Connecticut Self Storage Association Presentation

ENERGY SUMMIT
for Self Storage
Owners and Managers
CTSSA Program
March 12, 2013

Overview
Discuss economic benefits of investing in
energy efficiency measures from both an
investment and a tax perspective.
Discuss low interest financing options.
Review a case study – i.e. take you through an
actual proposal and financial analysis for a CT
storage facility.

Introductions
Panelists
• Stephanie Grubb, Cohn Reznick - Investment Considerations and Tax Benefits
• Jessica Bailey, CEFIA Commercial & Industrial Property Assessed
Clean Energy - C-PACE Financing
• Elena Cahill, Globele Energy - Audit Requirements and Benefits
• Nicholas Malagisi, Sperry Van Ness Advisors; Real Estate Benefits
• Scott Hainey, Storage Insurance Brokers - Insurance Requirements
• Tim McGrew, Connecticut Light & Power – CL&P Assistance to Improve
Energy Efficiency
• Christy Bradway, Connecticut Light & Power – Discussion of ZRECs
• Ted Lawrence, Renewable Resources Inc. – Solar Process and Case Study
• Tom Loredo, Renewable Resources Inc. - Panel Moderator

“Fuel for Thought”
UN Population Growth Estimate
to 9 Billion by 2040
What will the effect be on:
 The Use of Energy?
 The Cost of Energy?
 The Environment, if
we continue to use
fossil fuel based
energy?

World Energy Outlook by 2035
 World primary energy demand will increase 36%
 China’s demand for energy is rising by 75%
 The US is now the second largest energy
consumer behind China
 The use of renewable energy will triple
 Renewables account for 7% of all energy and will
rise to 14%

Electricity Rates
On average, CT electric rates have increased
5% per year, over the last 10 years. (Source: US Energy Information
Administration)
Currently, the average commercial cost is
between $0.16 - $0.17/kWh in CT
Straight line projection of 5%/year =
$0.27/kWh in 2023

Energy Conservation,
Generation and Alternative
Supply
On overview

How can you conserve energy in a building:
1. Look at your process and learn if you can lean
out the process;
2. Make process equipment more energy
efficient;
3. Look at the building systems and determine if
you can replace any systems with energy
efficient technology;
4. Manage you process and building systems with
technology.
5. An audit or benchmarking will help you
determine the present situation and provide
options for you

Next make sure you understand the economics of
conservation.
As you will learn today there are many programs available to
assist with funding for conservation projects.
Understand some monies are incentive monies to do the
project, other programs can help you finance the project,
and yet other benefits are federal tax credits or deductions.
The benefits are cumulative: you may be qualify for incentive
dollars which requires less funding for the projects and
then take the federal tax credit or deduction on your tax
return.

 Federal programs apply to every state.
 Every state and within the sate the utility company
may have their own programs for conservation or
generation.
 CT has the energy efficiency fund and CEFIA and now
CPACE
 MA has Massachusetts Energy and Utility Assistance,
 National Grid has efficiency programs, etc
 NY has NYSERDA, Con ED has efficiency programs,
etc
 DSIRE website for the benefits in your state

 Alternative electric and natural gas supply.
 Deregulation intended to save money and it can but be
knowledgeable
 CT utility companies can change their rates January 1
and July 1 – this year UI will change their rate next in
January 1, 2014 and CLP in July 2013.
 Present 24 hr rates- UI -.076 CLP - .078
 Make sure the rate can not go up.
 Natural Gas utility companies change their rates
monthly on the 1st.

 You can generate energy through renewable
technologies such as solar, wind, etc
 You can generate energy with cleaner technologies
such as fuel cell, co-gen etc
 Federal tax credits available for projects through 2016
 In CT - CPACE program can potentially fund the
projects, you will learn more later-CPACE is in 27
other states
 Cumulative benefits again- CPACE- Fed tax credits,
etc
 DSIRE will list renewable programs as well

Why Solar Power?
 Solar is a clean and renewable
energy source
 Every hour, enough sunlight shines on
the earth to meet global energy needs
for an entire year

It’s Natural – Just like the Sun
Silicon
Ingot
Wafer
Solar Cell
Modules
Array
Virgin
Silicon

Calculating Solar Efficiency
Azimuth
Pitch
Shading

The Economics of Solar
 Avoided Cost of Electricity equals Lower
Operating Expenses
 Federal Tax Benefits – ITC and Depreciation
 State/Utility Incentives - ZREC
 Life of Solar System (25 Year Warranties)

 30% Federal Tax Credit through 2016
 5-year accelerated depreciation (MACRS)
 50% bonus depreciation in 2013
 Depreciable base is reduced by 50% of ITC
credit value
Federal Solar Programs

Project Finance
 Direct Purchase – Conventional financing
 Capital Lease – 10 year term with $1 Buyout
 C-PACE – Property Assessed Lending

Solar Project Development Timeline
Month 1 2 3 4
Week 1 2 3 4 5 6 7 8 9 10 11 12 13
Stage I II III
A. Agreements
Completed
B. Physical
Plan/Site
Review
D. State
Authorization
Municipal
Permits
Assumes no zoning or
variances required
E. System
Installation
(Assumes good
weather conditions)
F. Municipal
Inspection
G. Utility-Net
Meter Install
C. Final Design
Utility
Application/
Interconnection
H. State
Inspection
Stage I - Design
Stage II - Applications
Stage III - Installation

