- Our panel on solar energy financing
will be moderated by Sherrie Gruder.
Sherrie is the sustainable design specialist
and distinguished lecturer and energy program manager
of Energy on Wisconsin program
at the University of Wisconsin-Extension.
She provides statewide education and technical assistance
on sustainable community development, energy strategies,
and green building to Wisconsin communities,
local and state governments and businesses.
And Sherrie will introduce the panelists.
- Thank you Jane and thank you to the Academy.
This is always a wonderful gathering
and I'm so glad to see so many people here
not only from this region but actually from around the state,
so thank you for driving all this distance
and I hope you carpooled.
Okay well, we are gonna talk about solar energy financing
and I have a wonderful panel.
I'm gonna start off to give you an update
on solar energy financing in Wisconsin.
And then we're gonna have Erika Kluetmeier.
Erika was the sustainability coordinator
for the city of Fitchburg, Wisconsin in Dane County.
And she just recently took a job
with the Wisconsin Department of Natural Resources
with the Green Tier Legacy Program.
And Erika is going to be providing technical assistance
to businesses in local communities
who wanna find innovative solutions
to create more sustainable organizations in her new role.
But luckily we'll tell you about
what she did at Fitchburg with their solar.
And then she's gonna be followed by Kurt Reinhold
from Legacy Solar Cooperative.
Kurt is the founder and president of Legacy Solar
and his company Solar Connections
put together the first municipal tax financing project
for solar in Wisconsin in 2013.
And Kurt works with faith-based organizations
and schools and now municipalities
and other businesses to find financers
whether they're third-party business financers
or just people like you and me
who wanna buy bonds in solar projects
to help finance solar projects.
And then our fourth speaker this morning is Jason Stringer
from WEC, Wisconsin Energy Conservation Corporation.
He's the senior manager of Clean Energy Finance
and Jason is a project finance expert
with a successful track record
of creating value in the clean energy finance
and commercial real estate industries
and he's gonna talk to us about PACE.
So to start,
a year ago at this summit I published a guide
and presented it, Solar Energy Financing Guide,
Empowering Wisconsin Local Governments.
And there has been so much going on
that in May we're gonna have volume two.
And it's not gonna be very different
in terms of how it's laid out
but it goes into what has changed
and we'll use it because some of our laws
and financing things have changed a bit.
The guide talks about,
first of all financing municipal, tribal,
and school solar projects
either through direct buy
or through public/private partnerships
which could include third-party financing.
But then also the other role of local governments
is that they can help their businesses
and their residents to install solar
and they do that in many ways
to facilitate solar group purchasing,
community solar gardens,
Legacy Solar Coop model,
they can use PACE financing, and Green Power purchase.
There's also a rule that local governments
can play in microgrids and we have one
that's being developed up in Madeline Island.
They're putting solar on different facilities
and in different land and eventually
we'll put in the storage component of that.
And so being an island, that's a great place to work on that.
And then there's another important part
and we heard a little bit about that today
and that's government actions that facilitate solar.
And actually Eau Claire won a SolSmart award
partly because one of the things they did
was to facilitate solar by helping with zoning and codes
and permitting and that's a cost.
That's a cost to the solar installers
and to people putting on the systems in both time and money.
And so there-- Please read that section of the guide
because that's another role that you can play
not just putting the solar on.
Okay.
So here's the update.
Right now in Wisconsin local governments, tribes and schools
have 187 solar projects up through
direct buy, solar gardens, and solar group buys.
This map is a GIS map that shows each of those
by size, location, and type.
And that equals 7.8 megawatts of solar
just through government operations
and that's an increase from 6.2 megawatts just a year ago.
In addition we have 30 counties now that have adopted PACE.
Which we had 18 in 2017.
And that means that right now
of the 80 megawatts of solar generation in our state
which is up from 53 megawatts just a year ago,
think about that, that's huge increase.
We have a little bit less than 10%
of it now comes from municipal-owned solar.
It was higher before and that's because
there're a lot more utilities
putting in large renewable energy generation.
