T EAM BEEC P OTENTIAL D HRUV V ARMA A SHWIN M YSORE A MAN M EHRA S HANKAR D AS

2 A GENDA The problem Solution Implementation Summary

3 E NERGY C HALLENGES IN M ULTI F AMILY H OUSING SPLIT INCENTIVE Cost - owners Benefits - tenants, HUD SPLIT INCENTIVE Cost - owners Benefits - tenants, HUD FINANCING Risk-averse Complex approvals FINANCING Risk-averse Complex approvals AWARENESS Cost savings AWARENESS Cost savings

4 T ARGET L ARGEST S EGMENT Market Based RentBudget Based Rent Utility cost not included in rent amount Quadrant 1Quadrant 2 Utility cost included in rent amount Quadrant 4Quadrant 3 2/3rd of the rent agreements do not include utilities Market Based Rent represent majority

5 The problem Solution Owner Adopt Distributive Generation Tenant Promote Energy Efficiency

6 T HE C HALLENGE WITH B UILDING O WNERS No incentive Owners running new utility business Investment difficulty ESCOs

7 H OW IT W ORKS FOR B UILDING O WNERS Total cost of occupancy

8 P ROFITABILITY FOR B UILDING O WNERS M ONTE -C ARLO S IMULATION Owner’s profitability in utility business

9 T OTAL P ROFIT FOR B UILDING O WNERS M ONTE -C ARLO S IMULATION Total annual profit from utility business

10 The problem Solution OwnerTenantOthers Implementation Summary

11 T HE C HALLENGE WITH T ENANTS Energy conservation Separate utility expenditure from subsidy Energy efficiency Alignment of savings provides motivation

12 H OW IT W ORKS FOR T ENANTS Total cost of occupancy

13 U PDATED S UBSIDY C ALCULATION M ETHOD (O LD VS N EW ) Tenant minimum contribution TTP (Total Tenant Payment) = 30% * Adjusted income TRP (Total Rent Payment) = 30% * Adjusted income – Utility Benchmark TTP (Total Tenant Payment) = 30% * Adjusted income TRP (Total Rent Payment) = 30% * Adjusted income – Utility Benchmark Benchmark rent Using payment standard Using rent standard (=payment standard – UtilityBenchmark) Using payment standard Using rent standard (=payment standard – UtilityBenchmark) HUD Subsidy HAP = MIN[(Rent + Utility allowance – TTP), (payment standard – TTP)] HAP = MIN[(Rent – TRP), (rent standard – TRP)] HAP = MIN[(Rent + Utility allowance – TTP), (payment standard – TTP)] HAP = MIN[(Rent – TRP), (rent standard – TRP)] Actual tenant contribution TTP TRP + UtilityActual TTP TRP + UtilityActual TTP (Total Tenant Payment) = 30% * Adjusted income TRP (Total Rent Payment) = 30% * Adjusted income – Utility Benchmark TTP (Total Tenant Payment) = 30% * Adjusted income TRP (Total Rent Payment) = 30% * Adjusted income – Utility Benchmark Tenant minimum contribution Using payment standard Using rent standard (=payment standard – Utility Benchmark ) Using payment standard Using rent standard (=payment standard – Utility Benchmark ) Benchmark rent HAP = MIN[(Rent + Utility allowance – TTP), (payment standard – TTP)] HAP = MIN[(Rent – TRP), (rent standard – TRP)] HAP = MIN[(Rent + Utility allowance – TTP), (payment standard – TTP)] HAP = MIN[(Rent – TRP), (rent standard – TRP)] HUD Subsidy TTP TRP + Utility Actual TTP TRP + Utility Actual Actual tenant contribution

14 The problem Solution OwnerTenantOthers Implementation Summary

15 B ENEFIT FOR O THER S TAKEHOLDERS Increased adoption of distributed generation Share the savings in the long-term Increased adoption of distributed generation Share the savings in the long-term HUD See benefits practically Reduced risk aversion to financing See benefits practically Reduced risk aversion to financing Financers Reduced dependence eases capacity constraints Can move into on-bill financing Reduced dependence eases capacity constraints Can move into on-bill financing Utility Companies