Next Steps
 Data Collection
 12 Month History of Electric Use
 Site plan
 Blue Prints
 Site review and structural analysis
 Proposal
 Financing Discussion
 Preliminary Project Timing

Proposed Bill No. 203
AN ACT CONCERNING PROPERTY TAX EXEMPTIONS FOR
RENEWABLE ENERGY SOURCES.
Be it enacted by the Senate and House of Representatives in General Assembly
convened:
That section 12-81 of the general statutes be amended to exempt from property
tax any Class I renewable energy source installed for the generation of
electricity for commercial and industrial use, and to make such exemption
applicable to assessment years commencing on or after October 1, 2012.
Statement of Purpose:
To encourage the use of renewable energy sources, and to allow the commercial
and industrial sectors to benefit from such sources by expanding current law
that allows the property tax exemption for renewable energy sources only if the
generation of electricity is for residential or farm use.

Commercial Business Case Study
 Building Overview
Building Type: Pre-engineered, steel
Roof Type: Metal, low pitch
Electric Company: CL&P
Electric Rate: $0.179/kWh
Electric Consumption: Approx. 52,300 kWh/ yr.
Anticipated Utility Rate Escalation: 3%

Commercial Business Case Study
 Solar Installation
• System Size— 46.08 kW
• Panels— 192 @ 240 watts
• System Production— 51,358 kWh (Year 1)
• Percentage of Electricity Produced by Solar— 98%
• System Degradation— 0.8%/year
• System Mounting— S5 Metal Roof Clips
• System Warranty— 25 year manufacturer’s warranty

Investment – Financial Evaluation
Investment analysis considers ‘at-risk’ rule, therefore the project is
financed at 80% maximum. Balance of system cost is invested by
owner. Also, a 35% corporate tax rate is assumed.
Considerations
• Project Cost— $175,104
• Cost/Watt— $3.80
• Avoided Electric Costs Savings— $0.16/kWh (with 3% yearly
escalator)
• 30% ITC Value— $52,531
• MACRS Value— $148,838
• Loan Value— $140,083
• Loan Term— 10 years
• Loan Rate— 6%
• Annual Loan Payment— $19,033 (assumes 1 yearly payment)

Evaluation Without ZREC Income
• Avoided Electric Cost Savings over 25 years – $269,200
• $52,531 ITC—Year 1
• $148,838 available MACRS
• ROI— 77%
• IRR— 9.21%

Evaluation With ZREC Income
• Avoided Electric Cost Savings over 25 years –
• $269,200
• ZREC Income— $119,665; ZREC Value = $164.22
• $52,531 ITC— Year 1
• $148,838 available MACRS
• ROI— 121%
• IRR— 21.77%

CohnReznick LLP
R e n e w a b l e E n e r g y P r o j e c t F i n a n c e
March 2013

• What drives the Renewable Energy Market
• What is the ITC
• How to finance a renewable energy project
• What are the benefits to you
A g e n d a

R e n e w a b l e E n e r g y M a r k e t D r i v e r s
• Renewable Portfolio Standards (RPS)
• Financial incentives
̶ Renewable Energy Certificates (RECs), particularly for Solar (SRECs)
̶ Feed-in Tariffs (FIT)
̶ Rebate and grant programs
̶ Federal tax incentives
̶ State tax incentives
• Rising cost of electricity
̶ Driven by fossil fuel prices and growth in demand
̶ Electricity prices (average retail price) vary considerably across the country
• U.S average retail price for electricity is $0.0983/kWh
• California costs are high, ~$0.13/kWh
• New Jersey costs are higher, ~$0.147/kWh
• Rates in Hawaii are among the highest, ~$0.25/kWh
• Source (as of 1/30/2012): http://www.eia.gov/electricity/state/

Key Renewable Energy and Solar Terms
PPA – Power Purchase Agreement = Contract for sale of electricity
MW – Mega Watt - Utility Scale Power generation. Powers neighborhoods
kWh – Kilowatt-hour – smaller unit of power output – e.g., a solar panel’s
electrical output
REC or SREC – Renewable Energy Certificate or “credit.” NOT a tax credit.
Represents the green/clean aspect of actual energy that is separately
produced. S in “SREC” means a Solar REC.
EPC – Engineering Procurement and Construction contractor
Off-taker – purchaser or user of the electricity
Host – person or place where a project is physically located (could be the
buyer in a PPA)
COD – Commence Operations Date (aka “Placed in Service”)

Sponsor – Energy Project developer or project manager
PV – Solar Photovoltaic (PV) technology. Makes electricity directly from
sunlight Light
SPE – a Special Purpose Entity (often an LLC) that plays a specific role in
the renewable energy project such as owning and/or operating it.
ITC – Investment Tax Credit (more on this later)
PTC – Production Tax Credit (more on this later)
Net Metering – Excess electricity is fed into the electrical grid. Project
owner is given a credit on their utility bill to use when the system generates
less electricity than needed.