And then a final point here is that even though
as John said in his economic development recap
from yesterday, that we are,
Wisconsin unfortunately is 12th
in the mid-west in terms of clean energy jobs.
We have 26,400 clean energy jobs
and that's up from 25,000 a year ago,
so it is a growing sector for us.
Just real quickly 'cause we've had questions on his before.
This is a study from the Institute of Local Self Reliance.
Their energy self-reliance state study, second edition 2010,
and it shows that Wisconsin
can meet all of its electricity needs
from renewable energy generated in our state.
So the green states are ones that can do that
and we are one of them.
And they point out that self-reliance
is almost always cheaper than imported energy.
And then also if we were to just get our electricity
from solar it would only take up .27%
of our land area in our state.
Of course we have very expensive farm land
so that's not something that we might want to do.
And then finally it's really important
that we do planning as you've heard at this conference
to get to that state
and you've seen how Madison and Eau Claire
are doing that and just the components
to get to those higher renewable energy goals
or energy efficiency, renewable energy, electric vehicles
and a progressive grid.
So with that I'm gonna turn it over to Erika
and she's gonna talk about how Fitchburg
did a direct buy program.
- Thanks Sherrie while you're getting set up
I know time is limited and I have a lot of slides.
Just wanted to say thank you to the academy for having me.
Thank you to Eau Claire for hosting us.
I just want to say we all aspire to achieve
what Ned Noel has done in the city of Eau Claire.
(laughs) You're too modest, Ned.
At any rate, so consider myself,
the hat I'm wearing right now as the City of Fitchburg's
sustainability specialist emeritus.
I did move over to DNR about a week ago
but it was a great path
because part of how we got this solar project done
in Fitchburg is through our connections
with Green Tier Legacy community.
For those who don't know about it,
it's a consortium of local governments, counties,
municipalities, towns, villages around the state
who are working together to get sustainability work done,
innovate, and help each other with sharing of knowledge,
best practices, templates, and it makes our lives
so much easier and gives us the ability to get stuff done.
So a shout out to Monona
who really helped blaze the trail
with third-party financing.
First municipality in the state
and we learned a lot from them along the way.
I wanted to do a couple more thank yous
'cause I'm gonna forget (laughs) in the middle of my presentation
'cause there's a lot of people in this room
who helped us get this project done.
First and foremost I want to thank--
It always takes a champion, Tony Hartmann,
an alder from Fitchburg's in the back of the room
and he was our biggest champion
who really sold this project to council
and helped them see the value and the benefits.
Focus on Energy is here, we got a RECIP grant.
Megan Levy, Office of Energy Innovation
also provided some funding for us
and I think I'm probably forgetting
somebody else (laughs) as well.
But anyways you can see from my title
our project didn't go exactly as we had planned
so I'm gonna tell you our story as quickly as I can.
I'm gonna give you a little snapshot,
tell you what our plans were, tell you how our plans changed
and tell you how we ended up.
Little snapshot, again we had unanimous council support
to install up to 375 kilowatts of photovoltaics
on municipal properties.
And we ended up with four different buildings.
Cost of the project was roughly $600,000.
We came in a little under budget.
This was helping us meet some of the goals and pledges
that we had made as an energy independent community.
2025 X 2025.
Also we signed on to the U.S. Conference
of Mayors Climate Protection Agreement.
So this was gonna get us about 10% of the way there.
A little bit about Fitchburg.
We're a fast-growing community in Dane County.
First municipality to the south of Madison,
so very similar demographics to Madison.
We have a population of about 29,000 currently
and we're adding about 500 people every year.
We're also a new city.
We in fact tonight are celebrating our 35th birthday.
We have a large land area
which makes us a little bit unique
because we're about two thirds rural, ag land.
We also have a green ethos like a lot of communities here
and we have a very engaged population
who expect leadership from the city.
So just really quickly wanted to let you know,
going back to 2015 is when we first got serious about solar.
We have a LEED Gold library.
I think I have a picture here.
And it was built solar ready and as prices were coming down
and the federal tax credits were available,
we kind of made a mad push to try
and get some panels on the library.
