with GHG-free sources
• 2,000 GWH of Energy Efficiency between 2018 and 2024

What is On-Bill Financing?
REPAYMENT
SAVINGS
EQUIPMENT
0%
LOAN
• On-Bill Financing is a $70M revolving loan fund (RLF), used to finance
energy efficiency projects for PG&E non-residential customers.
• The RLF uses ratepayer funds and is loaned at 0%
• As customers repay their loans, those funds can be loaned out again
• Loan payments are intended to be ‘bill-neutral,’ meaning they are
based on the estimated energy cost savings from the EE project

What is On-Bill Financing?
*Government Agency Customer is defined as a tax-payer funded agency of federal, state,
county, or local government that uses tax revenue to pay its PG&E energy bills. Such
Customers may include, but are not limited to, public schools, state of California colleges and
universities, public libraries, and government offices.
1 Government customers may combine premises in a single loan, so this may be considered a
per project cap.
1

Things to know:
All loans are
subject to
qualification
Estimated
energy savings
are not
guaranteed by
PG&E
Business
closure or
relocation will
require balance
repayment on
settling bill
Projects are
funded after
installation and
inspection
*Some contractors will float
the project costs until
project is funded

Who is eligible?
OBF is available to PG&E’s Business and Government
Customers (non-residential) that meet the following
conditions throughout the duration of the EE retrofit project:
1. Currently receive service at the retrofit location
2. Active PG&E account for the previous 24 months
3. Good credit standing for the past 12 months
(no 24-hour disconnection notices)

What is eligible?
OBF is available for energy efficiency retrofit projects.
Eligible costs include:
• EE Measures (net of rebates/incentives)
• Labor, taxes, and other directly related costs
• Operations & Maintenance Plans (O&M)
• Measurement & Verification Plans (M&V)
OBF may not be used to finance:
• New construction/new load;
• Basic lighting (non-LED) exceeding 20% project costs
• Customer’s in-house labor or project management
• Distributed generation

What is eligible?
Incentive Pathway
(Traditional OBF)
• Only rebated/incentivized measures
• Can combine deemed, custom, up/midstream measures
• Can accept deemed or site-specific savings calculations
• Loan only funded after all rebates/incentives approved
• Pre-Install Review required

What is eligible?
Alternative Pathway
A new way to finance EE Projects
• Any measure that saves energy!
• Cannot receive a rebate or incentive
• Lighting products must be on the Qualified Products List (caioulightingqpl.com)
• Only functioning equipment is eligible for replacement
• Projects must include O&M and M&V plans
• Baseline and M&V should use customer’s meter data:
• May use PG&E’s Share My Data tool to receive Smart Meter data
• Projects must be developed by an Investor Confidence Project (ICP)
Credentialed Project Developer and reviewed by an ICP Credentialed QA
Provider
• PG&E Pre-Install Review optional. Work with a QA Provider to ensure the
project meets Program requirements

OBF_AP Process
< 1 week
2 weeks 
2 months
1 month 
6 months
2 weeks
Payment History
Screening
Project
development
Installation
Apply to
PG&E and
approval
Operations
begins
Work with QA Provider
to meet Program
requirements
QA Post-
install
review
No need for PG&E pre-install review!

Additional Resources
www.pge.com/OBF
Traditional OBF:
• Customer and Contractor Handbook
• Fact Sheet
• Trade Pro Application Training
Alternative Pathway:
• Contact Arup, who is supporting the program and acting as
QA during the pilot and can send a copy of the draft
Handbook:
• Elizabeth.Joyce@arup.com
• Katrina.Zarate@arup.com

Miriam Joffe-Block, California Alternative Energy and Advanced
Transportation Financing Authority (CAEATFA)

CALIFORNIA HUB FOR ENERGY EFFICIENCY FINANCING 25CEFAC San Francisco Oct 28, 2016
California’s
Commercial Energy Efficiency
Financing Pilots
Opportunities for Contractors,
Financing Entities and Small
Businesses

CHEEF Financing:
Another tool to facilitate commercial energy upgrades
Commercial
PACE
On-Bill Financing
(utility capital)
SBA/State Loan
Guarantees
CHEEF financing
• Private capital
• Secured by equipment only
• Loans, leases, energy service
agreements
• On-bill and off-bill repayment
options
• Attractive rates and terms for
customers

o Housed in Office of
State Treasurer
o Develops market-
driven financial
assistance programs
to support State’s
energy and
environmental policy
goals.

