Category Archives: California

On-Bill Repayment & Community Solar: Clean Energy Investments Underserved Californians Can Afford

This commentary originally appeared on EDF's California Dream 2.0 blog.

It sounds like the opening line of a joke: What can finance do to reduce inequality?

However, this is exactly the question I tried to tackle during my presentation at the Clean Power, Healthy Communities conference last week. Hosted by the Local Clean Energy Alliance, this annual conference focuses on equitable, community-based clean energy solutions for the Bay Area.

In keeping with this theme, I took the opportunity to explain how On-Bill Repayment (OBR) can increase access to energy efficiency and distributed generation installations for low and middle-income families. By overcoming cost barriers, OBR can deliver energy savings, cost savings, jobs and more comfortable and healthy homes to underserved communities. In addition to these tangible benefits, it offers residents greater control over energy generation, as well as their energy consumption.

While I was able to share EDF’s finance work with community organizers and other environmental advocates, the conference was also a chance to hear about and discuss variety of other community-based solutions. One initiative that OBR has tremendous potential to support and complement is community-owned solar. Signed into law in September, California’s Senate Bill 43 allows for shared ownership of renewable generation. This means that individuals who are unable to install solar panels at their residences can invest in an off-site solar system, and receive credit on their utility bill for their share of the power generated.

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Setting the PACE on Clean Energy Finance

This commentary originally appeared on EDF's California Dream 2.0 blog.

I spend most of my time working to establish On-Bill Repayment programs that allow property owners to use their utility bill to repay loans for cost-saving energy efficiency or renewable energy upgrades.  Many of my colleagues work on a similar program known as Property Assessed Clean Energy (“PACE”), which uses the property tax bill for repayment.  Since both utility and property tax bills are usually paid, both PACE and OBR are expected to lower the cost and increase the availability of financing for clean energy projects.

Last week, I was invited to attend a meeting of the leading PACE program administrators, property owners and other market participants in the country — and was pleasantly surprised to learn how much progress is being made.

Connecticut launched their program in January and is expected to close $20 million of PACE transactions for commercial properties by year end.  The Toledo, Ohio area expects to have executed $18 million of commercial transactions by the end of 2013.  Sonoma County, with a population of less than 500,000, has already completed $64 million of financings for residential and commercial properties.  In late 2012, CaliforniaFIRST launched a PACE program for commercial properties that has already received 130 applications.

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Keeping It Clean: California Should Use Clean Resources To Integrate Renewables

This commentary originally appeared on EDF's California Dream 2.0 blog.

As the 8th largest economy in the world, California remains a global leader in clean tech investment, innovation and adoption of landmark climate and energy policies. What defines our success?  Our ability to try things first, set the bar high, and get policies right.

California’s Renewable Portfolio Standard (RPS) is a perfect example of that bold, pioneering spirit. Passed in 2011, the RPS required that 33% of electricity come from renewables by 2020 – a lofty benchmark, even by California’s standards. Along with self-generation and solar rooftop programs, California is successfully adding solar, wind, and other distributed generation to its resource portfolio.

In fact, renewables are successfully becoming a large part of daytime energy production, the California Independent Systems Operator (CAISO) – the organization in charge of balancing the statewide grid – is concerned over how to make up for that energy when the sun goes down while evening energy demand spikes.  The question is: How can the CAISO reliably integrate renewables?

The CAISO is currently figuring out how to address this need for “flexible” power and will have a draft decision out on October 2nd.  Just like people prefer to take routes they know well when they drive, the CAISO is most comfortable with what they know: familiar fossil fuels. Using clean resources and demand response instead is new territory for them that will require careful orienteering.

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A State Race To Save Energy

Earlier this year, the Alliance Commission on National Energy Efficiency Policy unveiled a plan to double nationwide energy productivity by 2030.  It’s an ambitious move to greatly increase our nation’s use of energy efficiency, which represents a huge – and largely untapped – opportunity.  Reducing wasted energy through efficiency cuts harmful pollution and saves people money on their energy bills.  After all, the cheapest, cleanest, most reliable electricity is the electricity we don’t have to use.

