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On-Bill Repayment Approved By California Public Utilities Commission

By Brad Copithorne / Published: November 12, 2012

This commentary was originally posted on the EDF California Dream 2.0 Blog.

Last week the California Public Utilities Commission (CPUC) approved energy efficiency programs and budgets that include an innovative On-Bill Repayment (OBR) program. The OBR program will allow commercial property owners to finance energy efficiency or renewable generation upgrades for their buildings and repay the obligation through the utility bill. The program is ‘open-source’ and is designed to allow a wide variety of contractors, solar installers, and energy efficiency project developers to work with a range of financial institutions to design offerings that best meet the needs of their customers.

The CPUC approval was highlighted today in the New York Times.

In the decision, the CPUC reiterated their intention to have the OBR program operational by March 2013. We understand that some of the utilities have expressed concern that this timeline is aggressive, but were pleased that the CPUC decision noted that the utilities have been aware of this timeline since the original CPUC decision last May.

A predictable timeline for OBR implementation is critical as EDF is working closely with multiple market participants to create a pipeline of projects that can be executed as soon as the program is operational. A successful launch will allow us to demonstrate to other states that OBR can create private investment and new jobs at no cost to ratepayers or taxpayers. We believe that this is a message that will resonate across the political spectrum.

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California Utilities Announce Innovative Financing For Energy Efficiency Retrofits

By Brad Copithorne / Published: October 3, 2012

This commentary was originally posted on the EDF California Dream 2.0 Blog.

On-Bill Repayment

Yesterday, the California investor-owned utilities (Sempra, SoCalEd and PG&E) announced several financing programs including the first On-Bill Repayment (OBR) program using third-party capital to finance energy efficiency retrofits in commercial properties. Property owners would be able to access low-cost capital to finance upgrades and repay the investment through their utility bill. The OBR program will contain three design elements that EDF believes are critical to success:

  1. The obligation will ‘run with the meter’ upon change in ownership or occupancy including via foreclosure. This both improves the credit quality of the obligation and allows investment in longer-payback retrofits.
  2. Partial payments will be allocated pro rata between energy and financing obligations. The utilities will also use all standard collection procedures for unpaid obligations. These features insure that the obligation will be treated similarly to existing utility bills.
  3. The program will provide flexibility for vendors, contractors, project developers, lenders and other investors to design retrofit solutions, go-to-market strategies and financing products that meet the needs of their customers.

Over the next 10 years, EDF estimates that OBR could generate $6 billion of private sector investment in commercial energy efficiency investment. During the next few years, EDF hopes to expand this initial program to additional states, and to cover residential properties.

EDF has been assuming that the California OBR program would only cover energy efficiency retrofits. In a sidebar conversation with a senior California Public Utilities Commission (CPUC) staff member, yesterday, I learned that it may be possible to extend OBR to renewable and demand response projects. We expect to be working closely with relevant stakeholders and the CPUC to make this a reality.

OBR is expected to be operational in California by the end of March 2013. EDF will be working closely with energy efficiency project developers, energy services companies, lenders and other investors to develop a robust pipeline of OBR projects that can be executed soon after program initiation.

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Commercial On-Bill Repayment Program In California Expected To Be Announced On October 2

By Brad Copithorne / Published: September 27, 2012

This commentary was originally posted on the EDF California Dream 2.0 Blog.

Next week, the California investor-owned utilities – Sempra, Southern California Edison and Pacific Gas & Electric – will be hosting a workshop to announce their proposals for energy efficiency financing programs as mandated by the California Public Utilities Commission (“CPUC”) in their May decision. The proposals are being developed by Harcourt, Brown and Carey (“HBC”) and are expected to include an On-Bill Repayment (OBR) program for commercial and other non-residential properties.

As I’ve mentioned before, OBR programs allow property owners to finance energy efficiency and/or renewable energy projects with third-party banks or other investors. Property owners repay their loan via their utility bill and that obligation stays linked to the meter upon a sale of the property.

Based on conversations with HBC and other stakeholders, EDF is optimistic that the program will be the first on-bill program in the country that funds energy efficiency retrofit projects entirely with private capital at no cost to ratepayers or taxpayers. The program will be flexible enough to accommodate a wide variety of property types, retrofit measures, financing structures and customer acquisition models.

The workshop will be open to the public and held from 9:00am-5:00pm on Tuesday, October 2nd in the Auditorium at the California Public Utilities Commission (505 Van Ness Avenue, San Francisco, CA).

Posted in California, Energy Efficiency, On-bill repayment / Tagged | Comments are closed

On-Bill Repayment In California

By Brad Copithorne / Published: August 30, 2012

This commentary was originally posted on the EDF California Dream 2.0 Blog.

