PAYS® for Clean Transport receives Design Funding Award

Convergence Logo

Clean Energy Works has received a Design Funding grant from Convergence to undertake a feasibility study of Pay As You Save® (PAYS®) for Clean Transport in a Latin American city.

“We found the PAYS model compelling, not only because it presents an innovative off-balance sheet solution for bus service providers smartly borrowed from other applications, but also because it shows potential to be catalytic for the clean transport space,” says Joan Larrea, CEO of Convergence. “Our mission is precisely to bring to light initiatives like PAYS that drive blended capital to where it is needed most and provide learnings for the broader market.”

PAYS has received significant traction from governments, development finance institutions, investors and philanthropies worldwide, including endorsement from the members of The Global Innovation Lab for Climate Finance in September. Convergence’s funding will allow Clean Energy Works to complete the necessary feasibility work to narrow down the pipeline of cities in Latin America to a candidate city for a first implementation project.

Financial analysis indicates strong potential for impact in emerging markets cities. For example, in Santiago, Chile, a PAYS investment for 100 buses can leverage more than $70 of investment capital for each grant dollar, while reducing overall grant requirements by 97%, generating $25 million in electricity sales revenues, and eliminating 62,000 tons of CO2 emissions.

Clean Energy Works will present an online briefing for those interested in learning more about the PAYS for Clean Transport model in the coming weeks. To receive more information about that event, please register here.

The Lab endorses PAYS® for Clean Transport

Logo of the Global Innovation Lab for Climate Finance

The Global Innovation Lab for Climate Finance announced today that it endorses Pay As You Save® (PAYS®) for Clean Transport, starting with battery electric transit buses.

Members of the Lab, including governments, private investors, philanthropies, and development finance institutions convened at the Rockefeller Foundation in New York during Climate Week to endorse and formally launch new investment vehicles for implementation including PAYS for Clean Transport. Public and private investors also committed to financial, technical, and political backing to take these rigorously developed instruments to market. Barbara Buchner, Executive Director of Climate Policy Initiative and the Lab Secretariat said, “The instruments are already on their way to making significant impact on the ground, at a time when swift and catalytic solutions for climate action are needed more than ever.”

Clean Energy Works participated in the 2018 Lab process as a proponent for the concept of PAYS for Clean Transport. PAYS harnesses a utility’s capacity to reduce the upfront cost of electric vehicles by investing in the on-board batteries and charging equipment that connects them to the grid. The utility recovers its costs through a service charge for the transit provider that is less than the expected savings, providing a path to ownership for the transit agencies without a loan or lease obligation.

Dr. Holmes Hummel, founder and principal of Clean Energy Works, noted the business opportunity for utilities. “With PAYS, utilities have a growth opportunity at the grid edge as electricity gains market share in a historic transition to clean energy on both the grid and in the transportation sector. Our aim in advancing this solution is to accelerate investment without expanding utility monopolies by introducing instead business models fit for many distributed energy innovations in the 21st century.”

Along with the endorsement, the Lab also released a brief overview and an instrument analysis with more detail. Clean Energy Works will present an online briefing for those interested in learning more about the PAYS for Clean Transport model in the coming weeks. To receive more information about that event, please register here.

Financing Sustainable Cities Initiative includes PAYS for Clean Transport at Clean Bus Finance Academy

Electric Bus

Time and time again, the high upfront cost of electric buses when compared to diesel buses is a major hurdle that cities face when trying to clean up their carbon footprint. The benefits of electric buses are undeniable, including reduced pollution, savings on operation and maintenance of buses, and increased public health benefits. But even if the transit agency, the local government, citizens, and other stakeholders are all aligned on wanting zero-emissions transit options, the biggest question they have to answer is: How can they afford this increased upfront cost?

Our colleagues at the Financing Sustainable Cities Initiative (FSCI) are working to help city governments and investors bridge from innovation to implementation and tackle questions such as this. FSCI is a partnership between C40 and the WRI Ross Center for Sustainable Cities, funded by the Citi Foundation, to help accelerate and scale up investment in sustainable urban solutions like electric buses through their annual Clean Bus Finance Academy.

At the second Clean Bus Finance Academy held in Quito, Ecuador this May, Dr. Holmes Hummel was invited to present on Pay As You Save (PAYS) for Clean Transport, an innovative model where a utility can offer to pay the upfront cost of bus batteries and charging equipment and then recover its cost with a fixed payment on the operator’s electricity bill. This approach reduces dependence on grants to overcome the upfront cost barrier, and as a result, cities can advance their clean transit goals much more quickly.

The Academy was attended by senior officials from nine different cities in Latin America, India, Europe, and North America as well as financial and technical experts.

2017: An Award-winning Year for Inclusive Financing. What’s Next in 2018?

Inclusive Financing Wins Top Award in Search for Breakthrough Climate Strategies

The Climate Strategies Accelerator recognized Dr. Holmes Hummel, founder of Clean Energy Works, with a top award for advancing an innovative utility financing concept to accelerate electrification of the transportation sector.  Dr. Hummel was among eight fellows initially selected for the Accelerator from a pool of more than 500 hailing from 89 countries.

To make the case, Dr. Hummel drew on a body of work on utility tariffed investments in better buildings, upgrading their energy performance. A similar approach can catalyze rapid electrification in the transportation sector, starting with vehicles that tend to have the best business case – transit buses.  

How does it work?  By offering to make a site-specific investment and recover its cost on the monthly bill for that site, utilities can cut the upfront cost of batteries and charging stations.  The result is more value delivered to the customer, more electricity sales, and lower emissions for transportation as the grid continues to grow cleaner every year.