o More attractive financing
reaching a broader customer
base enabling more EE
projects with deeper energy
savings
o Bring private capital into
energy efficiency space
o Establish a statewide
database of EE project and
financing data to spur future
investments
Pilot Program Goals:
Commercial pilots
Launching Q2/Q3
2017

CHEEF Commercial Pilot Features
Small Business
Meets SBA size restrictions, for-profits and non-profits
On Bill
Full amount of financing is credit enhanced
EE and DR only
Loan Lease & ESA
Off Bill
Part or all of
financing is credit-
enhanced
EE, DR and DG
Lease & ESA
Non
Residential
Any size, gov ok,
non-profit ok
On Bill
No credit
enhancement
EE, DR and DG
Loan, Lease, &
ESA

Why should financial entities, contractors and small
businesses participate in the small business pilots?
o Financial Entities - Mitigate Risk: Access $14 million in credit
enhancements for small business financing
o Contractors - Close more deals and increase project scope: Attractive
financing options for customers facilitates more projects and deeper
energy retrofits
o Contractors and Financing Entities -
o Offer convenience to customers: On-bill repayment options means 1 monthly payment
for customers: energy and financing charges
o Take advantage of lead generation: $10 million budget for marketing, training and
outreach, shared among the various pilots. Cooperative marketing and co-branded
collateral available.
oSmall Businesses – Access non-real estate secured financing at attractive
rates and terms, to finance energy upgrades with no up front capital
outlay. Access deeper energy savings and take advantage of utility
rebates and incentives.

Credit enhancements allow financial entities to
finance a broader set of borrowers or offer
more attractive terms
oStructured as a loan loss reserve
o5-20% value of each
loan/lease/ESA reserved for
lender in a trust account
oLender able to recover 90% of
loss in case of credit default,
provided they have funds in trust
account
oNo cost to lender nor borrower

Features of CHEEF Pilots help contractors
close more deals
oFlexible projects: 30% of financing can pay for non EE measures
oTenants can qualify: Borrower not required to be property owner
oProduct choices: Loans, Leases, Service Agreements
oNo industry restrictions
oNo upfront investment required of borrowers
oTerms up to 10 years
oNo restrictions on amount of lighting
oOn bill repayment option
Choice to follow the utility’s rebate and incentive guidelines for
deemed and custom measures, OR to use a for a “finance-only”
option like the OBF Alternative Pathway, utilizing Investor
Confidence Project protocols.

On Bill Repayment –
but with private capital
$
$
$$
Master Servicer
We recruit
lenders, lease
providers and
ESA providers so
customers have
options.

CHEEF Pilots offering private financing secured by
equipment complements OBF and C-PACE
We think private financing can complement OBF for:
o Projects greater than $100,000 or less than $5,000
o Where the customer uses OBF for the first $100,000 of cost, but needs private capital to cover
remaining costs.
o Customers wanting an equipment lease or Energy Service Agreement (ESA)
o Larger measures requiring payback longer than 5 years
o Projects that may never be “bill neutral” or won’t work with the utility’s methodology for
calculating bill neutrality
o Projects with significant non energy efficiency components (up to 30% of project cost)
o Where single end use lighting > 20% of project cost
o Lighting measures on the DLC but not on the California Qualified List of Products (QLP)
o Customers needing to replace equipment urgently who can’t wait for OBF approval
o Customers wanting energy savings now who can’t wait for utility’s custom incentive approval
We think private financing can complement Commercial PACE for:
o Tenant occupants (most small business owners rent space)
o Customers not wanting a lien on their property
o Smaller projects for which a PACE transaction is too costly

Project Eligibility Parameters Summary - Proposed
Rebate/Incentive Path Finance Only Path
Contractor
Requirements
Proper licenses and insurance
Utility Requirements for
participation in programs
ICP Developer Credential
Eligible Measures
Any measures eligible for
IOU/REN rebate or incentive
program. Must meet all rebate
and incentive requirements
Any energy saving measure (per CPUC
EE Policy Handbook 5.0)
Lighting must be on DLC.
QA/QC Pre-
Installation
Deemed measures: None
Custom: Follows utility custom
process; utility approval required
Utilizes Investor Confidence Protocols
3rd party QA Provider signs off on Pre-
Installation checklist
QA/QC Post-
Installation
Follows utility inspection
processes
Utilizes Investor Confidence Protocols
3rd party QA Provider signs off on Post-
Installation checklist
Data needed
Contractor/Customer send rebate
or incentive application and
information to utility
Finance Entity sends completed QA/QC
checklist to CHEEF
QA Provider sends underlying data to
utility
Financing terms, customer energy data release, borrower privacy disclosure
CHEEF invoice (high level measure and project info) and certifications
M&V and EM&V Utility and/or CPUC may choose to do M&V on the project.

