Energy Exchange

Hannon Armstrong Raises Capital For Clean Energy Finance

By Brad Copithorne / Published: April 10, 2013

Late last week, I had the chance to peruse Hannon Armstrong’s SEC filing for their upcoming Initial Public Offering (IPO), which is expected to start trading next week on April 18^th. The company is in the business of financing energy efficiency and other clean energy projects, and hopes to raise as much as $245 million.

Since 2000, Hannon Armstrong has provided or arranged over $3.9 billion of debt and equity financing deals for around 450 sustainable infrastructure projects. To date, most of these assets have been sold to other investors. Out of the $3.9 billion in financing deals they have arranged, Hannon Armstrong currently holds less than $200 million of these obligations on its balance sheet. The company plans to use the IPO proceeds to increase its investments, and has already identified $110 million of financing opportunities that can be closed within 45 days of the IPO. Additionally, the firm has secured $400 million of credit capacity from Bank of America to finance projects.

Our understanding is that the majority of the company’s projects are energy efficiency retrofits for the federal government or municipal properties, universities, schools or hospitals – often referred to collectively as the MUSH market. These properties tend to be attractive to lenders because the owners generally have high credit quality and the buildings are not generally mortgaged. Read More »

Also posted in On-bill repayment / Read 1 Response

America’s Schools On The ABCs Of Energy Efficiency

By Kate Zerrenner / Published: April 8, 2013

As part of my role at EDF, I keep track of stories about the benefits of energy efficiency. By that, I don’t just mean data and figures, rather stories about the real, tangible and positive impacts saving energy can have on everyday people. We live in a data-driven world, especially those of us who work on energy and climate issues, but it’s the stories about people that really stay with us. In the past few months, I’ve noticed a quite a few stories from local papers around the country discussing the benefits that schools have seen from implementing customer, or demand-side, solutions – such as energy efficiency, on-site renewables, like rooftop solar, and demand response (DR) initiatives – which allow customers to voluntarily reduce their high electricity use and receive a payment for doing so in the process.

For example, a story from the Louisville, Kentucky National Public Radio station WFPL covering the nation’s first net-zero school recently caught my attention. To be considered a true “net-zero” building is an impressive feat, because it means the facility’s net annual energy consumption, AND its carbon footprint, is zero.

The featured school, Richardsville Elementary in Warren County, has made some impressive improvements, from installing geothermal heating and cooling, bamboo gym floors, solar panels on the school rooftop and in the parking lot, efficient cooking technologies in the cafeteria to using a ton of natural lighting. As a result, the school receives zero utility bills. But the two most compelling pieces of this story are the energy costs and the educational opportunities.

Kentucky has some of the cheapest electricity prices in the country. Many states, particularly in the southern U.S., also have low electricity prices—meaning, the cost incentive is not as powerful for energy efficiency. But I would argue that, regardless of electricity prices, schools always have an incentive to save money. With schools, for every energy dollar saved, one more dollar goes to good teachers, textbooks and computers. And the non-monetary incentives are extra important when talking about children, whose developing lungs need the cleaner, indoor air and more natural lighting that come with efficiently-designed schools, as detailed in my previous post on schools. Read More »

Also posted in Renewable Energy / Read 2 Responses

The Texas Energy Crunch Report: Looking Back And Looking Forward

By / Published: April 1, 2013

We have been blogging about the ‘Texas Energy Crunch’ for over a year now, and the issue has attracted attention from the media, the Texas Legislature and even international groups. During all of that time, the Texas Public Utilities Commission (PUC), Electric Reliability Council of Texas (ERCOT) and stakeholders have continued to try to develop new markets and programs that will help ensure the state of Texas can keep the lights on this summer and into the future. This seems like as good a time as any to step back and take stock of how far we have come and how far we have left to go. To that end, EDF released this report: “The State of the Energy Crunch in Texas.”

The Energy Crunch is not a fleeting issue that will go away in the near future. It’s critical that we take action now to preserve our electric grid, the engine of the Texas economy, over the long-term as we face a shrinking water supply, a growing population and rising summer temperatures. The ongoing drought puts Texas’ power plants at risk, threatening a return of the rolling blackouts caused by extreme winter conditions we experienced in 2011. State Climatologist and Governor Rick Perry appointee, John Nielsen-Gammon states, “Statistically, we are more likely to see a third year of drought.” In recent testimony, Nielsen-Gammon reaffirmed that if the drought continued through this year, this drought is likely to be the second worst episode of drought in Texas’ history.

