Overview of an innovative financing approach aimed at fostering energy conservation and renewable energy

1. MUNICIPALITIES: KEY
PLAYERS FOR INNOVATIVE
FINANCING PROGRAMS
Bruno Gobeil, Senior Consultant
DUNSKY ENERGY CONSULTING
5th Annual GeoExchange Technical & Policy Forum
Canadian Geoexchange Coalition
December 8, 2011 www.dunsky.ca
(514) 504-9030 | www.dunsky.ca
(514) 504-9030 | info@dunsky.ca

2. DUNSKY CLIENTÈLE (samples from among >100 clients)
GEOGRAPHIC ORGANIZATIONS ENERGY MIX
Canadian emphasis Electric / Gas Utilities Hydro-
Hydro-dominated
Coast-to-
Coast-to-coast coverage Dedicated EE/RE Agencies Fossil-
Fossil-dominated
Substantial U.S. as well Government departments Mixed fuel
Associations & stakeholders
(514) 504-9030 | www.dunsky.ca | page 2

3. RATIONALE FOR FINANCING
INITIATIVES
Unprecedented energy saving goals
e.g. ~25% by 2020 in Ontario (peak demand)
Unprecedented level of capital required
Incentive programs alone insufficient
Innovative financing solutions needed in the toolbox
One financing option
Property tax assessment financing
(514) 504-9030 | www.dunsky.ca | page 3

4. QUESTIONS
How does the property tax assessment financing
work?
What are the benefits for building owners and
municipalities?
Where such financing scheme has been
implemented?
How these financing schemes were designed?
Examples?
(514) 504-9030 | www.dunsky.ca | page 4

5. HOW DOES IT WORK?
Municipality - Owner EE/RE Measures Financed Owner Pays Back
Agreement Municipality
• Voluntary Participation • Municipal options to raise • Repayment via property tax
• Owner: implement funds: (up to 20 years)
• Municipality: finance • Bonds, partnership w/ • Verification that measures
• EE/RE Measures banks, reserve losses ... are installed (inspection,
• Energy Star Windows, • Verification that owner paid receipts)
insulation, GSHP, solar … property taxes
• Owner installs measures
(514) 504-9030 | www.dunsky.ca | page 5

6. BENEFITS TO OWNERS?
Investment in EE/RE even if sale planned in short term
Financing tied to property and transferable
Payback within 1 year
Energy cost savings > Increase in property tax
Better financing conditions
Longer period and lower borrowing rate
Increase in comfort
Raise property value (mid to long-run)
(514) 504-9030 | www.dunsky.ca | page 6

7. BENEFITS TO MUNICIPALITIES?
Stimulate local economy « green jobs »
Contribute to EE targets and GHG reduction
Demonstrate environmental leadership
Improve quality of life
Expand revenue base (mid to long-run)
Higher value of retrofitted properties
(514) 504-9030 | www.dunsky.ca | page 7

8. WHERE HAS IT BEEN
IMPLEMENTED?
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• In place (EUA): Melbourne, Sydney
• Under consideration: other towns
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• Pilots underway (PAYS): Birmingham, Sutton, Sunderland, Stroud,
Surrey, Sussex
• Under consideration: other towns
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• Legislations adopted in 27 states (PACE): California, New York…
• FHFA 2010 directives brought PACE residential programs to
standstill (seniority of lien, risks)
• Programs gradually reintroduce as states address FHFA concerns
• Pilot underway: Vancouver
• Pilot under development: Halifax
• Under consideration: Toronto, Ottawa, NFLD
(514) 504-9030 | www.dunsky.ca | page 8

9. HOW THESE FINANCING SCHEMES
WERE DESIGNED?
3 examples …
(514) 504-9030 | www.dunsky.ca | page 9

10. 1) COMMUNITY SOLAR
PROJECT
Pilot goal
500-700 homes with hot water solar systems (HWS)
Fund
~ 5 M$ budget financed through various means (under
consideration)
Preferred loan
Loan conditions/terms under development
Note: grants from various programs would be integrated to
the extent possible
(514) 504-9030 | www.dunsky.ca | page 10

11. 1)COMMUNITY SOLAR
PROJECT
Fund Project
Repayment
HALIFAX CITY via Property Tax HOMEOWNER
Loan
Fund
(514) 504-9030 | www.dunsky.ca | page 11

12. 2) HOME ENERGY LOAN
PROGRAM
Pilot goal
500 homes retrofitted through ecoENERGY audit process
Funds
Loan: Vancouver City Savings Credit Union (Vancity) = 5 M$
Loan loss reserve: Vancouver City = 500 k$, Vancity Foundation =
1 M$
Preferred loan
Vancity: 10-yr term, 4.5% interest rate, 4-16 k$/home
Eligible measures: EE only (GSHP excluded)
Note: grants from ecoENERGY and LiveSmart BC for EE and RE
measures still accessible
(514) 504-9030 | www.dunsky.ca | page 12

13. 2) HOME ENERGY LOAN
PROGRAM
VANCITY
VANCOUVER Repayment
via Property Tax* HOMEOWNER
CITY
* Collection is junior to other debts
(514) 504-9030 | www.dunsky.ca | page 13

14. 3) GREEN FINANCE PROGRAM
Full scale program launched after pilot (Oct 2011)
Commercial buildings only
Funds
Loan: ~100 M$ from municipal bonds to finance projects
Loan loss reserve: municipal service offered to banks
Preferred loan
Owner seeks bank consent for PACE financing and negotiates
arrangements
Maximum: 10% of assessed value of property, 20-yr term
Eligible measures: EE, RE, water
Note: participants strongly encouraged to seek grants from other
programs
(514) 504-9030 | www.dunsky.ca | page 14

15. 3) GREEN FINANCE PROGRAM
BANK
Bond Proceeds
SAN Finance Project BUILDING
FRANCISCO
OWNER
CITY Repayment
via Property Tax
(514) 504-9030 | www.dunsky.ca | page 15

16. CONCLUSIONS
Property tax assessment financing
Transferable financing = innovative approach
Win-Win approach
Future programs
No need to reinvent the wheel
Work with and alongside other EE/RE programs to ...
maximize savings
minimize costs
(514) 504-9030 | www.dunsky.ca | page 16

17. QUESTIONS?
BRUNO GOBEIL
DUNSKY ENERGY CONSULTING
514.504.9030 x26
bruno.gobeil@dunsky.ca
www.dunsky.ca
(514) 504-9030 | www.dunsky.ca | page 17