Avoided Cost- is the cost the utility would have incurred had it supplied the power itself
or obtained it from another source. It is the price at which an electric utility purchases the
output of a Qualified Facility (QF)

Ta x D e d u c t i o n v s . Ta x C r e d i t
Tax deductions are a reduction of a taxpayer’s total income that
decreases the taxable income used in calculating the actual tax to be
paid.
What is a deduction worth?
̶ $1 Deduction = $1 x tax rate
̶ Assume 35% tax rate
̶ $1 x 0.35 = 0.35¢ of after tax value
Tax credits reduce dollar for dollar the amount of tax actually owed and
payable to IRS.
What is a tax credit worth?
̶ $1 tax credit = $1 of after tax value

Renewable Technology: Solar Electricity
Use of solar equipment (e.g. photo-voltaic (“PV”) or concentrated solar
power) to generate electricity.
Eligible for 30% ITC (or 1603) through December 31, 2016, 10% thereafter.

IRC 48 – Energy Investment Tax Credit (ITC)
• ITC is based on the percent of eligible equipment, not on how much
electricity is produced and not on total project cost. Most ITCs are 30%
with some 10% credits depending on technology.
• Unlike production tax credits (PTCs), there is no requirement that
electricity be sold, only that the facility generates electricity, heating,
cooling or lighting or meets other standards per the tax code.
• One year credit – generally claimed in year placed-in-service (PIS)
̶ End-user of tax credit must be an owner/partner in the deal before
COD/PIS date
̶ 5 year compliance/holding period (like § 47 Historic Rehab Tax
Credits)
̶ Credit vests and recapture period burns off 20% per year for 5
years from date of COD/PIS

• 5 year MACRS depreciation on most technologies (Bonus Depreciation
applies when law allows)
• Basis reduction – Must reduce depreciable tax basis by 50% of the credit
amount
• No governmental or tax exempt use allowed (“use” means ownership or
lease)
• Credits are Allocated by profit/loss ratio (like Historic Rehab Tax Credit)
• May offset Alternative Minimum Tax liability (for tax years starting after
2008)
• Note, the ATRA of 2012 extended the election to claim the section 48
investment tax credit (ITC) rather than the PTC for eligible wind and
other PTC facilities. Not all PTC eligible facilities are allowed this option.
For those that are, the election now applies for projects where
construction begins prior to January 1, 2014. This is a new rule.
IRC 48 – Energy Investment Tax Credit (ITC)

Ta x E q u i t y C a l c u l a t i o n
$1,000,000 Eligible Cost of Energy Property
x 30% Applicable ITC Rate (sometimes 10%)
$ 300,000 ITC to standalone project

Solar Tax Credits: Eligible Property Defined
Equipment that uses solar energy to generate electricity
Constructed/Purchased by the taxpayer
Must be Depreciable or Amortizable (i.e., used in a trade or business)
Acquired by the taxpayer and first used by the taxpayer
– Exception for sale-leasebacks - 90 day rule (Old IRC Section 48(b)(2))

Eligible Energy Tax Credit Basis – Solar ITC
Which costs are eligible for the credit?
• Solar panels, mounts, racks, wiring, inverters etc.
• Hard construction costs in general
• Direct and indirect costs of installation
System integration/design/testing
Permits, fees etc.
Interest expense prior to PIS – Subject to Section 266 Election
Developer fee if Reasonable
Other soft costs properly capitalized

Practical Issue: The extent to which a support system (i.e., “racking”) for
solar qualifies for the credit. Note– roof surfaces do not qualify, unless the
solar panel is also the actual roof; See, PLR 201121005.
• Base for ground-mounted units that have no other uses do qualify
• Parking garage structures which support panels but provide shade?
̶ Portion of roofing repair?
̶ Parking garage/carport cost? What portion?
For Solar Walls – See, PLR 201043023
Eligible Energy Tax Credit Basis

Test Your Knowledge: What is Eligible for ITC Basis?

B o n u s D e p r e c i a t i o n
ATRA Extended Bonus Depreciation
50% - Additional 1st year depreciation of 50% for qualified property
acquired and placed in service before Jan. 1, 2014 (before Jan. 1, 2015 for
certain longer-lived and transportation property). (Code Sec. 168(k)(2), as
amended by Act Sec. 331(a)).
A conforming change is made to Code Sec. 460(c)(6)(B) (relating to 50%
bonus depreciation not being taken into account as a cost in applying the
percentage of completion method for certain long-term contracts).
Bonus depreciation may be allocated as of the placed in service date, so
planning of Investor entry is important.

M A C R S D e p r e c i a t i o n
• Wind, solar and geothermal are generally classified as five-year
property
• Biomass is typically classified as seven-year property
• Ancillary components such as transmission lines are depreciated over a
longer period, generally not include in tax credit basis.
• MACRS Permanent part of the tax code
Wind/
Solar
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6
MACRS 20.00% 32.00% 19.20% 11.52% 11.52% 5.76%
MACRS +
50% bonus
depreciation
60.00% 16.00% 9.60% 5.76% 5.76% 2.88%

58
Financing Renewable
Energy Projects
Why and How.

W h y F i n a n c e R e n e w a b l e E n e r g y ?
For investors –
Tax incentives:
– Solar - 30% Investment Tax Credit (ITC), and for certain other
technologies, owners can elect Production Tax Credits (PTC) or a 30%
immediate Investment Tax Credit depending on technology.
– Five year tax depreciation (with some exceptions) on the equipment.
Yields can be considerably higher with shorter holding periods than
LIHTC and other tax credit investments.
For owner-operators –
Cash flow from the sale of energy to tenants or utilities under long term
agreements and renewable energy certificates (REC’s)
For energy user or “off-takers” –
Lock in their energy costs for 10-20 years
• Bloomberg Energy estimates the US energy tax credit equity market is at
$7B (source
http://www.cohnreznick.com/sites/default/files/The%20Return%20%E2%8
0%93%20and%20Returns%20%E2%80%93%20of%20Tax%20Equity%20for%20
US%20Renewable%20Projects.pdf)