Source: Church Times

Similarly, the State Energy Race to the Top Initiative (Initiative) is an incentive for states to make voluntary progress to increase their energy productivity. The U.S. Senate is moving forward to make this idea a reality.  Originally introduced as a bill in June, the Initiative has now been filed as a potential amendment, sponsored by Senators Mark Warner (D-VA), Joe Manchin (D-WV), and Jon Tester (D-MT), to the Shaheen-Portman energy efficiency bill.  If passed, the Initiative will stimulate energy innovation in both the public and private sectors, and allow states to tailor energy saving policies to their particular needs.

Administered by the Department of Energy (DOE), the Initiative will be broken into two phases.  In the first phase, following the submission of state proposals through their energy office, DOE selects 25 states to receive funding (a combined $60 million) to move their energy productivity concepts forward.  Although states have complete independence in developing and implementing their own clean energy strategies, the DOE will provide technical assistance upon request.  Eighteen months later, in the second phase, the 25 states will be asked to submit progress reports to DOE.  Based on their projects’ success, DOE will then select up to six states to receive a share of $122 million to continue their energy saving efforts.

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Seeing Green: Emission Reducing Fuel Policies Help Lower Gas Prices

This commentary originally appeared on EDF's California Dream 2.0 blog.

By: Tim O'Connor and Shira Silver

Californians struggling with high gas prices should feel optimistic about the future.  A new memo by economists from EDF and Chuck Mason, a prominent economist at the University of Wyoming, demonstrates that policies established to reduce emissions and help the state reach its climate change goals also help to arm consumers at the pump.

The Low Carbon Fuel Standardcap and trade, and other complementary policies such as Governor Brown’s Zero Emission Vehicle program and national Renewable Portfolio Standards seek to integrate lower or zero-carbon fuels into the energy market in an effort to reduce greenhouse gas pollution.

As our memo explains, in California these efforts also help to increase the market share for alternative, lower-carbon fuels. Between now and 2020, alternatives may grow to occupy between 15 and 24 percent of the market, creating new jobs and addressing the large market share that oil companies have in California.

Currently six oil companies control 94 percent of the fuels market in California. Through a set of mergers and other factors they have developed a strong lock on fuel in the state, and more specifically on consumers’ pocketbooks at the pump.

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Aloha for Clean Energy Finance: A Tale of Two States

This commentary originally appeared on EDF's California Dream 2.0 blog.

For over two years, EDF has been working to establish an On-Bill Repayment program in California that would allow property owners to finance energy efficiency or renewable generation projects and repay the obligation through their utility bill.  Since utility bills tend to get paid and the obligation could ‘run with the meter’, defaults are expected to be low, which will improve the availability and reduce the cost of financing.  In May 2012, the California Public Utilities Commission (“CPUC”) agreed with our position and ordered the large utilities in California to develop a program for commercial properties.  EDF estimates that this program could generate $5B of investment over 12 years, which is expected to support 36,000 jobs.

Unfortunately, we are still waiting for the nonresidential OBR pilot in California to be implemented and if the utilities get their way, we may be waiting for close to another full year.  The California utilities appear to be fearful of change, distributed generation, and the impact of reduced demand.  They have employed aggressive tactics with teams of lawyers arguing and re-arguing every potential issue, even after the issues have presumably been settled by the CPUC.

This stands in sharp contrast to what is happening in Hawaii.  On March 25, the Hawaii Public Utilities Commission (“HPUC”) ordered the primary Hawaii utility, Hawaiian Electric Company, (“HECO”) to establish an OBR program for residential and commercial customers.  I just returned from 3 days in Honolulu and it appears that they are working cooperatively to get the program running in the first quarter of 2014.  This timetable of 12 months from HPUC order to implementation is less than half of what we seem to need in California, despite the fact that the Hawaii program covers a much broader range of property types and relies on public as well as private sources of financing.

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Auto dealers vs. Tesla: Why the market will decide

This commentary originally appeared on EDF's Voices blog.

Source: jurvetson/Flickr

The European Union, the United Kingdom, Australia and the State of California have all set ambitious targets to reduce greenhouse gas emissions 80% by 2050. Given that a large share of global greenhouse gas emissions comes from transportation (including 29% of U.S. emissions), it will be very tough to meet this goal without “decarbonizing” our cars and trucks.

