December 18, 2019

Financing investment at the grid edge expands to new frontiers

By: Jenna Barron

New sectors, new geographies, and new partners. In these three dimensions and more, our team at Clean Energy Works has expanded the frontiers of engagement to mobilize massive investment in clean energy solutions at the grid’s edge.

While continuing to advance clean transit and building efficiency, we have seen more types of EVs join electrification in buildings and on-site solar as new markets that could be fueled with tariffed on-bill investment. The growing landscape of interest and activity is driving us to be more resourceful than ever in pursuing the best opportunities for both breaking new ground and for scaling up investment.

We are delighted to share this good news with funders, partners, advisors, and friends in the field, all of whom have helped sharpen and propel the quest to accelerate investment in distributed clean energy solutions on a scale that matters, in a time frame that makes a difference for all.

Launch of our international portfolio

Building on the endorsement of PAYS for Clean Transport by the Global Innovation Lab for Climate Finance in 2018, Margarita Parra joined Clean Energy Works to lead our international transportation electrification projects. This portfolio initially included a case study supported by Convergence on transitioning to electric buses in Lima using the PAYS model. Through our work with partner organizations such as C40 Cities, WRI, and ICCT, it has lead to a project on financing electric buses in Bogotá sponsored by the UK government and engagement with P4G’s Zero Emission Bus Rapid-deployment Accelerator (ZEBRA)

These engagements lead to invitations to present our work to broader audiences. Margarita presented on our international projects at COP 25 in Madrid, and Holmes Hummel keynoted the World Bank’s Global Infrastructure Facility (GIF) Advisory Council Meeting this fall in Washington, DC. In addition, we have accepted invitations to address the Latin American Forum on Impact Investment as well as managers of the Climate Investment Funds at the World Bank and its related multilateral development banks. The shared sense of urgency and pragmatism that forges the best international work on innovations in finance is certainly propelling our work forward through referrals that are opening new doors of opportunity in 2020.

Engagement with top-flight utilities

Utilities have powerful and unique instruments to unlock large-scale clean energy investments, so our outreach activities over the past year have increasingly focused on utility engagement. Internationally, we’ve primarily engaged with Engie and Enel, which have already sponsored electric bus projects in Latin America. Each has already gone so far as to purchase fleets of EV transit buses to lease to operators, and now they are seeking more capital efficient and scalable paths for accelerating electrification. These multi-national utilities are at the leading edge, moving faster than U.S. utilities to seek innovations in site-specific investment for electrifying strategic transportation fleets like transit buses.

In partnership with Blue Planet Foundation in Hawaii and all four counties in the state, we worked with a utility advisory firm to complete financial analyses exploring the business case for electrifying the transit bus fleets, which are a top priority in the Electrification of Transportation Roadmap issued by the main utility, HECO. Hawaii continues to be a leader in clean energy technology solutions, and with the support of these analyses, Blue Planet Foundation has presented a strong business case to key stakeholders, including utilities, transit agencies, advocates and policy makers. 

Similarly, Environmental Defense Fund (EDF) is collaborating with Clean Energy Works on advancing sustainable, replicable, and scalable solutions for capitalizing transit fleet electrification. Together with Cadmus, a utility advisory firm, we have completed financial analysis to explore how best to maximize funds for fleet electrification in the state. To realize that opportunity, they have led engagement with Duke Energy, transit operators, and state level policy makers in the executive branch, including the utility commission. 

Inclusive financing champions continue to emerge

Strong champions continue to emerge in the national ecosystem with an impressive cohort of leaders located in the Southeast. The Southeast Energy Efficiency Alliance (SEEA) has formed a Tariffed On-Bill Working Group for implementers to foster peer learning, faster adoption of best practices, and more development of self-serve resources for emerging champions in the field. One new addition to those resources is our paper prepared for the influential Behavior, Energy, & Climate Change conference in order to share results from PAYS programs across the United States, with a focus on the exceptional customer acceptance rates found across utilities offering to capitalize cost effective upgrades.

LibertyHomes has also begun operations this year, providing technical assistance to PAYS® Program Operators in order to develop more programs. Drawing on materials developed by Clean Energy Works in collaboration with electric cooperatives, LibertyHomes is now capitalizing on work by champions for inclusive financing in Missouri and Texas. In addition to supporting these new projects, LibertyHomes also documents the value of PAYS® programs for utilities and customers and encourages third-party evaluators to provide independent verification. 