H o w t o F i n a n c e R e n e w a b l e E n e r g y
P r o p e r t y
•Educate Lenders
•Be aware of “At Risk Rules”

61
What Does This Mean To
You?
More Tax Rules!

W h o C a n U s e E n e r g y Ta x C r e d i t s ?
Corporate investors (widely-held corporations)
An estimated 15-20 active investors; expiration of the Sec.1603 grant will
create demand for much more tax equity from investors
Individuals (and closely-held corporations)
There are several rules that may come into play here.
Tax-exempt and government entities
Qualified allocations
– Not eligible for tax credits, but won’t affect other partners if there are
“qualified allocations.” A technical rule.
– Section 168(h) election required for wholly-owned subsidiaries of tax-
exempts
PPA needs to be respected as sales/service contract… or lose / defer
incentives

W h e r e c a n I f i n d m o r e i n f o r m a t i o n ?
CohnReznick – Renewable Energy
http://www.cohnreznick.com/industries/renewable-energy
Energy Tax Credits – DSIRE
http://www.dsireusa.org/
– Information on federal tax credits and incentives
– Provides links to relevant state websites
Solar Energy Industries Association
http://www.seia.org/
American Wind Energy Association
http://www.awea.org/

C o h n R e z n i c k C a n H e l p Yo u
Stephanie Grubb, CPA
Manager
CohnReznick LLP
525 N. Tryon Street
Suite 1000
Charlotte, NC 28202
Main (704) 332-9100
Direct (704) 837-7252
stephanie.grubb@cohnreznick.com
www.cohnreznick.com
www.cohnreznick.com/industries/renewable-energy

The LREC/ZREC
PROGRAM
An Opportunity to Develop Behind-The-Meter Renewable
Generation in Connecticut
Christie Bradway
Manager, Renewable Power Contracts
Northeast Utilities

Whyare PeopleInterestedin Renewable
Generation?
Drivers:
• To “Go-Green”
• To reduce, or better predict, spending on energy
Barriers:
• Cost of Systems
• No clear long-term revenue streams to support capital
investments
• Public Act 11-80 created a billion dollar opportunity for
developers and installers of small renewable systems
• CL&P and UI will enter into 15 year contracts to purchase
“RECs” from new small renewable projects

WhatisaREC?=RenewableEnergyCertificate
• How is a REC Created?
Each time a renewable generation unit produces, the energy is
considered “renewable”
LREC: Low – emission RECs = e.g Fuel Cells
ZREC: Zero – emission RECs = e.g Solar, Wind, Small Hydro
Each megawatt hour of energy produced = 1 REC
• Why Should You Care About RECs?
• RECs have a value (commodity) and are used by electric companies to
satisfy regulatory requirements (RPS)

HowManyRECs&HowMuchAre TheseRECsWorth?
 RECs from Zero Emission units (solar, wind, hydro) may be worth up to $350 each* (cap) :
However, average price of selected medium zrec bids from 2012 = +/- $150 each
 Example 1: Residential Home = 5 kW Solar System= 6 RECs/year
 Annual Payment = $900.
 $150/REC x 6 RECs/year =+/- $900. per year
 Total Payment over 15 years = $13,500.
 $900 x 15 years = $13,500
 Example 2: Commercial Business = 100 kW Solar System = 114 RECs/year
 Annual Payment = $17,100.
 Total Payment over 15 years = $256,500.
 RECs from Low Emission units (Fuel Cells) may be worth up to $200 each* (cap)
However, average price of selected bids from 2012 = +/- $90 each
 Example 3: Commercial Business = 400 kW Fuel Cell = 3,154 RECs/year
 Annual Payment = $283,860
 Total Payment over 15 years = $4,257,900

REC Contract directly with
customer
The REC
purchase is a
separate
transaction
Utility purchases
excess energy under
existing tariff

Rec Contract with a developer
Electric Supply

LREC & ZREC Eligibility
General Project Eligibility Criteria
• Must be located behind contracting utility distribution meter
• Must not have received funding/grants from Clean Energy Finance Investment
Authority, or its predecessor the CT Clean Energy Fund (other than low cost
financing)
• Projects must be in service on, or after, July 1, 2011
LRECs
• No larger than 2,000 kW
• Must have low emissions
• <0.07 lbs/MWh NOx; <0.10 lbs/MWh CO; 0.02 lb/MWh VOCs, 1 grain per 100
standard cubic feet
• May include fuel cells and other low emission Class I resources, as well as all zero
emission Class I resources
ZRECs
• No larger than 1,000 kW
• Must have zero emissions
• May include solar, hydro and wind

