1. Funding Energy Projects in a Market-Driven World Local Energy Solutions Conference March 21, 2015 Joe Harrison Director of Clean Energy Finance NH Community Development Finance Authority Laura Richardson Executive Director The Jordan Institute

2. Introductions - CDFA Quasi-Governmental Agency Today – Manage $57M in resources Primary focus is aid to LMI residents Tax Credits, Block Grants & Energy Loans ($20M/YR)

3. Introductions – Jordan Institute Non-Profit organization Reduce energy use in buildings Public policy and program design Founded in 1995 For-profit company, majority owned by The Jordan Institute Scale-up number of energy- efficient buildings Expand available EE services - projects in the field including energy-centric construction management 2013 Strategic Plan & Reorganization 2014+ Policy and Program Design 2015+ C-PACE Program Launch

4. It’s a market-driven world Scarcity of public funds Politics and priorities Thousands of buildings need energy upgrades Private investment potential is almost infinite Volatile energy costs, hard to control operational costs People want to be comfortable and safe Matching resources with need is a different paradigm

5. Energy Financing Programs Municipal Business & Non Profit Municipal Energy Reduction Fund Enterprise Energy Fund & Better Buildings $450,000 $2,000,000 CDFA – for loan guarantees $1,000,000 C-PACE UNLIMITED!!

6. Conventional Energy Projects Have Risks Most lenders are wary of financing comprehensive energy projects and need assurances to reduce risk. NH doesn’t license/certify construction professionals Building code / energy code compliance is less than robust in many municipalities Building owners sell properties every 5-7 years Tenants move every 3-5-10 years Projects are rarely cash-positive Investors want to recover their money and want a good return

7. Conventional Ways to Reduce Risks High interest rate Large down payment Short term of loan Only undertake projects with fastest ROI Grants and Rebates to reduce capital costs Interest Rate Buy Down Loan Guarantee Loan Loss Reserve Don’t fund or undertake projects

8. To Scale-Up the Number of Projects: We need to reduce risk in order to attract and leverage private capital Standards Protocols Streamlined Processes Accountability Transparency Consistency Policy Goals

9. Energy Project Financing Requirements Energy Audit – ASHRAE Level II Building Commissioning Energy Monitoring and Verification Savings to Investment Ratio >1 Financial information about project owners and buildings Other requirements may apply

10. CDFA Case Study – Common Man Inn, Plymouth Measures included: Lighting, pumps, motors, occupancy sensors, ventilation, efficient laundry, high-efficiency wood-pellet boiler

11. CDFA Case Study – Rand’s Hardware, Plymouth

12. CDFA Case Study – Dunning Building, Walpole 1976 Steam Boiler

13. C-PACE Overview – Jordan Institute PRIVATE INVESTMENT in PRIVATELY OWNED COMMERCIAL BUILDINGS For EE/RE Projects through the conduit of voluntary municipal tax assessments which unleashes powerful benefits not otherwise available

14. C-PACE is different from other “loans” 1.Tied to the property, not the property owner 2.Cash Positive from DAY ONE 3.Non-accelerating payments “Pay for the energy efficiency you use” 4.Can be off balance sheet 5.Addresses split incentive between building owner and tenants 6.Quality control standards 7.Longer term repayment, not 5-7 years, but up to 30 years 8.Encourages comprehensive projects, not just fast ROI 9.Financial & energy project vetting/oversight, improves trust 10.C-PACE lenders understand the reduced risk of these projects 11.Public money not used to stand up or finance projects

15. Role of the municipality 1.Municipality must adopt “the program” – RSA 53-F 2.Municipality “should” designate administration to Jordan Institute 3.Jordan Institute trains tax collector and Registrar of Deeds 4.Municipality updates software for special C-PACE assessment 5.Register lien with County Registrar of Deeds 6.Send tax bills with special assessment to C-PACE borrower/s 7.Receive C-PACE payments and forward payments to CDFA 8.Notify CDFA if Assessment has not been paid in full Municipalities are NOT on the hook in case of default

16. Benefits realized by the municipality 1.Nominal payment to cover costs of being conduit for funding 2.Can market the program as business-friendly – economic development and community revitalization 3.Improved commercial buildings = efficient, resilient, occupied 4.Occupied buildings = improved employment and tax bases 5.Vast majority of administrative efforts handled by others 6.Part of the municipality’s sustainability program 7.Provide an ongoing project for the Local Energy Committee

17. CT - C-PACE Case Study – Shagbark Lumber C-Pace Financing: $485,000 Energy Upgrade: 157 kW PV system Building Size: 35,950 Square Feet Incentives: ZREC (Zero-emissions RECs) C-PACE Financing: $485,000, 100% project cost Term: 10 years Annual Interest Rate: 5.0% Annual C-PACE Assessment: $61,325 Annual Energy Cost Savings: $61,325 Lifetime Energy Cost Savings: $1,215,205 Courtesy of www.cpace.com

18. CT - C-PACE Case Study – Bushnell Theater C-Pace Financing: $384,000 Energy Upgrade: Hot water heater, 3 high- efficiency boilers and replacement of a single, inefficient steam boiler Building Size: 95,000 SF; Year Built: 1919 Total Project Cost: $650,000 Incentives: $266,000 C-PACE Financing: $384,000; Term: 20 years Annual Interest Rate: 5% Annual C-PACE Assessment: $30,411 Annual Energy Cost Savings: $30,411 Lifetime Energy Cost Savings: $1,173,479 Courtesy of:

19. THANK YOU!! Funding Energy Projects in a Market-Driven World Joe Harrison Director of Clean Energy Finance NH Community Development Finance Authority jharrison@nhcdfa.org 603-717-9123 Laura Richardson Executive Director The Jordan Institute lrichardson@jordaninstitute.org 603-226-1009, x204 Questions and Answers