Financing Parameters - Proposed
oLoans, Leases and ESAs are eligible
oFinancing entities set their own product terms and follow their own
underwriting; CHEEF sets minimum underwriting guidelines
oLoan loss reserve contribution for each lender of 5-20% value of
each loan, lease or ESA
oLenders can claim up to 90% of loss in case of a credit default
oLoan loss reserve contribution on up to $1MM of small business
financing
oNo cap on interest rates, but Participating financial entities must
demonstrate benefit to customers as a result of receiving a credit
enhancement
oFinancing entities must be regulated depositories or possess a
California Lenders License; specialty finance lenders must
demonstrate organizational track record and committed capital
For full list of proposed financing and project eligibility parameters, please visit
thecheef.com/commercial

We want your input on program design
oCurrently seeking input regarding:
–Financing Program Parameters
–Project Eligibility Parameters
oProposed program guidelines can be found at
http://www.thecheef.com/commercial
oSend comments to cheef@treasurer.ca.gov or to
mjblock@treasurer.ca.gov
oComments due Dec 2, 2016
oOn bill repayment workshop will be held November,
2016
oWe are always happy to meet or schedule a phone call

Questions for you
oWhat are your customers telling you? What are their financing needs?
oHow can we enable deal flow through these pilots?
oFor contractors:
–How could private financing help you get more deals done? What types of
deals?
–Do you have lenders you work with already?
–When might you use a “finance-only” option and ICP protocols instead of the
utility’s custom incentive approval process?
oFor Financial Institutions:
–How could access to a loan loss reserve help you provide broader access to
financing or better terms?
–What do you think of our proposed eligibility guidelines for financing entities?
And for borrower underwriting minimums?
–How do we balance appropriate guiderails for participation with a
streamlined process?

CHEEF Commercial Pilot Development
Schedule
June-December, 2016:
o On Bill Infrastructure Testing
Q4 2016/ Q1 2017:
o Regulation development and workshops
Q1 2017:
o Regulations approved
Q1/Q2 2017:
o Participating Financial Institution (PFI) and Participating
Finance Lender (PFL) enrollment
o PFI/PFL System integration with CAEATFA’s Master Servicer
o Potential off-bill pilot launch
Q2/Q3 2017:
o On bill launch

CHEEF Office and to join our mailing list:
Tel: (916) 651-8157
Email: cheef@treasurer.ca.gov
Web: www.treasurer.ca.gov/caeatfa/cheef
We want to hear from you
Miriam Joffe-Block
Mjblock@treasurer.ca.gov
916-653-3032
www.thecheef.com

Rich Chien, City and County of San Francisco

SFEnvironment.org
New Tools for the Toolbelt:
Moving projects with capital and data
Rich Chien, City and County of San Francisco richard.chien@sfgov.org
Clean Energy Financing Advisory Council (CEFAC) Financing
Workshop
November 1, 2016

SFEnvironment.org
SF PACE: Prologis
Pier 1, San Francisco
• $1,400,000 bond issued by SF, purchased by Clean Fund
• HVAC + lighting + 200kW PV = 32% demand reduction
• Solved “spilt incentive” (savings and debt service shared w/tenants)
• Positive cash flow

SFEnvironment.org
CA PACE “Open Market”
Resi
Resi

SFEnvironment.org
BayREN C-PACE Program
• Sustainable Real Estate
Solutions (SRS)
• Contractor training
• Project development support
 Optimize project scenario
for SIR*>1
 ICP approach
 Owner, capital provider
meetings & coordination
• “Success-based” fee
structure
• ~$16 million pipeline
*Savings-to-Investment ratio: total projected savings / total debt service over life of PACE term

SFEnvironment.org
Co-pay Microloans
• Fill cash gap for small businesses (< OBF)
• Complete more projects, improve monthly SMB cash flow, and
provide energy and financial savings
• Terms
o 0% loans to cover co-pay range $100-$4,999 for businesses that
enroll in San Francisco Energy Watch program
o Microloans repaid from energy savings, short terms (6-18 mo.),
revolve $ to loan to more customers
o Use existing program infrastructure (ECM’s, assessors,
contractors)
o Community lending partner to administer fund; will provide wrap
around credit building support, training, etc.