Procurement Processes
1) Competitive Solicitation - (RFP)
2) Tariff
Project
Type
Size Annual
Budget
Renewable Energy Credit
Price Cap*
RFP Timeframe and Frequency
Large
ZRECs
≥250 kW to
1,000 kW
~$2.13 M Max. $350/REC Annual in April for 6 years
2013 will be year 2
Medium
ZRECs
>100 kW < 250
kW
Approxim
ately
$2.13 M
Max. $350/REC Annual in April for 6 years
2013 will be year 2
LRECs Up to 2,000
kW
$4 M Max. $200/REC Annual in April for 5 years
2013 will be year 2
Project
Type
Size Annual
Budget
Renewable Energy Credit Price
Cap
Tariff Availability and
Frequency
Small
ZRECs
Up to 100 kW ~$2.13 M Weighted Average of the Medium
ZREC price + 10% up to $350/REC
- Year 1 Avg = $164.22/REC
Annually, after the approval of the
RFP and the filing of the medium
ZREC rate + 10%
Expect to offer Yr. 2 Q4 2013 or
Q1 2014

FinalResultsof 1st RFP
• Final Selected Projects weighted average price/REC = $89
1. Average prices were about 1/3 of the cap
• LREC Cap = $200 and Avg. Weighted Price/LREC = $65.94
• ZREC Cap = $350 and Avg. Weighted Price/ZREC = $121.13
2. RFP contracts will result in approximately 27 MW of installed renewable capacity in CT
• LRECs = 5.6 MW – fuel cells
• ZRECs = 21 MW - solar
Category Size # Bids #
Bids
Selected
Average
Weighted
Price/REC
Committed
Budget ($M)
Uncommitted
Budget ($M)
% of Budget
Uncommitted
15 Year
Contract
Value ($M)
LRECs Up to 2 MW 43 12 $65.94 $3.0 $162K 5% $45.6
Medium
ZRECs
100 – 250
kW
113 47 $149.29 $2.0 $78K 4% $29.8
Large
ZRECs
250 – 1,000
kW
140 21 $101.36 $2.1 $145K 7% $30.8
Total 296 80 $89.13 $7.0 $386 k 5% $106

Small ZREC Tariff
• Instead of competitive bidding - projects less than or equal to 100
kW are eligible to enroll in a tariff
• Price takers = $164.22/REC
• Program establishes the price as the average of the selected Medium ZREC
projects +10%
• Schedule - Small ZREC Tariff Program must open 30 days from
approval of Medium ZREC Contracts
• Medium ZREC Contracts approved 11/21/13
• Opened Small ZREC Program 1/8/13 (with PURA approval for extension due to
holidays)
• Initial two-week window closed 1/22/13

Small ZRECTariff
• At the close of the Small ZREC 2-week , CL&P received 479 completed Small ZREC Applications, which totaled over $5.6M in requested
Small ZREC funding - more than 138% above CL&P’s available Small ZREC budget of $2.36M for this round of the Small ZREC Program.
• Based on the volume of applications received during the two-week window, CL&P conducted a random selection process of completed
Applications submitted during the 2-week window, which process was observed by a representative of the State of Connecticut Office
of Consumer Counsel (OCC). The random selection process resulted in a numerical rank of all completed Applications received
during the two-week window.
• Based on the queue and available budget, we expect to enter into contracts with approximately 200 applications
• PURA approval of these individual contracts is not required
• PURA approved the Small ZREC Tariff and the price of tariff = $164.22/REC
• Small ZREC Tariff will be open until all available budget has been allocated, or at the time when a new Small ZREC price has been
established for the next year Small ZREC applications.
• Expect this round of the Small ZREC Program will result in an approximately 9 MW additional installed solar in CT
Category Size #
Applications
Received
Approx. # of
Contracts to
be awarded
Price/REC Available
Budget
($M)
Total Annual
Value of
Applications
15 Year
Contract
Commitment
Value ($M)
Small
ZREC
0 – 100 kW 479 200 $164.22 $2.36 $5.6 $35.4

Timeline and Next Steps
Action Date Comments
Small ZREC Tariff Service
Attachment Execution
January – July 2013 Execution of ~200 Service Attachments
LREC and Medium/Large ZREC RFP –
Year 2 Opening
April, 2013 Year 2 RFP to open in April 2013

For additional information visit:
Website: CL-P.com, and Click on Renewable
Energy Credits under the “Going Green” tab
Email: LREC.ZREC@NU.COM
UI: www.uinet.com/powerprocurement
Email: LREC.ZREC@uinet.com

Energy Efficiency Programs for
Business Customers
Conservation & Load Management
Connecticut Light & Power and
Yankee Gas

Energize Connecticut: New
name, same great programs
• Energize Connecticut is the state’s new branding initiative to help
consumers save money and use clean, affordable energy.
• A partnership of the Energy Efficiency Fund, the Clean Energy Finance and
Investment Authority, and local electric and gas utilities
• Energy efficiency is a valuable resource for Connecticut, it:
– Reduces air pollutants and greenhouse gases
– Saves customers money
– Reduces need for more energy generation
– Creates jobs
• Program funding:
– Electric customers pay 3 mills per kilowatt-hour
– Natural gas programs are funded through gas utility bills and approved by the Public
Utilities Regulatory Authority

2013 Program Incentive
Budgets & Caps
Project caps
• CL&P $1,000,000 per federal tax ID
• YGS/CNG/SCG projects with an incentive amount greater
than $100,000 require PURA approval
Budgets
CL&P C&I $ 35.2 M
YGS $ 2.4 M
CNG $ 2.3 M
SCG $ 2.1 M