16 The problem Solution Implementation Summary

17 S ITE S ELECTION C RITERIA P ICK LOW HANGING FRUIT AND BUILD ON SUCCESS Map Cheapest Technology to Region Prioritize by Potential Savings – LCOE Choose Easily Replicable Pilot Projects Ease of Implementation – Net metering, Subsidy

18 K NOWLEDGE S HARING Success Stories Open Collaborative Platform Savings Calculator

19 The problem Solution Implementation Summary

20 E COSYSTEM ESCO OWNER HUD Rent Subsidy TENANT Utility Subsidy

Thank You T HANK Y OU

A PPENDIX

M ONTE - CARLO S IMULATION D ETAILS AND A SSUMPTIONS  Dataset from HUD website ( ng/mfh/presrv/mfhpreservation) ng/mfh/presrv/mfhpreservation  Used records with  Actual rent within ±40% of fair market rent  Rent plus utility higher than 30% of income  Utility expense equal to or greater than $10 per month  At least 1 assisted housing unit  Simulation input Assumptions 1 Based on 2014 median income schedule as published by HUD ( 2 Based on Deutsche Bank report of average cost of electricity vs LCOE in California IncomeDistributed generation ActualMaximum for subsidy 1 Power contribution Cost reduction 2 Minimum$8,000$860030%19% Average$20,000$ %25% Maximum$48,000$ %31%

M ONTE - CARLO SIMULATION (S UBSET USED FOR S UMMARY D ATA ) BedroomCountNumberofCasesAvgContractRentAmtAvgFairMktRentAmtAvgUtilityAllowanceAmt 06162$689.92$722.80$ $687.69$730.56$ $770.69$911.22$ $873.43$1,220.60$ $1,011.62$1,461.08$ $1,447.42$2,080.01$ $1,638.00$2,182.76$98.04

C ALCULATIONS – B UILDING O WNER Tenant information Adjusted income$700 Minimum TTP$210 Maximum TTP$280 High level cost information Payment Standard$450 Gross Rent$430 Utility expenditure$50 Rent to owner$380 Utility cost information Reduction is cost for onsite generation40% Percentage of energy from onsite generation50% Payment to Utility Company$25 Cost for onsite generation$15 Price for onsite generated power$25 Who pays and who gets paid No Distributed Generation Distributed Generation - current system Distributed Generation - proposed system Sources Tenant (TTP)$210 HUD (HAP)$220$210$220 Uses Owner$380 Owner - onsite energy generation$0$15$25 Utility - traditional sources$50$25

C ALCULATIONS – T ENANT Tenant information Adjusted income$700 Minimum TTP$210 Maximum TTP$280 High level cost information Payment Standard$450 Gross Rent$430 Utility expenditure$50 Rent to owner$380 Proposed system - high level cost information Utility Benchmark$50 Minimum TRP$160 Maximum TRP$230 Gross Rent independent of utility cost$380 Rent Standard$400 Utility cost information Old energy expenditure $50 New energy expenditure $40 Who pays and who gets paid No Energy Savings Energy Savings - Current System Energy Savings - Our Proposal Sources Tenant (TTP/TRP plus energy cost)$210 $200 HUD (HAP)$220$210$220 Uses Owner$380 Utility$50$40

S TATES T HAT H AVE R EACHED P ARITY Source: Deutsche Bank, EIA (January 2014)

W ORKS F OR A LL Q UADRANTS Market Based RentBudget Based Rent Utility cost not included in rent amount Quadrant 1Quadrant 2 Utility cost included in rent amount Quadrant 4Quadrant 3 Owner Has access to additional profits Tenant Gets to keep savings from efficiency and conservation HAP kept constant, budget reduction leads to lower TRP