Strategies for Minimizing Default Risk While Maximizing Energy Efficiency:Lessons Learned from an On-Bill Financing Program for Small Businesses

摘要

Financing of initial Energy Efficiency (EE) investments remains one of the most significant obstacles to adoption of robust projects. Utility On-Bill Financing (OBF) programs carry the potential for less credit and default risk due to the bundling of loan payment obligations with electricity and/or gas bill payment obligations. The objective of the paper is to present design parameters and pre-emptive strategies for managing credit risk in Energy Efficiency (EE) Financing Programs. The paper will report out on an investor-owned utility (IOU)-administered OBF Pilot program which targeted convenience and grocery stores with peak demand less than 500 kW and was implemented between 2007and 2009. The overall loan pool was approximately $800,000 with loan funds being provided to more than 70 customers. The paper will set forth the basic elements of program design for the pilot OBF program along with the program logic and intent. An analysis and evaluation of the aggregated loan portfolio will be provided along multiple parameters: a) Type of technology and end use; b) Estimated energy savings and demand reduction; and c) Write-off, default, payment, and early repayment experience. A gap analysis will be presented comparing intended program logic outcomes with actual program experience. Finally, a more detailed analysis will be set forth identifying root causes for defaults and/or write-offs. Strategies and recommendations will be provided to assist other administrators of EE Project Financing programs in mitigating credit and default risk while sustaining energy savings and demand reduction from the financed projects.