Funding Renewable Energy
Qualified Energy Conservation
Bonds and Competitive Award
Tennessee Renewable Energy and
Economic Development Council
1st Annual International Renewable Energy Conference
Tennessee Tech University October 13, 2014
Pete Westerholm, Program Manager
TDEC Office of Energy Programs
Disclaimer: This presentation is intended to serve as a general
introduction to qualified energy conservation bonds to finance
energy projects. Nothing contained in this presentation should be
construed or relied upon as legal or financial advice.
TDEC Office of Energy Programs
•
OEP, which joined the Tennessee Department of Environment and Conservation (TDEC) in January 2013, functions as the U.S. DOE‐designated State Energy Office for Tennessee. •
OEP is tasked with developing and overseeing programs and initiatives that promote a cleaner environment, reliable energy delivery, and a stronger economy. •
Thus, the bulk of OEPs’ efforts focus on energy efficiency, renewable energy, energy management, and alternative fuels and transportation options in the following categories: (1) energy assurance planning; (2) policy, planning and program development; and (3) education and outreach.
What are Qualified Energy Conservation
Bonds (QECBs)?
•
Low interest bonds that can be issued by states,
territories, large local governments, and tribal governments
to finance renewable energy and energy efficiency projects
•
Attractive borrowing rates: 1%-5% effective interest rate
70% of interest rate is subsidized
Issuer typically gets 3%- 4% subsidy from Treasury,
lowering borrowing costs
15 to 22-year term
•
Created in 2008; greatly expanded by Recovery Act in 2009
•
Total national allocation is $3.2 billion; Tennessee allocation is
$64,676,000
•
Issued for qualified energy efficiency, renewable energy, and
energy conservation capital expenditures; qualified projects
are broadly defined
QECB Qualified Projects
Capital expenditures incurred for purposes of:
• Reducing energy consumption in publicly-owned buildings by at
least 20%
• Implementing green community programs (including the use of
loans, grants, or other repayment mechanisms to implement such
programs)
• Renewable energy production
• Energy-related research facilities and research grants
• Mass commuting facilities
• Demonstration projects (for energy-related processes)
In Tennessee, bonds can only be issued if physical asset
development or improvement is critical component of project
How QECBs Work: An Overview
From DOE QECB and CREB Finance Primer
Tennessee QECB Program:
Step 1: Large Local Jurisdictions
June 2012 Large Local Jurisdictions (LLJs) in TN received a share
of the $64.7 million based on their percentage of the population
•
Cities, Counties with populations of 100,000 or more
15 entities in TN received allocations, totaling $35.9 million.
Blount County, Chattanooga, Clarksville, Hamilton County, Knox County, Knoxville,
Memphis, Metro Nashville, Rutherford County, Shelby County, Sullivan County,
Sumner County, Washington County, Williamson County, Wilson County
“Allocation designees” may:
•
•
•
Authorize an eligible public entity such as a DevelopmentAuthority to issue
QECBs
Allocate all or a portion to an unrelated political subdivision within its
jurisdiction (such as a city in a county – conduit issuer relationship)
Reallocate to the State
Tennessee QECB Program:
Step 2: Competitive Sub-Allocation
Allocations not utilized by LLJs and reallocated to the State were
combined with state government allocation $46,542,400
Total allocation made available to local governments and public
universities through a competitive sub-allocation process
RFP released in October 2013, proposals due January 2014
Resulted with $7.5 M sub-allocation going to the City of Memphis for
Green Communities program
Tennessee QECB Program:
Step 3: Second Competitive Sub-Allocation
Remaining $39,042,395 made available through 2nd competitive
sub-allocation process
Allocation made available to local governments, cap increased
from $7.5M to $12.5 M
RFP released in July 2014, proposals due September 2014
Results: 2 energy projects moving forward
$12.5 M sub-allocation to Knox County for solar
installation
$3.5 M sub-allocation to Lebanon for gasification project
Total State Allocation
64,676,000
Allocation for Large Local Jurisdictions
Allocation to State
35,998,072
28,677,928
Utilized/Retained
Allocation for Large Local Jurisdictions
Chattanooga¹
Clarksville²
Hamilton County³
Memphis¹
Metro Nashville/Davidson County⁴
Other LLJs’ Reallocations to State⁵
Reallocated
35,998,072
1,767,919
1,241,344
1,668,015
7,014,356
6,441,971
18,133,605
17,864,467
17,864,467
Amount Available in Initial Sub‐allocation / RFP
Approved Proposal through 1st RFP ‐ Memphis
7,500,000
Amount Available in Second Sub‐Allocation /RFP
Proposal from City of Lebanon
Proposal from Knox County
3,500,000
12,500,000
Total Allocation Remaining 46,542,395
39,042,395
23,042,395
TDEC Office of Energy Programs
SEP2013CompetitiveAward
• In December 2013, the U.S. Department of Energy awarded
OEP $426,644 for its State Energy Program 2013 Competitive
Funding Opportunity Announcement (FOA) application to
stimulate energy investments in local jurisdictions and public
housing authorities.