The solutions are out there in the form of customer, or demand-side resources, like energy saving demand response (DR) initiatives (which allow customers to voluntarily reduce peak electricity use and received a payment for doing so in response to a signal from their utilities), energy efficiency programs and increasing renewable energy sources like solar and wind power, all of which consume almost no water and can be built faster than gas and coal plants. This report provides an overview of these issues and concludes with legislative recommendations that will help meet future energy needs while providing direct benefits to customers and reducing water usage.

As economic growth continues to surge in Texas, state leadership must ensure a stable and secure supply of electrical power to businesses large and small, homeowners, hospitals and schools, among others. This challenge is critical in the face of a worsening drought, population growth and the failure by the PUC to take meaningful action after almost two years of deliberation. In the final months of the 83rd Legislative Session, lawmakers have an opportunity to directly address the Energy Crunch through several pieces of legislation that would help reduce customer energy bills, lower water consumption and increase business opportunities in Texas, while also reducing peak electric demand throughout the state.

Several of these opportunities have been identified by the PUC, but a lack of clear direction from Commissioners has left businesses hesitant to engage directly in the Texas market without a good understanding of the long-term outlook. By providing the PUC with strong guidance on issues like demand response, innovative clean energy financing mechanisms and fair payment for locally generated electricity, the Legislature can help reduce the threat of extremely costly rolling blackouts across the state.

We cannot solve this problem with the same thinking that got us here. Technology has changed our lives and the energy industry over the past few years alone, creating new opportunities for innovation. Now the state needs to be smarter about the way energy is used, and it starts with using technology to better manage our electric grid. This includes taking advantage of market-based solutions such as demand response (DR), energy efficiency programs and the continued growth of renewable energy into a smart grid.

In our report, EDF details legislation that is currently being considered by several Texas House and Senate Committees to help meet future energy needs while providing direct benefits to customers and reducing water usage. The list includes bills that allow all customer classes to participate in electric markets, provide innovative clean energy financing mechanisms and offer fair compensation for customers who provide power back to the electric grid by generating excess electricity from renewables or conserving energy using demand response initiatives. The Energy Crunch hasn’t ended by a long shot. Forecasts continue to show that we won’t have the level of reserves needed this summer to ensure reliability –particularly if the summer looks anything like 2011. Similarly, EDF will continue to engage in the issue both on our Texas Energy Crunch website and through the discussions going on at ERCOT, the PUC and the Texas Legislature.

Stayed tuned as we continue to develop innovative, market-based environmental and economic approaches that seek to keep the lights on and benefit customers.

Also posted in Demand Response, Renewable Energy, Texas / Read 1 Response

New Thinking Is Critical To Better Manage Water And Electricity Resources In Texas

By Kate Zerrenner / Published: March 28, 2013

Central Texas Workshop Discusses Opportunities For Resiliency During Extreme Weather Events

This commentary was originally posted on our Texas Clean Air Matters blog.

Last week, I attended a regional workshop that focused on adapting to extreme events, sponsored by the U.S. Environmental Protection Agency (EPA), the National Oceanic and Atmospheric Administration, the Water Environment Research Foundation, the Water Research Foundation, Concurrent Technologies Corporation, and Nobilis. This workshop was the sixth in a series organized around the country to determine what is needed to increase the resilience of water utilities and communities in the face of extreme weather events. While the focus was on water, time and again, electricity was brought into the conversation—the two are closely linked, and in Texas, a state facing shortages of both water and power, this will require some creative thinking on our part.

This workshop focused on Central Texas, in particular our drought. But as the two-day workshop went on, it became clear to the organizers when local water utilities and other stakeholders spoke, that drought was only one extreme event that Texas has had to deal with…and continues to deal with. We are a state of extremes—weather, politics, personalities—and we not only have drought to handle, but also hurricanes, floods, tornadoes, wildfires, and just generally scorching heat. One of the first speakers was John Nielson-Gammon, the State Climatologist based out of Texas A&M University. He confirmed that while these natural phenomena are not new to Texas, we are experiencing more intense weather events. Last year was one of the hottest in Texas since we started recording temperatures, and we are heading into the third year of a pretty gruesome drought. Not being prepared for extreme events to get worse seems pretty foolhardy.

During the workshop, we heard from a variety of speakers from around the Central Texas region, including from the Barton Springs/Edwards Aquifer Conservation District, the Lower Colorado River Authority, rice growers, the University of Texas, the high tech industry, and individuals from Austin, San Antonio, and Bastrop. These people are dealing first hand with the impacts of the extreme events we’ve had in the past few years. They are simultaneously trying to manage the current situation while planning for what the changing climate means in the coming years. It’s a difficult balancing act.