The Accelerator’s two-year award made through the Silicon Valley Community Foundation will assist Clean Energy Works with strategy development and stakeholder engagement.

Mainstage Presentation at VERGE 17

At VERGE 17, Dr. Hummel addressed GreenBiz’s premier sustainability conference to make the case for harnessing the power sector to accelerate transformation in the transportation sector. In front of 2,000 leaders from government, nonprofits, and the corporate and tech sectors, Dr. Hummel laid out the opportunity to capture market share in transportation fuels by addressing the upfront cost barrier for electric vehicles, starting with transit.

Dr. Hummel’s talk, “Inclusive Financing for Clean Energy — Paving the Way with EVs,” laid out a vision to drive oil out of the transportation sector and surging investment in EVs. Widespread adoption of inclusive financing tools, such as a utility tariff, can accelerate this transition and help cities and transit agencies achieve their commitments to sustainability.

What’s Next for Clean Energy Works?

In 2018, Clean Energy Works will expand its field of activity to collaborate with allies and key stakeholders, including utilities, transit agencies, manufacturers, policy-makers, and NGOs.  Harnessing the strength of aligned interests, Clean Energy Works will focus on creating conditions for broader use of inclusive financing. This model has proved effective in energy efficiency building upgrades, and plummeting costs for batteries and other distributed energy solutions are opening the door for EVs and more.

We will continue to provide advisory services and technical support to those interested in adopting inclusive financing. For example, the Southeast Energy Efficiency Alliance (SEEA) sponsored a series of open-access briefings and webinars to dozens of champions for public interest in SEEA’s Inclusive Financing Learning Circle. This group is made up of practitioners who are exploring a specific application of inclusive financing, and they receive technical assistance on designing and implementing utility tariffs.

As we continue to build on the momentum of the Climate Strategies Accelerator award, we will continue to seek ways to go to scale faster, both inside the U.S. and beyond.  If you have an interest in exploring your potential, please be in touch:

Mainstage at VERGE 17: Paving the Way for Inclusive Finance through EVs

VERGE 17, GreenBiz’s premier sustainability conference, recently brought together 2,000 attendees to Santa Clara, California, to learn, share and be inspired to create a better future. The conference converged leaders from the corporate, tech, government, nonprofit and art sectors to accelerate sustainability solutions and forge connections.

Dr. Hummel’s main-stage presentation makes the case for widespread adoption of inclusive finance starting with accelerating electrification of bus transit.

“For years, utilities have resisted the distributed energy revolution already underway. Yet, electrification of the transportation sector presents a historic opportunity for growth, and it is a critical path for climate stabilization. What’s new? In the last year, plummeting battery costs have helped the some vehicles — specifically, long-range electric transit buses — finally approach cost parity on a lifecycle basis when compared to diesel buses. At the same time, an innovative finance mechanism is gaining traction in the utility sector that would allow utilities to invest and recover costs for the on-board batteries. With these developments, utilities could drop the upfront cost of all-electric vehicles, set off a surge in sales, and rapidly capture the prize of market share for transportation fuels. But will they?”

International Accelerator Awards Holmes Hummel for Breakthrough Financing Strategy for Clean Transit & Electric Vehicles

After considering more than 500 ideas from 89 countries over the course of eight months, the Climate Strategies Accelerator selected an innovative financing concept raised by Dr. Holmes Hummel for a top award.  Specifically, Dr. Hummel proposed to cut the upfront cost of EVs by applying a successful utility tariff for distributed energy solutions, starting with bus fleets that provide the most compelling business case.

For the final round, the Accelerator hosted a Silicon Valley-style Innovation Showcase attended by an invited audience of more than two dozen leading funders and field leaders for climate action. Criteria for selection included judging on the merits of potential for breakthrough impact, breakthrough strategy, leadership, field-wide perspective and capacity to execute.  

 Final decisions were made by representatives of the Packard Foundation, Oak Foundation, and Good Energies, the sponsors of the Climate Strategies Accelerator Fund.  The Silicon Valley Community Foundation, which hosts the Fund, will process the Accelerator’s recommendation of a two-year award to advance the strategy to drive down oil demand with innovative utility financing for EV, starting with clean transit.

Climate Strategies Accelerator selects Clean Energy Works for 2017 Oil Breakthrough Lab

CSA logo

“Think a world without oil is possible?  Here’s your chance to prove it.”  That was the challenge posed by the Climate Strategies Accelerator when they announced the Oil Breakthrough Lab, a worldwide challenge that drew more than 500 candidates from 89 countries. Among the 8 Fellows selected is Dr. Holmes Hummel, whose work on inclusive financing for building energy efficiency upgrades shows even greater potential for rapid uptake in the transportation sector.

The Climate Strategy Accelerator’s announcement includes recognition for Clean Energy Works along with luminaries in the field such as Nnimmo Bassey (Nigeria) and Fuiquing Yang (China).  Fellows will draw on the resources of the Accelerator to fast-track the development of their ideas into working prototypes for initial application.  Sponsors of the Accelerator include Good Energies, the Oak Foundation, and the Packard Foundation, and Fellows will have the opportunity to present their opportunities for impact to funders later this year.

Through the Accelerator, Clean Energy Works will be able to advance the application of tariffed on-bill programs to transit buses, which are essential infrastructure in cities around the world.  Dozens of major cities have already pledged to move toward zero emission fleets, yet financing has proven to be a key constraint slowing the transition.  Once applications to transit fleets are well underway, additional vehicle classes can be covered as can upgrades to buildings with additional distributed energy solutions.