We thought those federal tax credits might expire in 2015,
which ended up not happening,
but we went before our library board
to try to make the case.
It was too complicated, too much information,
but it helped us really set up a good framework.
We created an internal solar team, our mayor was on it,
facilities manager, public works, myself.
We had a really good group who was really motivated
to work on this project.
In the end it kind of demonstrated
that when you're dealing with libraries
they have a little bit of a different model
in that they have a state statutory authority
to control their building.
So it's really up to the library board to make that decision
and our library board wasn't ready then
but they were excited about it.
So as we stepped back we knew
that we needed to get more people to the table.
So our finance director joined us,
our city attorney joined us.
We had been consulting with him on the library project
but it was clear that they were critical
to the success of our project.
I'm not gonna spend a lot of time on the planning process
because Kurt who helped us as our consultant on this project
is gonna talk about this in more detail.
But just other than letting you know we really--
We needed to have a few more people at the table.
The site selection project was critical
looking at energy loads, the age of roofs
and that really helped us hone in on what we wanted to do.
The other factor since we had our city attorney at the table
was that he felt very strongly
that we needed to follow state guidelines
for publicly bidding
public works projects.
So we actually did the bidding,
which is an option of course.
We had intended to work with the third-party finance,
that's how our project was designed,
that's what council approved,
so we ended up doing the bidding
and then our intention was to present that bid
to an investment partner.
Which never came to pass but we'll get to that point.
So this was our intention as I mentioned.
This was our mix of funding as it started out.
Third-party financing, some operating funds,
some CIP funds, some grants,
we went after four grants were successful with two of 'em
and that meant we had some skin in the game.
So we were looking at about 25% ownership,
75% ownership share with a third-party investor.
We hit some roadblocks.
Again our finance director was advising us,
and she was doing her due diligence behind the scenes
and checked in with our bond council
and she came to find out that there's some rules
governing how much private entities
can benefit from our buildings
and since we're a new city with a lot of debt
that was something that we had to take a step back
and in the end it was gonna take time
and it was gonna take more resources.
So serendipitously we come
to our final financing arrangement
where our bids came in much lower than expected.
Thank goodness, whew!
Yeah, the timing couldn't have been more perfect
because with the solar tariff case
we just slid in right before that whole hubbub happened.
We came in at $1.60 a watt, we'd expected $2 a watt,
so we decided that we're just gonna scrape together
enough money to own it directly.
So out with the third-party financing,
we still had our city funds, we still had our grants.
We found some surplus money from a tax incremental district
that was expiring.
We rolled that over.
The library had some capital campaign funds
and the friends of the library kicked in the kiosk at the end.
So here you can see our four sites.
We have about 43 1/2 kilowatts on City Hall,
92 on West Fire Station, 112 on Public Works Garage,
and about 114 on our library.
And again all this is behind the meter.
So you can see some of the impacts of our projects,
some of the metrics,
really I'd say you can look at a nine-year payback,
but given that our finance director was very conservative
she said let's calculate this
as if there were no utility rate increases,
so that would be on the 11-year side.
I'm more optimistic, so I'm saying nine years. (laughs)
At any rate we will find out what happens on that
but not as quick a payback
as if we had done third-party financing,
but still really solid.
Just wanted to mention
there's a little screen shot of our online solar monitoring.
You can go to our website, see what we're producing,
but looks like our estimates are pretty much spot on so far.
Finally, I just wanna say that the future is bright,
there's more plans for solar and renewables in Fitchburg
and we're looking at putting solar thermal,
solar PV geothermal on our East Fire Station.
That's gonna be under construction early next year.
But more importantly we've created that dialog
and we have come together to understand
that we need to take advantage of all the opportunities we can.
So when new buildings are being built
solar is gonna be included in the construction cost.
It's not gonna be, "We're building solar ready.
"This is an afterthought."
We're gonna integrate it into projects
and when we put new roofs on buildings,
that's the time to put the solar on.
So, thank you.
(applauding)
- Thanks to the Wisconsin Academy, thanks to Sherrie.