The most obvious solution is electric vehicles (EVs) charged by clean energy sources like solar or wind. While several startup EV companies – including Fisker, Coda and Better Place – have struggled, the Tesla car company seems to be succeeding. At least that’s the current view of the markets: Tesla shares have more than tripled since March and in May the company raised almost $1 billion in new capital.

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AB 32’s Scoping Plan is a Tale of Two Energy Futures

This commentary originally appeared on EDF's California Dream 2.0 blog

Tim O'Connor

For a window into two vastly different visions of our state’s future, take a look at the comments filed last week as part of the AB 32 Scoping Plan update process. The 2008 Scoping Plan lays out the approach that California will take to achieve its goal of reducing emissions to 1990 levels by 2020, and this is the first 5 year update.

EDF’s comments reflect what most Californians have already asked for – a laser focus on expanding emission reductions and providing ample clean energy opportunities for businesses throughout the state.

This includes:

 

  • Increasing emission reductions from vehicles, goods movement and the agriculture sector;
  • Developing diversified low-carbon fuels that yield cost reductions;
  • Integrating clean energy and energy efficiency through programs like “time-of-use” pricing and On-Bill Repayment;
  • And, extending the cap-and-trade program and low carbon fuel standard beyond 2020;

All of the opportunities outlined by EDF aim to fulfill the Scoping Plan’s mission: achieving the maximum technologically feasible reductions in greenhouse gas pollution in a cost-effective way.

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California’s Capital Leads the Nation in Energy Efficiency Financing

This commentary originally appeared on EDF's California Dream 2.0 blog.

By: Kate Daniel, EDF Climate Corps Fellow

Kate Daniel, Climate Corps Fellow

Great news for California and the future of energy efficiency in Sacramento.

Today I took part in an announcement by Sacramento Mayor Kevin Johnson unveiling the nation’s largest Property Assessed Clean Energy (PACE) project in the country — and potentially a huge boost for businesses in the state’s capital.

Launched by Clean Energy Sacramento, the property owners of Metro Center, Metzler Real Estate, will now be able to take advantage of PACE financing to fund $3.1 million in energy efficient upgrades, including high efficiency rooftop units for heating and cooling and a state-of-the-art building management system. Ultimately, these upgrades will save $140,000 in annual utility costs for the property.

This project is not just good news for Metro and Metzler, but for the entire Sacramento region. Here’s how it works: Under the PACE program Metzler will receive private funding from Ygrene Energy Fund, who covers the upfront costs of the project Metzler pays the costs back on their property tax bill while Johnson Controls will design and implement the upgrades.

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On-Bill Repayment in California: Two Steps Forward, One Step Back

This commentary originally appeared on EDF's California Dream 2.0 Blog

Last week, the California Public Utilities Commission (“CPUC”) issued a proposed decision with the final implementation rules to create the nation’s first On-Bill Repayment (“OBR”) program for commercial properties.  If properly constructed, the program is expected to allow building owners to finance clean energy retrofits with third party capital and repay the obligation through their utility bills.

The good news is the CPUC’s proposed decision contains the vast majority of the program elements necessary to create a flourishing financing market for energy efficiency and renewable projects.  The CPUC ordered robust disclosure to tenants and property owners of any OBR obligation in place, required a centralized program administrator to reduce expenses for market participants, required an equitable share of partial payments between the utility and the lender and agreed that nonpayment of an OBR obligation will result in the same collection procedures from the utility as nonpayment of an electricity charge.

Unfortunately, constructing a successful financing program is much like building a boat.  A boat with 90% of its hull in place will not travel very far.  The proposed decision appears to also have a potentially fatal flaw.  The CPUC has required all subsequent owners and tenants of a property to provide consent to ‘accepting’ the OBR obligation, but does not specifically state what will happen if the consent is not given.

OBR can work for lenders when it significantly reduces risk and simplifies the underwriting decision.  ‘If the lights are still on, then the lender is getting paid’ is a simple rule that will provide significant comfort to ratings agencies and credit committees.  Downtown office buildings and suburban shopping malls are foreclosed on a regular basis, but in almost all cases the lights stay on.  If an OBR obligation is sure to be paid — even after a foreclosure — the availability of investment and cost of financing will improve dramatically. Read More »

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