verdict session21 acef2008
TRANSCRIPT
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U.S. Energy Ef f ic ienc y and CleanEnergy Funds Panac ea or Pipe Dream ?
Presentation For
Asia Clean Energy Forum 2008
June 1 6 ADB Headquarters Makati, Philippines
by
Malcolm E. Verdict, CEM
Associate DirectorEnergy Systems Laboratory
Texas A&M University System, USA
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Im Here To
Provide Overview of U.S. Energy Efficiency Funds
Examine What Worked & Didnt and Why
Create a Dialogue with Forum Participates
2U.S. Clean Energy Financing
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PANACEA OR PIPE DREAM?
Panacea is defined as universal remedy orsolution, cure-all, or magic potion
Pipe Dream is defined as dream, wishful
thinking, fantasy, or delusion
Energy Efficiency & Clean Energy Funds3U.S. Clean Energy Financing
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Clean Energy Funds Important GloballyFor Same Reasons As U.S.
4U.S. Clean Energy Financing
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4Common U.S. Energy Efficiency& Clean Energy Funds ($)
Public Sector Funds - Revolving funds, tax-exempt bonds
Private Sector Funds - Banks, utilities, green capital
funds, energy service companies (ESCOs)
Incentives/Dedicated Funds - Interest buy downs,
rebates, clean technology funds (wind, bio fuels, etc.)
Credit Enhancements Govt loan guarantees, energyefficient home mortgages (EEMs)
5U.S. Clean Energy Financing
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Examples of Successful CleanEnergy Funding Programs
Public Sector Funds $96 M Texas LoanSTAR revolving fundwith $240M loans & 5.6 yr. avg. payback since 1990
Private Sector Funds Green mutual funds invested inenvironmentally responsible corp., green bonds, bank capital
Incentivized/Dedicated Funding Numerous utility loanprograms such Austin Energys Residential & Commercial loans
for appliance/weatherization/commercial lighting @ 0%.
Credit Enhancement Funding Dept. of Energy ($38.5B) &Agriculture [$2.1 B] Loan Guarantee Programs
6U.S. Clean Energy Financing
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Key Reasons for Successful U.S.Clean Energy Funding Programs
Dedicated public sector funds Key word is dedicated i.e.,Low-cost dollars chasing green projects.
Loan Guarantees (new to clean energy in U.S. & my favorite)Can leverage $billions without Govt. tax dollars. Govt.
guarantees lowers risks, the costs & project paybacks.
Use of existing banking channels Lenders already in thebusiness and know what they are doing. Also, low transaction
costs plus good at marketing. Utilities like this one.
7U.S. Clean Energy Financing
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Not So Successful, U.S. CleanEnergy Financing Mechanisms
Energy Efficient Mortgages (EEMS) One of biggestdisappointments in U.S. last 20 years
Performance guaranteed loans Too many unknowns
Some ESCO projects Very much a mixed bag.
Difficult to do right on both sides.
8U.S. Clean Energy Financing
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Reasons For Lack Luster Performanceof Some U.S. Clean Energy Funds
Based on False Assumptions - Lack of private funds, that lowinterest rate will increase demand, that financing is a Silver Bullet.
Boutique Loan Products Very specialized with low volumesthat that becomes a non-profitable loan product (not sustainable).
High Transaction Costs Added fees for certification (i.e. energyrating), added paper work & long lead times.
Greater Credit Risk - New/emerging technologies, volatileenergy prices, difficulty in verifying savings & performance, few
lenders with energy engineering experts or vice versa.
9U.S. Clean Energy Financing
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Homework/Good References US EPA Report: State Clean Energy Funds (www.epa.gov/combdhpp/state-
policy/funds_fs.html)
NGO Reports: (1) State Residential Energy Efficiency Loan Programs,
Energy Programs Consortium, M. Brown, Sept 2007 (http://www.cee1.org/)(2) Funds for Energy Efficiency Projects, Alliance to Save Energy, Apr 2002(www.ase.org/)
State Loan Programs: California Energy Commission(http://www.energy.ca.gov/), NYSERDA - (http://www.getenergysmart.org/),
Texas State Energy Conservation Office - (http://www.seco.cpa.state.tx.us/) World Bank Reports: (1) Financing Energy Efficiency: Lessons from recent
experience in Brazil, China, and India, May 2006
(2) Development & Climate: Financing Challenges, A. Miller, IFC, Sep 2006
10U.S. Clean Energy Financing
http://www.epa.gov/combdhpp/state-policy/funds_fs.htmlhttp://www.epa.gov/combdhpp/state-policy/funds_fs.htmlhttp://www.epa.gov/combdhpp/state-policy/funds_fs.htmlhttp://www.ase.org/http://www.getenergysmart.org/http://www.seco.cpa.state.tx.us/http://www.seco.cpa.state.tx.us/http://www.getenergysmart.org/http://www.ase.org/http://www.epa.gov/combdhpp/state-policy/funds_fs.htmlhttp://www.epa.gov/combdhpp/state-policy/funds_fs.htmlhttp://www.epa.gov/combdhpp/state-policy/funds_fs.html -
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Summary of Lessons Learned& Questions?
- Clean Energy Funds rightfully recognized as anessential public tool but not a Silver Bullet or panacea.
Success of U.S. EE financing has varied widely
- Study U. S. models carefully to not repeat missteps
Contact: Email [email protected]
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