Innovative Financing for Renewable Energy . Richard Ottinger & John Bowie Pace Law School Pace Energy and Climate Center IUCNAEL 2014 Colloquium. Background. Divided mechanisms into three groups: Off-grid or underdeveloped infrastructure Community-scale grids National grids.
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Innovative Financing for Renewable Energy Richard Ottinger & John Bowie Pace Law School Pace Energy and Climate Center IUCNAEL 2014 Colloquium
Background • Divided mechanisms into three groups: • Off-grid or underdeveloped infrastructure • Community-scale grids • National grids
Selected Mechanisms • On-bill Finance Mechanisms • Microgrids • Internet Mechanisms • Yieldcos
On-Bill Finance 1 • What is On-bill finance? • Third party (non-financial institution) provides finance for the initial high capital cost of an energy asset. • Uses an existing bill collection as a mechanism to collect payment for a renewable energy or energy efficiency asset. • In practice, this may be a utility bill or a property tax surcharge.
On-Bill Finance 2 • On-Bill Finance – Utility-financed project installs a renewable energy or energy efficiency asset, and adds a recurring charge on the customer’s monthly bill. The monthly rate is designed to use the savings created by use of the energy asset to pay the loan. • Property Tax Assessed Clean Energy – State-financed project provides funding for renewable energy or energy efficiency assets.
Microgrids • Community Microgrids present a unique opportunity for renewable energy systems. • Local projects benefit from community stakeholders in billing, enhanced economic opportunities, and benefits in biomass reuse.
Internet Mechanisms • Prepaid Meters • Peer-to-Peer Finance • Crowdfunding • Peer-to-Peer (“P2P”) Finance
Prepaid Meters • Prepaid meters function like other prepaid services such as prepaid cellular phones. • Customers text message a prepaid code to the billing company, which then credits the meter for a specified amount of power. • The meter company distributes payment to the specific electricity provider, while retaining a small service fee.
Lumeter Networks • Lumeter Networks provide prepaid meters and cloud accounting for renewable energy installations. • An energy company can install a solar panel in a remote or off grid setting, and then recover bill payments through Lumeter’s wireless prepaid billing.
P2P & Crowdfunding • Peer-to-peer (P2P) funding and crowdfunding allow a potential borrower to post their proposed project on the internet, where one or more people may then act as lenders. • Atypical lenders • Small scale loans • Favorable rates • Ethical lending
Yieldcos • “Yield Companies” or “Yieldcos” • Yieldcos package long term profits from renewable energy assets into tradable securities. • Enables the Yieldco to quickly raise capital, which can then be used to purchase developers’ renewable energy assets. • Renewable end-game?
Conclusions • Many more mechanism are currently being deployed to speed investment in renewable energy. • Functioning private sector financing solutions are essential to the long-term health of renewable energy. • Innovative to Conventional Thank you