California decision may speed up energy efficiency financing

A new market shaping decision found the California public utilities Commission (CPUC) on Sept. 19. The State dependence of private capital for energy efficiency, to increase the funding, the CPUC has provided private utilities $65.9 million for a suite of pilot finance programs for the State. California diversified approach could lead to original solutions, which other States could adopt.

"It's a very aggressive effort", said Frank Spasaro, head of the energy efficiency partnerships and financial Sciences at the Southern California gas company.

Most new programs offered by all State major private utilities. California has other great use, but they are not part of the CPUC decision.

"We have much effort into things that are market transformative," said David Nemtzow, Rector of Nemtsov & associates. "You can imagine it as a catalyst."

Taxpayers use the new suite of programs to access private capital funds. The programs will go on at the same time financing challenges from many angles. It tests a wide range of financing approaches to discover how to effectively perform. Utilities can later, as they by their experiences during the pilot phase these programs expand.

"This is a pilot project to learn how the market reacts in different ways to see," Nemtsov said. "Will lead it to lower interest rates [or] different terms? Borrowers will be more willing to lend? These are the things, which we want to test."

It has been somewhat controversial, that on-Court programs require repayment of the written consent of buyers of commercial real estate if the properties are sold. After Brad Copithorne, energy and financial policy specialist at Environmental Defense Fund can this feature be discouraged investment, because some lenders prefer loan, which are automatically transferable.

The new financing of programmes includes three residential and three non-residential programs.

Residential programs include an energy efficiency finance items fee, a master-metered more families pilot program with Bill-repayment and a single-family house direct loan program.

The non-residential programs include two on-Bill-repayment programs for companies and a small-business area on Bill repayment of lease provider program (for equipment leasing).

New residential programs

Energy efficiency post free finance program offered by Pacific gas and electric company. Participants will be on line article-to-/ discounts on their electricity bills to pay back. Private investors will finance the loans.

Even if participants do not pay their bills, California will protect them law breakers. According to Spasaro if homeowners partial payments, these payments applied to other duties on the Bills before they are applied to the energy-efficiency loans.

The master metered more families pilot program with Bill-repayment is designed for the affordable housing market. This program connects private investors with multifamily owners who strive, retrofit their buildings more energy efficient. (A master is meter an electricity meter, serve several households.)

California Spasaro said affordable housing market is fairly limited, so it is difficult to develop effective programs for this sector. He said community development, which involved financial institutions, to create this program.

Spasaro said that this program in the price can provide heating included, discounts and solar water. Credit enhancements are probably to be expected. (Incentives offer credit enhancements for lenders to improved conditions for projects to offer.)

The CPUC decided that this program does not require that loan recipient enough energy to financially break save each year. (This requirement is also known as "Bill neutrality.") Program participants who do not their credit payments will be protected from interruptions.

The House direct loan program is a loan program, provides the private capital for low to middle income homeowners. The program was expanded to allow both direct and indirect loans. There is a provision for outstanding claims loans lenders protect, in case that some loans will not be repaid.

New non-residential programs

The two on-Bill-repayment programs for company records grant private capital from lenders to energy-efficiency loans. One of the programs is for small businesses, while the other programme covers the rest of the industry.

The small-business program is aimed at organizations that have difficulties with the procurement, energy efficiency financing.

The medium to large business program covers various approaches to energy efficiency, including the distributed generation and demand response. (Demand response programs energy consumption of a company customize, so that it is better makes in accordance with the, the utilities provide.) This company can be more energy efficient.)

Electrical service can be separated in both programs, if companies fail to make loan payments. When companies make installment payments, these payments will be split the cost of energy and their loans. These programs will include loan loss reserves as a credit enhancement.

An attempt to engage, Spasaro the equipment leasing market said the small businesses on-Bill-repayment leasing provider program. "We think there is a very large effort that goes in the area of leasing." It will be a competitive tender, any plants to find leasing providers.

Existing programs

The existing on-account-financing programs use funds collected from utilities by the taxpayer to energy efficiency financing support. The CPUC modified decision these programs so that they will reduce their focus on lighting. Spasaro said that these programs have waiting lists.

The new generation of pilot programmes these programmes in the area of the on account repayment, search go a step further private capital to the energy efficiency retrofit support.

Data management

Requires California new mediator - so-called organisational "hub these programs" for data and financial information set up sharing. This hub is the California hub for energy are called efficiency financing (Mamadou) and California are running from the alternative energy and advanced transportation Financing Authority (CAEATFA).

Spasaro said the CHEEF activities responsible for the management of the master servicer, credit enhancements and loan performance data.

The CHEEF will stand between the utilities and the financial organizations and handle their transactions and data. Exchange of information between these organisations will be expected to be very complex. California adopts an IT system that can process these transactions, find other States copy it a useful model.

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