Environmental Defense Fund’s Investor Confidence Project (ICP) and the Clean Energy Finance Center (CEFC), in partnership with state and local lending programs, financial organizations and a range of additional stakeholders, are collecting, aggregating and analyzing loan performance and energy savings data from energy efficiency upgrades in residential and commercial buildings.

The Energy and Loan Performance Data Project represents the first concerted effort to combine data from some of the largest US energy efficiency programs in an attempt to develop an actuarially significant dataset to help engage the capital markets.

Nearly 40% of US energy is consumed by both residential and commercial buildings.  Realizing all of the available cost-effective energy efficiency savings would require roughly $279 billion of investment, resulting in more than $1 trillion in energy savings over ten years.  However, currently, only 1% of all US investments are made in energy efficiency projects.  Our goal for this project is to help lay the foundation that will enable organizations to tap into this vast potential market.

Currently energy efficiency investors of all types, including building owners, energy service companies, insurance providers and even utilities, are hampered by an inability to easily and accurately predict loan performance.  This results in high transaction costs, as well as risk premiums, that increase the cost of capital.  One of the main challenges is the small quantity and low quality of data that investors can utilize when evaluating investments in energy efficiency assets.  This lack of data standards and access to large datasets has been cited by a broad range of stakeholders, including capital providers, policy makers, building owners and contractors, as impeding large-scale investment in building retrofits.

In collaboration with the University of Chicago's new Data Science for Social Good fellowship program, EDF and CEFC will identify how stakeholders use loan and project performance data, determine gaps that may exist in the current datasets and deliver high-quality analytics to support the advancement of energy efficiency finance and investment through actuarial data.

Many key stakeholders in the energy efficiency sector support this new project, including the New York State Energy Research and Development Authority (NYSERDA).  NYSERDA’s Treasurer, Jeff Pitken, stated that “making our program loan performance history publicly available and aggregated with history from other programs will lower the cost of capital for these programs and allow more favorable financing terms to be offered to participating consumers.”

Beyond loan performance, the project also seeks to provide the ability to analyze performance risks.  This will allow investors to realize more predictable returns, which will lead to more lending at better rates.  Performance prediction is especially important for innovative energy financing models, such as On-Bill Repayment and Energy Service Agreements, and better analysis will enable the widespread adoption of these structures.  From an operations perspective, better data analysis offers the ability to continuously improve project commissioning – thus leading to increased energy savings.

The Energy and Loan Performance Data Project will be collecting data sets from some of the largest residential and commercial programs across the country.  We will be combining these sources with public sources, such as census data, to provide publicly-available data that we hope will accelerate investments in energy efficiency.  Data will be anonymized and modified to protect privacy, but will include the following elements:

• Loan Repayment Performance
• Underwriting Criteria and Deal Structure
• Project Attributes, Energy Conservation Measures and Predicted Performance
• Energy Performance Data (Realization Rate)

We are inviting energy efficiency and finance organizations with data and/or data expertise to participate in this endeavor (especially those who can contribute significant amounts of data).  The project will adhere to rigorous privacy standards to ensure that no proprietary information will be disclosed to the public.

Please help us make this project a success.  If you have a use for this type of data and analytics, or if you have data to contribute, please take a few moments to let us know how we can help by filling out this brief survey.

The Investor Confidence Project congratulates NYSERDA, the NY Green Bank, and the many contractors and homeowners that will benifit from this important milestone.  Today, NYSERDA has announced the release of $24,300,000 Residential Energy Efficiency Financing Revenue Bonds (Series 2013A) to finance and refinance loans issued through the Green Jobs-Green New York (GJGNY) program to fund energy efficiency improvements in 1-4 family residential dwellings.  

The Bonds have been rated AAA/Aaa by S&P/Moody’s, based upon a Guarantee of the payment of principal and interest on the Bonds provided by the New York State Environmental Facilities Corporation (EFC) though its State Revolving Fund (SRF) program - the largest SRF program in the country, providing AAA-rated financial assistance to local governments and public entities to finance clean water and drinking water projects.  The bonds are anticipated to price on July 30 and close on August 13. 

The Bonds will be secured by a pledged of loan payments from residential energy efficiency loans issued through the GJGNY program totaling approximately $29.2 million in aggregate principal, and any available monies in the revolving loan fund established under the GJNGY program.  Approximately 65% of the loan pool will be Direct Bill loans (borrower makes monthly payment to NYSERDA’s master loan servicer) and approximately 35% will be On-Bill Recovery loans (borrower repays through a charge on their utility bill).  The Bonds will be sold as taxable Qualified Energy Conservation Bonds (QECBs), which provide a partial interest subsidy from the US Treasury. The bonds are structured with serial maturities in varying amounts with maturities of one to ten years, and a 15-year term bond which is callable at par after ten years, providing an average maturity of about 6.9 years.  The QECB interest subsidies, coupled with the interest rate anticipated from the AAA rating, are expected to result in a net interest cost on the bonds well below 1%.  The Bonds require NYSERDA to maintain a coverage ratio of Net Pledged Revenues (pledged loan payments plus pledged QECB interest subsidies less expenses for loan servicing, trustee and credit facility fees) of at least 110% of annual debt service, and have been structured to achieve a projected coverage ratio of 126%.  Excess revenues are returned to the GJGNY revolving loan fund upon maintaining required coverage ratios.  The EFC Guarantee requires NYSERDA to establish a Collateral Reserve Account held by a Custodian, funded with approximately $8.5 million in federal grant funds provided by the U.S. Department of Energy through its Better Buildings program, to reimburse EFC for any draws upon its Guarantee and to protect the assets of the SRF program; the balance of the account is reduced and returned to NYSERDA on a pro-rata basis with bond principal payments. 

For your information, attached is the Investor Presentation and Preliminary Official Statement, also available on MuniBond Roadshow at:  http://munios.com/rs/yf085

The Bonds are one of the first programmatic undertakings of the Green Bank within NYSERDA.  Announced by Governor Cuomo in January 2013, the Green Bank will alleviate financial market barriers that currently impede the flow of private capital to clean energy projects.  

On Thursday, July 11th, from 1:00 pm to 2:00 pm EST, Matt Golden, Senior Energy Finance Consultant with the Environmental Defense Fund (EDF) will discuss the Investor Confidence Project (ICP) with our Project Ally Noesis, with a focus on how the ICP Energy Performance Protocols can be leveraged as a pathway to securing investment in Energy Efficiency projects.  

The Investor Confidence Project works with a network of Allies to standardize deal-flow and investment in energy efficiency projects leveraging the ICP Energy Performance Protocols.   

The Noesis website operates as a platform intended to connect energy efficiency projects requiring third-party funding with financing lenders.  Their software provides a framework whereby energy professionals can submit their project definition in a standardized format, and forecast energy savings potential through the use of industry-standard guidelines, allowing evaluation by Noesis financial partners.

The Investor Confidence Project is currently working with a growing network of Project Allies to integrate their protocols as an important component of the evaluation process.  The ICP protocols, funded by the Environmental Defense Fund, define best practice engineering protocols for energy efficiency projects, in order to provide for more stable, predictable and reliable savings outcomes.  The protocols address baseline development, savings calculations, design, construction and commissioning practices, operations, maintenance and monitoring, and M&V.

The intent is that the ICP protocols will, as the name suggests, help to provide investor confidence in potential energy efficiency projects. ICP is working with a wide range of allies to establish a standardized and robust process for evaluation of the financial stability and potential of efficiency projects, allowing for fast, reliable and consistent connections between potential projects and financial lenders.