Also posted in Energy-Water Nexus, Texas / Comments are closed

Chasing Green: Going Solar By Paying Your Utility Bill

By Brad Copithorne / Published: March 22, 2013

This commentary was originally posted on our EDF Voices blog.

Source: SolarPowerForYou/Flickr

So far, my experience is that environmentalists and business executives often speak different languages. Take the basic idea of sustainability. To an environmentalist, sustainability, as applied to a business, refers to the amount of environmental damage it will cause over time. To a business person, the term refers to the ability of the business to generate profits and so sustain itself.

In other words, there is a profound difference between the “green” that environmentalists are focused on and the “green” that businesses must generate to survive.

At EDF, I am trying to bring those two camps together. Broadly defined, my work involves creating opportunities for companies to make profits by selling products that benefit the environment, usually by reducing carbon emissions. My belief is that, with the right incentives and market structures, the profit motive can be a powerful force for change. Green companies that hire workers also create new advocates for environmental policy.

A study by McKinsey, the big consulting outfit, has shown that there are potentially hundreds of billions of dollars in energy efficiency investments that could yield annual returns of 7% to 20%. At a time of historically low yields on fixed income investments, like bonds, those are pretty good numbers.

Mostly, I focus on increasing investment in energy efficiency and renewable generation projects for homes, offices and other commercial properties. In many cases we can lower a building’s utility bills, including financing costs, while also reducing carbon emissions.

Take investments in solar technologies. I am lucky enough to have pretty good credit and was able to get a solar installer to finance a rooftop installation that provided my wife and I with immediate savings. Unfortunately, many homeowners do not currently qualify for financing. So EDF is working to decrease financing costs and increase availability of capital for such projects through a program called On-Bill Repayment (“OBR”).

OBR can help a building owner finance, say, a rooftop solar array, with money put up by an third part investor, and then repay that loan through his or her monthly utility bill. The costs of the loan are reduced because the loan is part of the legally binding rate tariff for the property, and will remain in place even after a foreclosure.

Once we have OBR in place, far more homeowners should be able to finance the upfront cost of installing energy efficiency or solar projects that lower their bills. This creates jobs, saves money and is good for the planet. What’s not to like?

Take California. The state is expected to initiate an OBR program for commercial properties in about 4-6 months. EDF’s economists estimate that this program over the next 12 years will lead to about $7 billion in third-party clean energy investment, create 50,000 job-years that cannot be exported. Over the same period, OBR will the cut carbon emissions by 10.3 million tons, the equivalent to replacing 180,000 gasoline cars for 12 years with solar-powered electric vehicles. And the environmental benefit will continue to grow as we add residential customers and expand to other states.

OBR is just one way in which business and the environment can coexist. In future blog posts, I will look at other ways to achieve the same end.

Also posted in On-bill repayment / Tagged OBR, Solar Energy | Comments are closed

EDF And Others Honored For New York City’s Carbon Emissions Video

By Jim Marston / Published: March 8, 2013

Source: Carbon Visuals

Last week, Environmental Defense Fund (EDF) and Carbon Visuals, a UK-based firm (brought to EDF’s attention by Power Angels) dedicated to “communicating carbon data more effectively,” were honored by American Clean Air Skies Foundation at their awards gala to commemorate videographers and web-based innovators for works that bring climate change and energy resources to mainstream media. Carbon Visuals produced a video, funded by EDF, which encapsulates, literally, New York City’s (NYC) carbon emissions in a year’s time. The video shows blue bubbles as they multiply and expand to cover NYC’s skyline over the course of an hour, day and year. It was designed to engage everyday people who use energy (which is everyone!), helping them to visualize the magnitude of carbon emissions emitted in order to better understand why we must act NOW to accelerate the transition to the clean, low-carbon energy economy we need to avoid climate catastrophe.

This visually impactful video was made possible with the support of NYC and its exemplary effort to track and reduce greenhouse gas emissions. The City of New York provided a report from September 2011, Inventory of New York City Greenhouse Gas Emissions, documenting the 54 million metric tons of carbon dioxide (CO2) – the principal contributor to man-made climate change – NYC added to the atmosphere that year. The building sector alone contributed approximately 75 percent of the emissions, with the bulk of the remainder attributed to the transportation sector. While these figures may seem irreversible, NYC and Mayor Bloomberg have made considerable strides to reduce emissions in one of the most energy-intensive cities in the world. For instance, emissions in 2010 were 12 percent less than 2005 emissions, and NYC continues to stay on track to reduce emissions by 30 percent by 2017 – a commendable target.

Also posted in Climate, Investor Confidence Project, New York, On-bill repayment / Comments are closed