• Tennessee was just 1 of 6 states to receive funding in the
FOA’s Area of Interest 3 – Retrofitting Public Buildings.
• Tennessee’s proposal specifically targeted hard to reach public sectors of smaller jurisdictions and public housing authorities.
Objectives
• Project objectives are to provide education, outreach, and technical assistance to – and serve as technical assistance providers for – local governments and public housing authorities (PHAs) to stimulate energy efficiency investments in the State of Tennessee.
• Outreach to a minimum of 50 local jurisdictions and 35 PHAs.
• Commitments from at least 10 local jurisdictions and 8 PHAs.
Technical Scope Summary
• Project will explore four primary financing options: (1) energy performance contracting; (2) utility incentives; (3) utility bill repayments; and (4) commercial PACE. • Other financing options may be identified during the grant period. • Technical assistance services will run the gamut
Project Team and Partners
Core project team:
• TDEC Office of Energy Programs
• Clean Energy Solutions, Inc.
• Memphis and Shelby County Office of Sustainability
• Metropolitan Government of Nashville and Davidson County
• City of Franklin
• City of Knoxville
Stakeholders:
• Tennessee Municipal League
• Tennessee Housing and Development Agency • Tennessee Association of Housing and Redevelopment Authorities
• Tennessee Renewable Energy Economic Development Council
• Tennessee Valley Authority
Timeline
•
February 2014 to January 2016
•
Work will be accomplished in four phases:
Phase I – Planning and Organization
Phase II – Initial Outreach
Phase III – Technical Assistance and Ongoing Outreach
Phase IV – Final Reconciliation and Reporting
Phase I: Planning and Organization (M1‐6)
• Align and organize stakeholders
• Create outreach plan
• Draft outreach collateral / materials
• Establish data management protocols
• Establish partnerships with energy service companies and participating agencies
• Identify and track financing mechanisms
• Investigate feasibility of commercial PACE
Phase II: Initial Outreach (M6‐12)
• Hold meetings with local governments and PHAs
• Finalize and distribute outreach collateral
• Milestone: secure commitments from at least 5 local governments and 4 PHAs
• Collect utility data from participating agencies
• Issue Request for Qualifications for participating contractors
• Release report on feasibility of commercial PACE as a potential energy efficiency financing option in Tennessee
Phase III: Technical Assistance (M12‐21)
• Advisement on singular or joint Requests for Qualification (RFQ) from participating energy services companies.
• Prequalification of eligible facilities and energy audits.
• Commitment to debt financing.
• Collection of utility data for benchmarking.
• Assembly of capital needs and priorities.
• RFPs and negotiation of contracts.
• Monitoring, verification and commissioning.
Phase IV: Final Reporting (M22‐24)
• Hold meetings with local governments, PHAs, and stakeholders to discuss next steps • Completion of data analysis for participating governments and agencies
• Submit final report
• Submit implementation model to promote similar program outcomes in other states and regions
QUESTIONS AND NEXT STEPS
Pete Westerholm, Program Manager
TDEC Office of Energy Programs
615‐532‐0238
[email protected]
Luke Gebhard, Senior Program Manager
TDEC Office of Energy Programs
615‐532‐8798
[email protected]
OEP Energy Hotline: 615-741-2994
http://www.tennessee.gov/environment/energy.shtml