Financing Clean Energy: Innovations From The Nutmeg State

Connecticut’s Clean Energy Finance and Investment Authority (“CEFIA”) was created in 2011 to help the state increase public and private investment in clean energy solutions that are cheaper and more reliable than traditional solutions.  I had the chance last week to catch up with Bryan Garcia, CEFIA’s CEO, and his impressive team.  I found three of their initiatives to be particularly innovative and impactful.

• Commercial PACE (C-PACE) – Property Assessed Clean Energy (PACE) is an innovative, market-based approach that helps alleviate the steep, upfront costs that property owners generally incur for energy improvements by using loans that are seamlessly repaid through an additional charge on their property tax bills. While many jurisdictions have implemented PACE programs, CEFIA has had a particularly hands-on approach of working with property owners, contractors, lenders and mortgage holders to reach agreement on transactions that meet the needs of each party.  This strategy appears to be paying off as CEFIA has received 190 applications since the program was launched in April 2013.  Additionally, the Connecticut program appears to be the first PACE program that supports commercial solar installations with the lowest-cost financing structures such as leases and power purchase agreements.  I believe this could be a game changer for installing solar projects and plan to write about this in greater detail in a blog post coming soon.

• Distributed Solar – Financing solar projects in a cost-effective manner can be quite complex due to the tax benefits associated with solar installations.  Earlier this month, CEFIA worked with six financial partners to develop an innovative investment fund that has reduced credit requirements and increased availability of funds for Connecticut homeowners looking to install solar panels by local installers.  This fund also plans to invest in C-PACE commercial solar installations as discussed above.

• Residential On-Bill Repayment (OBR) – Legislation requires CEFIA to establish an OBR program to finance clean energy retrofits for residential properties.  As a private capital solution to financing energy efficiency and renewable energy projects, OBR enables building owners to access low-cost capital, with repayment on their utility bills. The program looks to have many of the key features that we believe are necessary for success, including treating the OBR obligation as an integral part of the utility bill, allowing it to run with the meter upon changes in building ownership and financing a broad range of energy upgrades (including renewables).  We look forward to working with CEFIA for a successful implementation of OBR in Connecticut.