SFEnvironment.org
Workflow
• Project Proposal/Quotations & Propose Microloan
• Customer Acceptance/Signed Application & Loan Application
• Loan Approval & Loan Distribution (100% of co-pay +10%)
Engagement
&
Site
Assessment
Proposal
&
Quotation
&
Loan
Amounts
Customer
Acceptance
&
Loan
Application
Verification
&
Incentive
Payment
Loan
Distribution
&
Purchase
&
Installation

SFEnvironment.org
BRICR (BayREN Integrated Commercial Retrofits)
• U.S. DOE grant for SMB’s (<50K sq. ft.)
• ABAG/BayREN (lead); LBNL, NREL; ICP/OpenEEMeter, Joule,
Renew Financial; cities of SF, Berkeley, Oakland
• Develop and disseminate retrofit tool that
o Describes and segments small commercial building stock in
Bay Area by physical attributes, energy assets, and other
relevant data
o Applies large scale energy modeling to identify “best fit”
buildings for serial and one-time deep retrofits (approaching
ZNE)
o Uses interface that develops project proposals and calculates
savings
o Is open source, durable, and can be updated by users
(implementers) to improve data quality over time.

SFEnvironment.org
BayREN SMB programs (draft)
• Support existing efforts;
work with new actors
and opportunities (e.g.
AB 802, private
financing)
• Customized advice and
services to enable
deeper savings
• Develop & foster
long-term relationships
• Pilot new approaches
(P4P)
SMB
Performance
Advisor
Commercial
PACE, OBF,
CHEEF Pilots
Small
Business
Co-pay
Microloans
SMB Pay for
PerformanceLGP’s/Energy
Watch, PG&E
programs
Water
agencies;
green business
programs; PAYS

SFEnvironment.org
© 2016 SF Environment All Rights Reserved
The author of this document has secured the necessary
permission to use all the images depicted in this presentation.
Permission to reuse or repurpose the graphics in this document
should not be assumed nor is it transferable for any other use.
Please do not reproduce or broadcast any content from this
document without written permission from the holder of copyright.
Richard Chien
Senior Program Specialist
richard.chien@sfgov.org
Thank You!

Matt Golden, Investor Confidence Project

Environmental Defense Fund
Investor Confidence Project

New Reality of Grid 2.0
Solar
Output
CAISO
Power
Price

Energy Efficiency Project Barriers

Breaking Down Barriers to EE Finance
Performance
Risk
Credit
Risk
Asset
Risk
• On-Bill Repayment
• Commercial PACE
• Green Banks
• Benchmarking
• Asset Labeling
• Disclosure
Project Finance
Long-term financing
of projects based
upon the projected
cash flows of the
project rather than
the balance sheets of
its sponsors.

BASELINING
• Existing Building
• Drawings
• Weather File
• Energy Usage
• Energy Rates
• Occupancy
ICP Energy Performance Protocols
SAVINGS
• Model File
• Calibration Data
• Bid Packages
• Certifications
COMMISSION
• Cx Plan
• Cx Authority
• Test Procedures
• Facilities Req.
OPERATIONS
• BMS Points
• Fault Plan
• Maintenance
Plan
MEASUREME
• M&V Model
• Regression
Model
• Adjustments
• Impact
• Baseline
Adjustments
Cx

Investor Confidence Project Protocols
Commercial Multifamily
Large Projects
(project size >$1M)
Standard Projects
(project size <$1M)
Targeted Projects
(limited interactivity)
EPP – Standard
Commercial
EPP – Targeted
Commercial
EPP – Large
Commercial
EPP – Large
Multifamily
EPP – Targeted
Multifamily
EPP – Standard
Multifamily

Investor Ready Energy EfficiencyTM
Third-Party
Verification
Project
Development

Investor Ready Energy Efficiency™
IREE is the logo in the lobby,
like LEED but for a building
retrofit project.

Join the Fun!
ICP Credentialed Project Developers and QA Providers
Who: Developers, ESCOs, Energy Consultants, Installers, etc.
Why: Enhanced Credibility, Differentiation, Marketing
Opportunities
ICP Investor Network
Who: Lenders, Equity Providers, Insurers, etc.
Why: Streamlined and consistent origination of qualified projects
ICP Ally Network
Who: Anyone
Why: Help grow the industry by supporting standardization
ICP Technical Forums
Who: Engineers, investors, program managers, etc.
Why: ICP stakeholders drive ICP’s emerging standards!

Investor Confidence Project
www.EEperformance.org
For More Information:
Matt Golden
Senior Energy Finance, EDF
matt@efficiency.org
415.902.4546
Jeff Milum
ICP Market Director
jeff@efficiency.org

Question and Answer

Thank You!

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