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7.31.20 - Building Decarb & PAYS® Utility Value Prop

Updated: Aug 31, 2020

"Towards Accessible Financing Solutions" by Holmes Hummel, advised by Harlan Lachman

  • We mentioned in our April 3, 2020 Newsletter that Holmes Hummel and Harlan Lachman, our fellow PAYS® Pals, were embarking on a study with the Building Decarbonization Coalition to develop a policy roadmap and thought-leader consensus for deploying a financing mechanism that puts decarbonization investments within reach of most Californians, regardless of income, liquidity, or homeownership status. The goal was to find systems that address the criteria below:

    • The ability to finance over long periods (10-15 years) even in rental units with multiple changes in tenancy, etc;

    • Ability to leverage utility bill savings to defray investment costs, rather than rely on consumer credit or home equity;

    • Cash-positive outcomes that assure low and moderate-income customers will not have increased energy burdens;

    • Ability to scale to serve millions of households

  • On July 9th, The Building Decarbonization Coalition released the final report co-authored by Holmes which calls for the introduction of tariffed on-bill investments by utilities in California. Holmes Hummel then presented the findings using these slides on a webinar that had an audience of over 150 people. Since the release of the report and webinar, CPUC commissioners have asked Holmes for a private meeting to go over the findings! Way to go Holmes and Harlan!

"Utility Value of a Pay As You Save® Energy Efficiency Program" by Stephen Bickel, Jill Ferguson, and Daniel Kauffman to be published in ACEEE Summer Study 2020 proceedings

  • After recognizing a dearth of evaluations quantifying the actual electricity and peak demand reduction from upgrade programs using PAYS®, LibertyHomes partnered with Enpira to perform this evaluation for a subset of homes that participated in Roanoke Electric Cooperatives Upgrade to $ave program. We will share the full results once they are published in ACEEE's Summer Study Proceedings but you can see a sneak peek below at the end of the abstract!

  • Abstract: Pay As You Save® (PAYS®) is a tariffed on-bill system that couples site-specific utility investment in energy upgrades on the customer-side of the meter with site-specific cost recovery through a charge on the bill that is less than the estimated savings. PAYS programs are inclusive because eligibility does not depend on criteria such as income, credit score, or homeowner status. In 20 years of field experience across 18 utilities in eight states, energy upgrade programs using PAYS have reported take rates of 50%-90% with higher average capital investment per site compared to on-bill loans, while keeping utility uncollectibles below 0.1%. Utilities and regulators have sought measured energy and peak demand reduction metrics as inputs to financial analysis of the utility business case. This study analyzed weather normalized hourly meter data from Roanoke Electric Cooperative's (REC) Upgrade to $ave energy efficiency upgrade program based on the PAYS system. Results show that homes upgraded over a 21 month period have generated an average annualized reduction in electricity consumption of 4,228 kWh and 1.3 kW of peak demand reduction in winter and 1.2 kW in summer. The resulting net present value to the utility is $3,047 per home over the lifetime of the upgrades, and the total net present value of investments made during the period of this study is $1 million. Thus, even after taking into account the cost of capital, program operation costs, and foregone revenue from foregone wasted energy, REC’s PAYS investment portfolio is generating economic benefits for the utility.

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