New Construction & Equipment
• Captures electric and natural gas
savings where they are most cost-
effective: during design
• Covers up to:
– 95% of the incremental
cost of installing
measures in new
construction
– 75% of the incremental
cost for equipment
replacement projects
Energy
Efficient
Lighting
Lighting
Controls
HVAC
Equipment
Building
Envelope Refrigeration
Process
Equipment
Gas Boilers VFDs
 New Construction
 Major Renovation
 Equipment Replacement

Prescriptive Rebates
• HVAC Unitary
Equipment
• Heat pumps
• Infrared heaters
• Water heaters
• Food service rebates
• Gas heating
equipment
– Condensing boilers
– Non-condensing
boilers
– Condensing furnaces
– Condensing unit
heaters

Existing Buildings
• Incentives to replace functioning equipment with
more energy-efficient options
Covers up to:
• 40% of installed cost
• 50% of installed cost
for comprehensive
projects
Energy
efficient
lighting
Lighting
controls
EMS/
Programmable
Thermostats
Process
Equipment
VFDs
HVAC
Refrigeration
Controls
Gas Measures

Small Business Energy Advantage
(SBEA)
• Turnkey energy-saving program
• Pay nothing upfront
• Existing business, municipal, and
government customers
• Average 12-month peak demand between 10
kW and 200 kW
• All possible energy efficiency measures
• On-bill, 0% financing to qualifying customers

BUSINESS & ENERGY
SUSTAINABILITY (BES)
Retro Commissioning/PRIME/O&M Services/Training & Outreach

Business & Energy Sustainability
(BES)
• The next level after all or most
major capital improvements
have been completed
• Maximize operational
strategies with existing capital
equipment & people
• Develop management
practices

BES Programs
• Retro Commissioning: Optimizes operation of
customer’s facility without installing capital
equipment
• PRIME: Focuses on industrial manufacturing
processes
• Operations & Maintenance: Improves efficiency
through changes and repairs that can be classified
as maintenance or operational procedures
• Training & Outreach

Financing
Type Min Max Rate Term
Max
Pymt Source
SBEA/
Muni
$500 $150,000 0% 4 yrs On-Bill Utility
C&I $2,000 $1 Million
(1st $100,000
w/ subsidy)
2.99% or
4.99%
5 yrs 3rd Party 3rd Party
PURA
Loan
(>50 kW
savings)
$1
Million
1% below
rate/no
more than
prime
10 yrs 3rd Party 3rd Party

Residential Programs
Home Energy Solutions
HES – Income Eligible
Residential New Construction
Retail Products
Heating & Cooling

CL&P Contacts
• New Construction (ECB): Rich Asselin (860) 665-3292
• Retrofit (EO): Glen Eigo (860) 665-5084
• Business & Energy Sustainability: Dave McIntosh (860) 665-3531
• Cool Choice: Dennis Beauregard (860) 665-4758
• Express Lighting Rebates: Dennis Beauregard (860) 665-4758
• Small Business: Randy Vagnini (860) 665-4753
• Financing: Gentiana Darragjati (860) 665-4757
• Residential Programs: Lomont White (860) 665-3790
• Natural Gas Programs: Matt Fox (860) 665-3749
• Your Account Executive

UI Contacts
• New Construction (ECB) : Peter Aufdemorte (203) 499-4715
• Retrofit (EO) : Peter Aufdemorte (203) 926-4715
• Cool Choice ( CCH) : Will Riddle (203) 499 -2407
• Express Lighting : Will Riddle (203) 499 -2407
• Your account manager

QUESTIONS?
Thank you!
1-877-WISE-USE
EnergizeCT.com

C-PACE:
A financing tool for multi-family
Clean Energy Finance and Investment Authority

Property Assessed Clean Energy
▪ An innovative financing structure that enables commercial, industrial, and
multi-family property owners to access financing for qualified energy
upgrades and repay through a benefit assessment on their property tax.
Private capital
provides 100%
upfront, low-cost,
long-term funding
Repayment through
property taxes
A senior PACE lien is
put on the property
and stays regardless
of ownership

CRE Owners Face Barriers to Upgrades
REFERENCES
EE Indicator – NA 2010, Johnson Controls and International
Facilities Management Association (IFMA)

PACE Addresses Key Barriers
REFERENCES
EE Indicator – NA 2010, Johnson Controls and International
Facilities Management Association (IFMA)

Why C-PACE
▪ Zero up-front cash investment
▪ Immediate positive cash flow
▪ Long-term financing (up to 20 years) and low interest
rates
▪ PACE assessment stays with the property upon sale
▪ Ability to pass payments through to tenants
▪ Higher rents and greater long-term property value
because of energy efficiency
▪ Preservation of borrowing capacity through off-balance–
sheet financing

Connecticut Special Session
Public Act 12-2 (June 2012)
▪ Commercial, industrial & multi-family property
▪ Requires the consent of the existing mortgage lender
▪ Requires SIR>1; permanently affixed
▪ Enables municipalities to opt-in
▪ Enables CEFIA to administer a statewide program

CEFIA’s Role in C-PACE
•Publish Guidelines November 2012
•Onboard Municipalities
•Website launched (www.c-pace.com)
Design
Program
•Technical Underwriting
•Marketing & Outreach
•Work with Existing Mortgage Lenders
Administer
Program
•Qualify Capital Providers
•Offer Credit Enhancement tools (as needed)
•Provide capital (as needed)
•Develop warehouse / bonding authority (Q2 2013)
Attract
Private
Capital