Rode up here with Jason,
so I learned a lot about PACE financing.
I knew a lot about--
Well, I knew probably more than the average individual,
but I hope you all will learn soon.
And thank you Erika for the kind words
about my involvement with the City of Fitchburg project.
So we're Legacy Solar Co-op.
We've worked with a number of community institutions.
Some of them are municipalities
but most of them are either libraries, churches,
schools, non-profits, also for-profit entities
that are really just looking to crack that initial nut
which is the upfront cost of a very top-heavy technology
that 95% of the cost of solar is in that first year.
But the Legacy in our co-op is that it's gonna survive
into the next generation.
And most likely those solar panels
will still be producing electricity
at more than half of their rating: 30 plus years.
So it might feasibly be a 40-year horizon
that you get to benefit from.
So many private companies look at investing
in retrofit energy projects
and they require a two- to five-year payback.
Solar for investment, for commercial firms
that can use the tax benefits,
maybe you could do that in five years.
Maybe six years.
But you'll find with PACE financing that can be cut down,
but also with public/private partnerships.
The good news for municipalities
and for non-tax-paying entities
is that you may be able to partner with an entity
that could use those tax credits
and still be able to navigate those difficult waters
of utility regulations, IRS regulations
and in some cases, if you're offering community solar,
securities registrations.
So I'm just gonna do three slides
that's just a real quick overview.
Most of this is intuitive to you.
Some of you know how you can reduce your bottom line,
but if we're going from 100% utility dependent power
to something like 50% or 100% renewable at someday.
One of the first measures you can take
is going from full dependency.
And it's not by accident,
and it's not too much of an exaggeration,
but the amount of coal that it takes to run a building
could be the size of the building each year.
I mean, it's really hard for us to quantify pounds of CO2,
because it's invisible,
but it's incredible the amount of waste
and the amount of effect that our current energy use
can be on the environment.
So to go from let's say using an average U.S. home
of approximately 10,000 kilowatt hours
of electricity per year.
Adding in some energy efficiency
you might be able to bring that down,
if you have some low hanging fruit
or an older home, an older building.
You might be able to bring it down by 30%,
so now your coal pile is getting smaller.
And then if you add on some solar on-site,
this is behind the meter, we call it distributed generation.
If you're able to use most of that power on-site,
you can basically get down to, in some cases, net zero
for your energy use.
But you see the arrows going both directions,
so in some cases you will be exporting
some of your electricity
if in that moment that the sun is shining
your loads are not sufficient enough
to meet the supply of the solar.
Don't let that scare you. In a lot of cases,
especially if you're under 20 kw in Alliant territory
and some other, but under 100 kw in Xcel territory
and MGE, you can share those electrons
with your utility, export them back,
and still get the retail rate or credit
on that net metering.
Okay.
So how do we figure into this?
How does Legacy Solar Co-op help municipalities?
Well one way we help is just
by being an independent third-party.
We say that we are installer agnostic,
so even though we tend to do projects
with a handful of installers around the state,
if you want help with an RFP in your municipality
to comply with bidding requirements,
we can help you set up and figure out
the engineering requirements for your project.
Even before that we'll do the site assessment,
narrow down your sites
that you may want to contemplate putting solar on.
And then we'll provide some of the engineering specs
so that you can have an apples-to-apples comparison
on the respondents to your RFP.
So we can do some of that type of work
but we can also come in
and provide some tax equity financing.
And to be honest and to be comprehensive
our model does differ from a lot of models
outside of Wisconsin.
Outside of Wisconsin you usually have
one big financee, financer
that comes in and does a lot of projects.
We call 'em power purchase agreements.
You call 'em solar leases.
You can't do that in Wisconsin.
You really have to be careful on complying with
and not becoming, having that third-party become
an unregulated public utility.
So we work closely with the rate payer.
In fact, it's a co-ownership.
So the municipality can use some RECIP funds.
Everybody here know what RECIP is?
Okay so, RECIP is one competitive bidding program,
maybe it will be coming up again soon.
But whatever kind of source of bond--
Oh three minutes, two minutes?