The U.S. Department of Energy also added to the chorus at its Better Buildings Summit, releasing an Issue Brief on tariffed on-bill programs as part of its Clean Energy for Low Income Communities Accelerator (CELICA). Within months, it had become the top internet search result for the topic as the clarity of the brief increased its currency with broader audiences. Soon after, Clean Energy Works learned of two teams within the agency including tariffed on-bill investment in the scope of projects focused on grid resilience and building energy performance.

The emergence of more champions in the field increases our independent validators and shows that in some parts of the landscape the balance of effort is moving from market development, where opening doors of opportunity is needed, to business development, where the focus is on converting those opportunities to new investment programs. 

Financing for new frontiers: solar, electric school buses, and building decarbonization

Rural electric cooperatives are leading the way with energy efficiency whole-home retrofit programs in Kentucky, North Carolina, Arkansas, Kansas, and most recently in Tennessee. Increasingly, investor-owned and municipal utilities are considering launching tariffed on-bill programs of their own. For example, three for-profit utilities in Missouri are now following the conclusions of their feasibility studies on tariffed on-bill investment last year in order to introduce more inclusive options for participating in energy efficiency programs going forward.

Utilities are also considering new ways to apply tariffed terms for site-specific investment and cost recovery, ranging from vehicle electrification of transit and school bus fleets to other grid-edge solutions such as solar, demand-response, and building decarbonization. All of these applications can play a substantial role in accelerating the reduction of emissions and increasing access to clean energy solutions for all.

In California, major utilities such as SMUD, PG&E, and Southern California Edison, are starting to take a deep dive into the concept of tariffed on-bill investment after multiple rounds of stakeholder consultation have elevated calls to center equity in the clean energy economy. Greenlining Institute has led the way with its Mobility Equity Framework as well as the more recent Equitable Building Electrification framework, which recommends tariffed on-bill investment to ensure access for all customers. 

Clean Energy Works is supporting the leading utilities in California by sharing field experience reported by utilities in other states, and also, we are making similar technical assistance available to California Energy Commission (CEC) and the California Public Utility Commission (CPUC). Both Commissions have repeatedly expressed interest in ensuring clean energy policies do not produce regressive effects, and this month the CEC reiterated its call for a statewide tariffed on-bill program as part of the state’s Energy Efficiency Action Plan. At the CPUC, a similar solution has been in the scope for proceedings on electrification of transportation and decarbonization of buildings

Continued validation 

In three of the past four years, Clean Energy Works has received recognition through highly competitive international awards, and we are humbled to have extended that run in 2019 with a Keeling Curve Prize in Finance. This prize named for famed climate scientist Charles Keeling recognizes projects that reduce greenhouse gas emissions or promote carbon uptake. The award highlights Clean Energy Works for innovation in the transition to clean transport, starting with transit and expanding into school buses, which have a broader presence in larger numbers in the U.S.

The Hewlett Foundation also expressed support of our aim to catalyze $1 billion in investment for 4,000 electric buses and drive new diesel buses out of transit fleets in more than 50 cities within three years. These goals are in sight where utilities can capitalize the upfront cost of smart investments that are recovered through a service agreement approved by their regulators or oversight boards. The Hewlett Foundation agreed to provide a multi-year grant to support our work on PAYS for Clean Transport, following up on the endorsement of the concept last year by the Global Innovation Lab for Climate Finance, which it also supports.

Additional grants received in 2019 include the U.S. Department of Energy, which has funded the Low Income Financial Transactions (LIFT) Solar Everywhere research project led by our partners at Groundswell. This line of exploration will test the applicability of inclusive financing via tariffed on-bill investment in onsite solar.

Clean Energy Works continues to be sought out by philanthropists seeking advisory services to support their mission-oriented interests in more equitable approaches to a clean energy transition. Grants from two foundations in addition to our general operating support has allowed us to help funders integrate equity into their strategies to catalyze faster investment in the clean energy economy, especially in underserved market segments. 

Want to learn more?

With all this progress in 2019, we’re looking forward to another great year in 2020, collaborating with even more champions for rapidly scaling up investment in grid edge solutions in ways that open up more opportunity faster. If you are interested in learning more about how to pursue inclusive financing with your community, please contact us. We are interested in investing in your success!

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