Municipalities Opted into C-PACE
Coming Soon: Cheshire, Clinton, East Granby, East Hartford, Fairfield, Hamden,
Manchester, Meriden, New Haven, Plymouth, Torrington, Waterbury, Wethersfield
▪ Beacon Falls
▪ Bridgeport
▪ Durham
▪ Hartford
▪ Middletown
▪ Norwalk
▪ Old Saybrook
▪ Putnam
Hartford
West Hartford
Bridgeport
Norwalk
Simsbury
Stamford
Stratford
Southbury
▪ Simsbury
▪ Southbury
▪ Stamford
▪ Stratford
▪ West Hartford
▪ Westport
▪ Wilton
▪ Windham

C-PACE Opportunities in Connecticut
Hartford
West Hartford
Bridgeport
Norwalk
Simsbury
Stamford
Stratford
Southbury

Customers Apply Into C-PACE
Hartford
West Hartford
Bridgeport
Norwalk
Simsbury
Stamford
Stratford
Southbury

C-PACE Partners do Technical Underwriting
Hartford
West Hartford
Bridgeport
Norwalk
Simsbury
Stamford
Stratford
Southbury
3rd Party
Administrator:
Buonicore
Partners
Program Expertise:
Buonicore Partners
• Milford, CT
• Modeled Energy Profile of CT
• Nationwide PACE experience
Technical Expertise:
Celtic Energy
• Glastonbury, CT
• $1bn of energy-related projects
• Experience with large commercial
end-users, utilities, and government
Real Estate Expertise:
Sustainable Real
Estate Solutions
• Trumbull, CT
• Benchmarking Database
• Industry leader in building energy
performance assessment

Upgrades: What’s Eligible
Anything that saves energy from baseline
▪ High efficiency lighting
▪ HVAC upgrades
▪ New automated building and HVAC
controls
▪ Variable speed drives (VSDs) on motors
fans and pumps
▪ High efficiency chillers, boilers, and
furnaces
▪ High efficiency hot water heating
systems
Hartford
West Hartford
Bridgeport
Norwalk
Simsbury
Stamford
Stratford
Southbury
… as long as it isn’t going anywhere
▪ Combustion and burner upgrades
▪ Fuel switching
▪ Water conservation
▪ Heat recovery and steam traps
▪ Building enclosure/envelope
improvements
▪ BMS
▪ Renewable energy systems

Upgrades: What’s Not
▪ Appliances, e.g., refrigerators,
dishwashers, etc.
▪ Plug load devices
▪ Vending machine controls
▪ Any package of measures with a
weighted average effective useful life
(EUL) that does not meet or exceed
the life of the loan
▪ Any package of measures that does
not achieve an energy savings (over
the life of the loan) to [total project]
investment ratio > 1
Hartford
West Hartford
Bridgeport
Norwalk
Simsbury
Stamford
Stratford
Southbury
▪ Any measure that is easily
removed/not permanently
installed
▪ Any measure that does not result
in improved energy efficiency
▪ Extending natural gas lines to the
property line to enable a PACE-
eligible gas conversion project.

Capital Partners
Hartford
West Hartford
Bridgeport
Norwalk
Simsbury
Stamford
Stratford
Southbury
Qualified Capital Providers
▪ CEFIA qualified 8 capital providers
through a RFI.
▪ “Lending tree” model
Owner Arranged Financing
▪ Property owner is free to choose
their capital provider from the
private market. There is no
government financing required.
Construction and Term Financing from
CEFIA
▪ CEFIA authorized $20M short term
facility for construction and term
financing.

Requirements
▪ Building must be commercial, industrial, or multifamily
▪ Non-profits eligible if municipality allows
▪ Building must be located in a municipality which has
opted in
▪ Feasibility study required for renewables
▪ Mortgage lender must consent

Application Review: Two Paths
▪ Full Assessment – Whole Building Analysis
– Begin with a Level I screening step (by CRE owners consultant),
designed to cost effectively identify projects with compelling
savings & ROI
– Proceed to Level II/III audit when significant savings potential
exists. Determine the optimized bundle of ECMs, calculate
project cost, projected energy savings & key financial metrics
▪ Fast Track
– Designed for buildings where prior energy audits have been
completed including ECM recommendations, but failed to get
implemented due to owner inability to self-fund the project
– Less technically complex projects (single ECM)
– Pre-approved projects under utility EE incentive/rebate programs

▪ Developed in light of other PACE and leading CRE energy
retrofit finance programs around the country
▪ Incorporates three established industry protocols
– ASTM Building Energy Performance Assessment (BEPA) Standard
E2797-11 for baseline energy use data collection and analysis
– ASHRAE Level 1, 2, 3 Energy Audit Guidelines to identify ECMs
and project energy savings
– International Performance Measurement & Verification Protocol
(IPMVP) for energy savings measurement and verification
▪ Underwriting methodology is technically sound,
standardized, reliable & fully-transparent
Application Review: Technical Standards

$
$
$$$$$$
C-Pace Capital
Provider
ContractorProperty Owner
$
$
CEFIA
Town Tax
Collector
Town Land
Records
Property/ECMs
Lien$$$
Mortgage Holder
Notification &
Consent
Assessment & C-PACE
Services Contract
Funding
Agreement
Funding: Capital Flow Process
“M&V”
Financial
Conduit
Agreement

