1. Energy Financing for Municipalities Andrew Brydges Director, Institutional Programs Clean Energy Finance and Investment Authority (CEFIA) April 2014

2. CEFIA, Connecticut’s “Green Bank” Vision for Clean Energy at Scale …transitioning programs away from government- funded grants, rebates, and other subsidies, and towards deploying private capital …CEFIA was established in 2011 to develop programs that will leverage private sector capital to create long-term, sustainable financing for energy efficiency and clean energy to support residential, commercial, and industrial sector implementation of energy efficiency and clean energy measures. 2 Green Bank

3. Financing Opportunities for Municipalities ▪Energy Efficiency Retrofits –Small Business Energy Advantage  Delivered through CL&P and UI –Energy Savings Performance Contracting –C-PACE ▪Specific Technologies –CT Solar Lease (solar PV) –Anaerobic Digestion and CHP –Microgrids

4. Energy Efficiency Retrofits repurpose wasted utility dollars to: ▪Address deferred maintenance ▪Eliminate costly emergency repairs ▪Upgrade to high efficiency energy systems ▪Stabilize energy costs, improve budget accuracy

5. Financing Concept

6. Small Business Energy Advantage (SBEA) Generally for small, quick payback measures Only for customers with <200kW billing demand Free energy audit by utility approved contractor Most recommended efficiency measures can use utility procured, competitive pricing Cash incentives provides up to 30%–50% of the cost Balance of cost (<$100k) financed “on bill”, 0% / 4yrs Cash flow neutral or immediate positive

7. Energy Savings Performance Contracting (ESPC) ▪Implementation of comprehensive energy saving measures, paid for by guaranteed savings from future operating budget ▪Approach is over 30 years old, approx. $4.1 billion market in U.S. in 2013 1 –“SMUSH” Sector > 50% of ESPC Market 1 Lawrence Berkeley National Laboratory, “Current Size and Remaining Market Potential of U.S. ESCO Industry”. (Presentation to Energy Services Coalition, August 13, 2013)

8. Aggregated Measures Balance Payback 1-5yr Payback –High Efficiency Lighting –Optimized energy management systems –Low flow fixtures 10-20+yr Payback –Advanced HVAC Systems –Windows and building weatherization –Renewable energy systems Aggregate Payback <15 years

9. How does the CT ESPC program work? ▪Pre-qualified vendors (QESPs = “ESCOs”) ▪Pre-approved, standardized documents and process –Required for use by state agencies –Can be used by municipalities ▪Technical Support

10. Program: > $100m of Projects and Growing Connecticut Valley Hospital Dept of Corrections Dept of Motor Vehicles City of Bristol Regional School District 17

11. C-PACE Commercial –Property Assessed Clean Energy ▪ Enables non-residential property owners to access financing for qualified energy upgrades and repay through a benefit assessment on their property tax. 100% upfront, low-cost, long- term funding Repayment through property taxes (Savings exceed payments) A senior PACE lien is put on the property and stays regardless of ownership 11

12. CT Solar Lease ▪$60 million fund combining tax equity and leveraged bank debt –Delivered as a Power Purchase Agreement –Expected fund life - two years (if successful … more to come) ▪Qualifying “Commercial” System Hosts: –Municipalities and schools  Must be rated A3 (Moody’s) or A- (S&P/Fitch) ▪CT Solar Lease will cover all O&M, and provides PL&C coverage that will get priced into the PPA –Installer offers six-year workmanship warranty, and panels, inverters, and racking have standard product manufacturer warranties 12

13. Anaerobic Digestion and CHP Programs ▪$6M Pilot Programs for new projects:  Each funded to $2M/year for 3-years (programs close Feb. 2015)  Up to $450/kW (incentive in the form of a grant, loan or PPA)  Maximum project size  AD – 3 MW  CHP – 5 MW  Projects requesting loans or PPAs have a higher probability of being selected

14. Connecticut Microgrid Program The purpose of the Connecticut Microgrid Program is to solicit proposals to build microgrids in order to support critical facilities (as defined by Connecticut General Statutes, Section 16-243y, as modified by Public Act 13- 298, Section 34) during times of electricity outages. The Program was developed in response to the recommendation of the Governor’s Two Storm Panel regarding the use of microgrids as a method for minimizing the impacts to critical facilities associated with emergencies, natural disasters, and other events when these cause the larger electricity grid to lose power.

15. CEFIA’s Role in Financing Microgrids Sources Uses CEFIA Direct Financing $5M Available CEFIA Programs >$100M Available DEEP Grants $15M Available EPC Cost for Generation Assets Balance of System Costs Interconnection Costs Engineering & Design Costs Private Capital

16. THANK YOU! Andrew Brydges Director, Institutional Programs Clean Energy Finance & Investment Authority andrew.brydges@ctcleanenergy.com 860-258-7834