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December 22, 2014 Economic Forecast

Clean energy financing expects double-digit growth

PHOTO | Contributed Connecticut companies like C-Tec Solar have seen their business grow as a result of Green Bank programs.

Q&A discusses the future of renewable and efficient energy project financing with Bryan Garcia, president of the Clean Energy Finance & Investment Authority, which is changing its name to Connecticut Green Bank.

Q: What will the Connecticut energy industry look like in 2015, particularly as it relates to CEFIA?

A: Over the course of the past several years, many of us have worked hard to support the development of a clean energy industry that is more competitive, which translates into clean energy being more accessible and affordable to consumers. We are transitioning a market for clean energy that was driven by public subsidies in the past towards a more sustainable pathway that is attracting more private capital investment. In 2015, expect growth. We are going to see more clean energy being deployed at a faster pace than ever before while using less public subsidies and more private investment.

Q: What can the business community expect from CEFIA in 2015?

A: Growth! We are seeing a doubling of the market year-over-year in clean energy. For example, we are seeing the market for the residential rooftop solar photovoltaic industry at $25 million in 2012 growing to potentially $150 million by the end of 2014. In the C-PACE (Commercial Property Assessed Clean Energy) program, last year we saw more than $25 million in transactions for commercial and industrial building energy improvements through deeper energy efficiency projects that are delivering 40-50 percent energy savings and the deployment of renewable energy systems that are more cost competitive in the utility renewable energy credit auctions. This year, we expect to eclipse $50 million in C-PACE transactions, which will require more private capital investment in Connecticut.

Q: What has been the response to business programs like C-PACE thus far, and how will that translate to interest next year?

A: The response to C-PACE has been extraordinary. We just signed up our 100th town — Newington. Now, nearly 90 percent of the commercial and industrial properties in Connecticut have access to affordable capital through C-PACE. With our early PACESetters, C-PACE is picking up rapidly across the board from a variety of customers, including family businesses like Shagbark Lumber and Katz Hardware, and industrial manufacturers like Precision X-Ray and Buordon Forge, to commercial real estate property owners and even community-based nonprofit organizations like the YMCA, Bushnell Theater, and religious institutions. C-PACE is a financing tool that enables consumers to lower their energy expenditures immediately while also improving the value of their properties.

Q: What is CEFIA's biggest challenge in 2015?

A: The biggest challenge for the Connecticut Green Bank in 2015 is managing in a growth environment. Growth is good, but it presents challenges for the industry. Imagine the growth challenges presented to clean energy installers that are small businesses going from $1 million a year in revenues to $5 million or $10 million a year. Hiring a trained and skilled workforce, accessing working capital to support growth, and redesigning business processes are but a few of the challenges they are being faced with. For us, doing what we can to support a market as it transitions from early stage to growth stage is our biggest challenge.

Q: CEFIA made one large deal for private financing of the C-PACE program in 2014. Can we expect more than that coming next year?

A: Yes. The Connecticut Green Bank enabled the first securitization of C-PACE transactions in the country in 2014. That deal has elevated the interest of private investors across the country in devoting more capital into clean energy financing. So, you should not only expect to see more of this from the Connecticut Green Bank but because of our leadership in Connecticut, you can expect to see more of this kind of investment across the country.

Q: Do you think renewable energy projects in Connecticut will reach grid parity in 2015 or sometime in the near future?

A: Yes. Depending upon the market segment — residential, commercial, industrial, institutional, or infrastructure — and the technology, including solar arrays and fuel cells, we could see renewable energy projects reach grid parity in the near future. For example, in the last two years, we have seen the installed costs of residential solar PV drop by more than 20 percent to $4 per watt delivering a levelized cost of energy of 19.07 cents per kilowatthour. As more competition comes into the market further driving down costs and as consumers are provided with easier access to affordable capital, we will see distributed energy resources become cheaper than the grid without subsidies.

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