Property Audit/
Energy Assessment
$
$
$
$
$$$
$$$

$
$
$
$
$$$
$$$
Mortgage Holder
Notification &
Consent

$
$
$
$
$$$
$$$
Mortgage Holder
Notification &
Consent
CEFIA Program
Administrator
Technical
Review

$
$
$
$
$$$
Mortgage Holder
CEFIA
C-Pace Capital
Provider
Funding
Agreement
Notification &
Consent

$
$
$
$
$$$
Mortgage Holder
CEFIA
C-Pace Capital
Provider
Assessment & C-PACE
Services Contract
Funding
Agreement
Notification &
Consent

$
$
$
$
$$$
Mortgage Holder
CEFIA
C-Pace Capital
Provider
Financial Conduit
Agreement
Funding
Agreement
Notification &
Consent

$
$
$
$
$$$
Mortgage Holder
CEFIA
C-Pace Capital
Provider
Funding
Agreement
Property/ECMs
Financial Conduit
Agreement
Notification &
Consent
Assessment & C-PACE
Services Contract

$
$
$
$
$$$
Mortgage Holder
CEFIA
C-Pace Capital
Provider
Assessment & C-PACE
Services Contract
Funding
Agreement
Town Land
Records
Property/ECMs
Caveat
Financial Conduit
Agreement
Notification &
Consent

$$$$$$
Equipment &
Services
$
$
$$$
Mortgage Holder
CEFIA
C-Pace Capital
Provider
Assessment & C-PACE
Services Contract
Funding
Agreement
Town Land
Records
Property/ECMs
Caveat
Financial Conduit
Agreement
Notification &
Consent

CEFIA
$$$$$$ ContractorProperty Owner
$
$
$
$
$$$
Mortgage Holder
CEFIA
C-Pace Capital
Provider
Funding
Agreement
Town Land
Records
Property/ECMs
LIEN
Assessment & C-PACE
Services Contract
Financial Conduit
Agreement
Notification &
Consent

CEFIA
Town Tax
Collector
$
$
$
$
$$$
Mortgage Holder
CEFIA
C-Pace Capital
Provider
Assessment & C-PACE
Services Contract
Town Land
Records
Property/ECMs
LIEN
Financial Conduit
Agreement
Funding
Agreement
Notification &
Consent

CEFIA
Town Tax
Collector
$
$
$
$
$$$
Mortgage Holder
Notification
& Consent
CEFIA
C-Pace Capital
Provider
Assessment & C-PACE
Services Contract
Funding
Agreement
Town Land
Records
Property/ECMs
LIEN$$$
Financial Conduit
Agreement

$
$
CEFIA
Town Tax
Collector
$
$
$
$
$$$
Mortgage Holder
Notification
& Consent
CEFIA
C-Pace Capital
Provider
Assessment & C-PACE
Services Contract
Funding
Agreement
Town Land
Records
Property/ECMs
LIEN$$$
Financial
Conduit
Agreement

130
Recap:
▪ Audit
▪ Notification to Mortgage Holder / Consent
▪ Project Review by Program Administrator
▪ Referral out to Qualified Capital Providers
▪ Capital Provider Selected by Owner
▪ Negotiations  Funding Agreement
▪ Assessment & C-PACE Services Agreement & Financial Conduit Agreement (CEFIA – Owner
– Cap Provider)
▪ Caveat on the Property (CEFIA – Town/City)
▪ Funding Disbursement(s) & Project Work Commences
▪ Project Completion
▪ Finalization of the Lien on the Property, Payment Schedule, etc.
▪ Owner Enjoys More Efficient Building & Repays Funding via Tax Bill

▪ Full Assessment & Fast Track project data are entered & tracked in CEFIA’s Data
Management Platform (CDMP)
M&V: Data Management Platform
 CDMP is powered by SRS’s cloud-
based software platform
 CDMP facilitates key project data &
analytics management across the
entire project life cycle (project
development through M&V)

Benefits to Other Stakeholders
Hartford
West Hartford
Bridgeport
Norwalk
Simsbury
Stamford
Stratford
Southbury
Capital Providers
• Low risk investment
opportunity
• Senior lien
• Secure repayment
mechanism (taxes)
• Legal and technical
structure administered
by CEFIA
Mortgage Lenders
• Improves Building
Financials/Risk
• Lowers OPEX
• SIR>1
• No acceleration
• Creates a more
attractive building for
occupants and owners
• Finances deferred
maintenance needs
Municipalities
• Creates economic
development & jobs
• Reduces energy costs
for businesses
• Reduces pollution

The Customer (Building Owner):
PACE Addresses Key Barriers
Hartford
West Hartford
Bridgeport
Norwalk
Simsbury
Stamford
Stratford
Southbury
Near term plan to sell?
Lack of funding?
Cannot assume more debt?
Insufficient payback/ROI?
Split incentives?
Uncertain savings/technical expertise?
Tax obligation fixed to property
100% upfront, 20 year financing
PACE assessments qualify as OPEX
Positive cash flow in year 1
Assessment/savings pass to tenants
Technical underwriting / SIR>1

PACE Project Example
$1,500,000 add to Building Value (8.9%)
134
30 Year Old,
200,000 ft2
commercial
building

860.257.2888
jessica.bailey@ctcleanenergy.com
www.c-pace.com
Jessica Bailey, Director C-PACE
Clean Energy Finance and Investment Authority

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