Moving Forward with OBR for Commercial Properties

Earlier this year, the California Public Utilities Commission (“CPUC”) issued a decision requiring the state’s investor-owned utilities to establish several financing programs, including an On-Bill Repayment (“OBR”) program for commercial properties. OBR programs allow property owners to finance energy efficiency and/or renewable energy projects with third-party banks or other investors. Property owners repay their loan via their utility bill and that obligation stays linked to the meter upon a sale of the property.

EDF has been working closely with the utilities, environmental groups, financial institutions, project developers and other key stakeholders to craft a program that provides low-cost financing for retrofits, does not require ratepayer subsidies and has maximum flexibility to allow vendors and investors to decide how best to serve their customers’ needs. We are cautiously optimistic that the utility proposal will meet these objectives when it is released to the public on October 1, 2012.

The CPUC, however, believes that they currently do not have the regulatory authority to extend the OBR program to residential properties. EDF has been pursuing legislation to grant this authority to the CPUC, but, at this time, we do not expect that it will pass in the 2012 legislative session. EDF plans to re-introduce the residential-focused legislation in 2013 with a broad range of supporters, including several key members of the legislature.

EDF has also begun work to establish OBR programs in Ohio, North Carolina and Texas. So far, the reception has been quite positive in each state and we are hopeful that OBR may be a market-based, clean energy solution that has appeal across the political spectrum.

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The Missing Link: Energy Efficiency Data And The Capital Markets

By Brad Copithorne / Published: May 30, 2012

EDF And Bloomberg New Energy Finance Host A Successful Conference

Last week, Environmental Defense Fund (EDF) and Bloomberg New Energy Finance (“BNEF”) hosted 150 property owners, energy efficiency project developers, ESCOs, banks, institutional investors and other thought leaders to discuss how improved datasets could spur the market for energy efficiency (EE) investment.  Dan Doctoroff, Bloomberg’s CEO, kicked off the morning by discussing the company’s plans to provide this data and how similar efforts have spurred financial innovation in the past.

Three types of energy efficiency data were the basis of most of the conversation:

Project Performance Data – Accurately forecasting the energy savings from a retrofit project remains an elusive goal due to wide variance in benchmarking and forecasting standards.  Chris Lohmann of the Department of Energy discussed a large database that he is developing that will attempt to provide comparisons to historical projects.  Elizabeth Stein of EDF discussed a project that she is leading to develop a standardized methodology for estimating savings and pointed out that robust standards for comparing projects will substantially enhance the value of an EE project performance database.

Benchmarking Data – New York, San Francisco and other cities have taken steps to benchmark energy usage for commercial tenants.  Riggs Kubiak of Honest Buildings discussed how his company is publishing this data on the web and believes it will allow prospective tenants to compare properties and spur landlords to invest in EE projects.

EE Loan Performance Data – While several EE loan programs have shown strong repayment performance to date, the rating agencies will need a far longer history in order to provide the best terms for securitizations.  On-Bill Repayment (OBR) may be able to benefit from the long history of utility bill payments to create a data stream for the rating agencies.

EDF looks forward to working with Bloomberg and other market participants on each of these initiatives.

Posted in Energy Efficiency, General, New York, On-bill repayment / Comments are closed

Big Banks Increase Focus On Energy Efficiency Finance

By Brad Copithorne / Published: May 11, 2012

Report from the American Council for an Energy-Efficient Economy (ACEEE) Energy Efficiency Finance Forum

This week, I had the pleasure to attend and speak at ACEEE’s annual conference on energy efficiency finance.  Almost 250 executives were in attendance from banks, ESCOs, project developers, venture capitalists, asset managers, property owners/managers, utilities, government officials and nonprofits. 

Key takeaways included:

Commitment from Banks – Despite a lack of meaningful revenue to date, senior bankers from JP Morgan, Wells Fargo, US Bank, Deutsche Bank, Bank of America and Citi all reiterated their commitment to develop low-cost financing solutions for energy efficiency retrofits.  Marshal Salant of Citi did lament that, to date, the number of conferences far exceeds the number of deals, but he was hopeful that we could soon reverse the situation as he, and others, have an attractive pipeline of projects that they hope to close in coming months.

On-Bill Repayment will play a key role – EDF has been working to establish an On-Bill Repayment (OBR) program in California to finance retrofits through the utility bill.  Several speakers expressed hope that OBR may provide the credit enhancement and flexibility necessary to provide low cost financing for the residential and commercial sectors.  I had a chance to speak with representatives from each of the large California utilities at the conference.  While the utilities still have substantial concerns about the OBR proposal, I was pleased with the constructive nature of the dialogue.

EE Financing will be Available – Citi shared a chart indicating a wide range of financing vehicles that they believe are workable and either available today or in the near future.

Posted in Energy Efficiency, On-bill repayment / Read 3 Responses