Additional Resources

Below is a summary of additional resources available to assist you in making energy efficiency upgrades to your property.

Service Agreements

Service Agreements, in general, allow a property owner to realize the savings from energy efficiency improvement and/or renewable energy generation without having to own the equipment and without having to pay the upfront costs.  Services agreements remain off balance sheet.  Under a services agreement: 1) Contractor has the responsibility for property, plant and equipment (PPE) operation 2) Benefits are shared between the Contractor and the Client.

Program: Energy Savings Performance Contract (ESPC)
Description: ESPC structure has been used extensively by ESCOs in the MUSH (Municipalities, Universities, Schools and Hospitals.  In an ESPC arrangement energy efficiency improvements are owned by the Customer and may be installed with little or no upfront cost.  The ESCO installs energy efficiency improvements and sometimes guarantees the savings. The ESPC contracts are usually structured so that savings spilt between the Customer and the ESCO to ensure that the Customer’s total savings exceed the total of all of their payments (both payments to the ESCO and to the lender/investor) over the term of a 10 or 20 -year contract.

Program: Energy Services Agreement (ESA) and Managed Energy Service Agreement (MESA)
Description: In ESA and MESA contracts, the Customer does not pay the initial costs for the energy efficiency improvements but enters into a ESA or MESA with an energy services contractor.  The Customer makes regular payments to the contractor over time based on mutual agreed upon historical costs, floating percentage of the Customer’s actual utility rate or cost per avoided therm/kWh.

Program: Power Purchase Agreement PPA
Description: A financing structure that enables property owners or tenants to realize the benefits of renewable energy generation without having to own the equipment and pay the upfront costs.  The PPA “buyer” (property owner or tenant) enters into a long-term contract by which they agree to pay a pre-determined rate (fixed or floating) per unit of electricity generated.

 

Leases

Leasing generally provides 100% financing and reduces or eliminates upfront expenses and downpayments required by other financing alternatives.  If an agreement either 1) holds the customer responsible for the operation of the property, plant and/or equipment and/or 2) allocates all benefits from the PPE to the Customer then the agreement is recognized as a lease. Energy efficiency equipment lease payments can paid for out of the savings, resulting in a net positive cashflow.  The Financial Accounting Standards Board (FASB) is considering new standards that will require all leases, both capital and operating, to be reflected on a company’s balance sheet. 

Program: Capital Lease
Administrator: Equipment vendors
Description: A capital lease has more of the characteristics of asset ownership.  A capital lease meets one or more of the following criteria:  1) lease term is greater than 75% of the property’s estimate useful life 2) lease contains an option to purchase the equipment for less than fair market value 3) ownership of the property is transferred to the lessee at the end of the lease term or 4) the present value of the lease payments exceeds 90% of the property’s fair market value.

Program: True Lease
Administrator: Equipment vendors
Description: A multi-year lease which does not pass on ownership rights of the equipment to the lessee.  A true lease structure where the lessor (person granting the lease) bears both the risks and rewards of ownership of the property.  The lessee gets to use the property through a rental arrangement

 

Utility Allowances

Utility allowances which are used to calculate household rent in income-restricted units are usually set by the local Public Housing Authority.  For the most part, these allowances do not factor in the age, physical condition or improvement history of buildings.  This can lead to utility allowance calculations that are overstated and result in lower rents.  The Utility Allowance strategies listed below offer alternative ways to establish utility allowances which more accurately reflect a building’s actual performance and thus the amount a tenant will actually pay.

Program: ECM (Energy Consumption Model)
Description: An ECM calculates a utility allowance developed for a specific project based on the energy performance of that property as calculated by a qualified professional.
Eligibility: 1) TCAC has not yet approved use of CUAC for retrofits  2) Project-specific but not unit-specific so there is no clear price signal to residents based on actual usage

Program: EEBUA (Energy Efficiency Based Utility Allowances)
Description: EEBUA is an alternative utility schedule that properties can use if they meet threshold energy performance criteria (ie 20% for new construction and 25% for rehab projects.)  EEBUA is a lower utility allowance based on estimating the average energy consumption of energy-efficient buildings located within a PHA’s jurisdiction.
Eligibility: 1) Not project-specific. Ie a project that is 50% more efficient than code has to comply with the same EEBUA schedule as a project that is 25% more efficient than code

Program: On-Site Generation Utility Allowance (OGUA)
Description: Owner installs Solar PV which services resident demand.  Owner can deduct from the electrical allowance the corresponding % of electrical demand met by Solar PV
Eligibility: 1) Deduction to utility allowance made across the board, no clear price signal to residents

Click for more information on Utility Allowances.  Here you can download Utility Allowance Options for Investments in Energy Efficiency: Resource Guide.

 

Weatherization

Program: Low Income Home Energy Assistance Program (LIHEAP)
Administrator: Local Energy Service Providers through CSD
Geographic Coverage: throughout California
Description: LIHEAP is a federal program funded by the Dept of Health and Human Services.  Residents participating in the CARE program typically qualify.  Programs are implemented by Community Development Corporations (CDCs) under California’s Dept of Community Services and Development (CSD).
Eligibility: For dwelling units occupied by households with income under 200% of poverty level.  Multifamily buildings may be weatherized if at least 66% of dwelling units in the building are eligible and certain other requirements are met.
Click for more information

Program: Weatherization Assistance Program (WAP)
Administrator: Local Energy Service Providers through CSD
Geographic Coverage: throughout California
Description: WAP reduces the heating and cooling costs for low-income families by improving the energy efficiency of their homes and ensuring their health and safety.  The program targets low-income households especially elderly, disabled and families with children.
Click for more information

 

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