Whatever source of bond financing, excuse me,
grant financing that you might have
or donations or even out of your city budget,
that can be your equity ownership share
in that solar project.
The rest of it can qualify for tax investment financing.
So that's what we do.
The number of people around that circle
that just is supposed to indicate
that we've got some members.
We have over 100 members in our co-op now.
But what we do is we help provide some structure
for this Tax Sponsor LLC to rent the roof space
and we can provide some financing.
The one opportunity
that we actually have not taken advantage of yet
on the municipal level,
but if you wanted to have residence in your community
go ahead and buy shares,
they can buy solar panels or sponsor solar panels.
It ends up being about two
of our solar bonds per solar panel.
We sell solar bonds to our members for $250 increments.
Two of those are about $500.
This is about the long-term cost of a solar panel.
So that would be something that you can say,
hey, I helped put that solar panel on City Hall,
or I helped put 10 solar panels on the library.
That can be part of what you're offering.
You can't as a municipality
solicit investments, but you can say
we're working, we're partnering with Legacy Solar Co-op.
Legacy Solar Co-op can do that kind of bond financing
within the umbrella of our co-op
we can solicit investments
because the co-op members own the co-op.
So this is a model.
If you have any more questions that you're not able to answer
during the question and answer session catch me at lunch.
Otherwise go to LegacySolarCoop.org
and thank you for your time.
(applauding)
- Hi I'm Jason Stringer
from the Wisconsin Energy Conservation Corporation
and PACE Wisconsin.
Thank you very much to the Academy
and Sherrie and Extension
for inviting us to come and update everyone
on the progress we've made with PACE Wisconsin.
What I'm gonna try to do is pack a bunch of stuff
in to the next 10 minutes.
I'll try to cover,
what is PACE financing or property assessed clean energy?
Why it's important? Do a little update on the program
and the progress we've made with PACE Wisconsin
and try to wrap up with some case studies.
The story, PACE Wisconsin,
is really about local government partnerships.
This is kind of the founding partnership
that helped bring PACE Wisconsin to fruition.
And incidentally, I think we launched PACE Wisconsin
about three years ago here
or about the time of this conference.
So the program, the governance structure
of PACE Wisconsin was developed by von Breisen & Roper
on a pro bono basis.
That structure's been endorsed and supported
by the legal Wisconsin municipalities
and the Wisconsin Counties Association.
Green Tier Legacy community
and their memberships have been early adopters
of the PACE Wisconsin program.
State Office of Energy Innovation
has helped us do outreach.
City of Milwaukee's program was a trailblazer for us
in a lot of respects, we learned a lot of lessons from them.
And Wisconsin Energy Corporation
now serves as the program administrator
for PACE Wisconsin.
This partnership started there
and has grown to now include 30 member counties.
Three years ago honestly the goal within WEC
was to have two or three counties
participating in PACE Wisconsin
but the partnership with the Wisconsin Counties Association
and Jon Hochkammer involvement in particular
really helped us,
make that goal and beat it 10 fold.
So these counties collectively represent
over 60% of the state's population.
That means the commercial property owners
in these jurisdictions have access to PACE financing.
We continue to grow that membership
and are working in a number of counties today.
Just very briefly
this is a perspective on PACE financing nationally
and the hockey stick here is
what we really want to focus on.
This product is scaling
in terms of the amount of volume that it's doing.
The amount of clean energy we're generating
with this product, it's very exciting to be a part of it.
What is PACE financing? What does it do?
PACE financing is financing for renewable energy,
clean energy projects on commercial properties.
What's unique about it and why the counties are involved
is because these financings are secured by a tax assessment.
Because of that security mechanism,
property owners are able to realize
some very unique business cases
that we think unlock a lot of clean energy potential.
Within PACE Wisconsin,
PACE financing is available to commercial property owners.
That is a pretty broad array of property owners.
That can be traditional real estate buildings,
but it can also expand into institutional buildings,
such as a private school, potentially places of worship,
but also agricultural entities.
There's isn't a local government that we work with
that doesn't have an agricultural component.
