11/01/2013

New Financing Solutions for Energy Retrofits

Jump over the obstacle of initial cost and fund your money-saving project

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ON-BILL FINANCING: ON TARGET FOR GROWTH
Like PACE financing, on-bill financing minimizes upfront costs, but rather than spread payments over property tax bills, the latter spreads them over utility bills. Also like PACE, the money saved on utility bills after the energy improvement has been implemented can exceed the loan payment, making cash flow positive from the outset. Many programs require that the energy savings meet or beat the corresponding charge on the utility bill.

Energy savings far into the future can be matched to long on-bill repayment periods, even extending to future building owners and tenants. For the utility, on-bill programs can drive efficiency that helps meet legislative energy targets, manage peak loads, and avoid the cost of new power plants.

States with on-bill financing programs include California, Oregon, Illinois, Wisconsin, Georgia and New York (see map). Other states have pilot or pending programs. Due to varying state regulations and utility structures, the specifics of individual on-bill programs vary widely. They can be structured as loans, tariffs or service agreements.

While on-bill financing (OBF) has been available for years and is the most common on-bill option, a related model called on-bill repayment (OBR) is more recent and has the potential to vastly increase the capital available for energy efficiency. OBF programs are limited to utility or ratepayer funds, but OBR programs tap into a potentially far larger pool of third-party capital. This makes the latter vehicle a possible game changer on the energy efficiency field.

 

“On-bill financing requires the utility to make the loan, do the underwriting, and typically use rate payer or tax payer capital to do it. That means there is a limited amount of capital available,” says Brad Copithorne, financial policy director for the Environmental Defense Fund (EDF). “The OBR idea is that the utilities just do something they’re already good at, which is collecting bills. The private sector provides the capital, and if it decides this is an attractive market, it may choose to invest billions, not millions, of dollars.”

According to EDF estimates, if an on-bill repayment program in California spurred investment in the range of $3 billion annually, it could create 20,000 jobs while reducing electricity use and emissions. OBR could also improve the credit quality of other vehicles including loans, leases, energy service agreements (ESAs) and power purchase agreements (PPAs).


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When choosing a metal-clad building for your next construction project, consider Morton Buildings, Inc., and their designBUILD team, we’ll make your dream a reality.

Visit our website today to learn about the design flexibility of a Morton building and the endless possibilities of partnering with our designBUILD team.

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We Can Help You Reduce Energy by 30%

Our mission is to help our customers manage their buildings' energy costs, improve reliability, and enhance performance while having a positive impact on the environment.
CLICK HERE to find out how.


Mitsubishi Electric’s H2i R2-Series heat pumps provide 100% heating capacity down to 0° F and simultaneous heating and cooling down to -4° F delivering year-round comfort, regardless of climate zone.

Connectrac wireways offer discrete power and technology connectivity in open interior spaces of all kinds; affordably, quickly and with long-term flexibility.



When choosing a metal-clad building for your next construction project, consider Morton Buildings, Inc., and their designBUILD team, we’ll make your dream a reality.

Visit our website today to learn about the design flexibility of a Morton building and the endless possibilities of partnering with our designBUILD team.

Wood construction is both cost and energy efficient. Check out Morton Buildings and our designBUILD team online today to discover all the benefits of post-frame construction.

We Can Help You Reduce Energy by 30%

Our mission is to help our customers manage their buildings' energy costs, improve reliability, and enhance performance while having a positive impact on the environment.
CLICK HERE to find out how.


Mitsubishi Electric’s H2i R2-Series heat pumps provide 100% heating capacity down to 0° F and simultaneous heating and cooling down to -4° F delivering year-round comfort, regardless of climate zone.

 
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