And those businesses use a lot of energy
and there's opportunity there as well.
So I'm gonna briefly talk about why PACE.
I'll do kind of a CliffsNotes version of this
and tailor it to why we think PACE
is a very effective tool
for helping businesses install solar on their businesses.
And generally as Kurt started to talk about
a business, when they talk about
investing their capital in a project,
they typically have a return
or a performance objective for their capital
of a two- to three-year return on their investment.
We all know clean energy investments
just don't perform that well.
There are five-, seven-, 10-year paybacks.
So with PACE we can really change the equation
and turn that clean energy project
into a very exciting business case.
Doing that by financing 100% of the installation.
So in a case with solar project
a business can use PACE financing
with no cash out of their pocket.
They can leverage non-recourse financing,
which in the finance world is very attractive
to kind of mitigate personal risk
and tie the project and the financing to the property.
So no cash out of pocket.
The other benefit is we can match those longer-term paybacks
that we derive from the clean energy investments
with long-term financing.
So for a solar installation right now today
we can offer 20-, 25-, 30-year fully amortized money
for a solar installation here in PACE Wisconsin.
That's very attractive.
'Cause what we can do is match the repayments
of that financing with the benefit stream
that comes off of those solar installations.
We turn that project into a cash flow positive project
from day one.
So business owner has no cash out of pocket
and they're boosting their profitability
from the energy benefits they're deriving from the system.
Truly groundbreaking in terms of how this product
can unlock clean energy benefits.
Back to PACE Wisconsin.
PACE Wisconsin is an open market program.
Any lender can utilize this security mechanism
and make the PACE financing to their customers.
Currently we have 12 financial institutions
participating in PACE Wisconsin.
Collectively this group makes available
well over 100 million dollars' worth of capital
to fund clean energy projects.
To date we've funded five projects in PACE Wisconsin.
We have a growing pipeline
and we're excited about what's gonna happen
over the next few years.
I wanna switch to a couple of case studies.
These are from one of our lenders, Green Works Lending.
They work across the country like a lot of our lenders
we have both local lenders like McFarland State Bank
and Farmers Savings Bank, but we also have national lenders.
I'm gonna use a couple of case studies
from solar installations that were done
in other parts of the country.
But I just tell the audience
I think by the summer we'll have our first couple
of solar PACE financings done in PACE Wisconsin.
Up till now they've all been efficiency projects,
which is fine.
So this is an office building
that has about 126 kilowatts of solar installed on it
and the clear takeaway here is the net benefits
that accrued to the building owner
is a million dollars over the lifetime of that system.
So net of all of the payments
the energy benefits produce a million dollars
worth of increased value
in incremental revenue to this business.
Very similar case study here.
This is another office building on the East coast
where I think they put about a thousand panels,
not sure how many kilowatts that is.
And again business owner
has a tremendous amount of cash coming back year one.
In the lifetime of the system again
a high-million-dollar net cash flow benefit to the business.
So clearly other businesses have recognized
that this tool can be an effective tool
to help them not only achieve their clean energy goals
but also boost their profitability
of the underlying business.
More information about PACE Wisconsin
is available on our website, we use the website,
I rely on it quite a bit to really interface
with the market, that's PACEWI.org.
And I look forward to your questions
and discussion that follows. Thanks.
(applauding)
- Thank you.
Now you've seen what a community had to go through
and a couple of funding opportunities
of how to help your businesses and residence
and also property assessed clean energy
for energy efficiency to help your commercial sector
as well as your residential,
or no, just your commercial sector.
And I want to say that if you're a municipality
in a county that hasn't adopted PACE,
go lobby your county officials to do so.
Okay, so.
Let's see.
Oh, someone, a question is,
what did the Legacy Co-op bonds pay in interest rate
to their bond purchasers?
- I'm sorry I didn't get a chance to get into all of that
but the bonds are in $250 increments.
Two requirements: you have to be a member of the co-op--
it's not a high barrier--
and a resident of the state of Wisconsin.
So satisfy those two conditions you can buy bonds
and help support solar growth.
They pay between 4 and 6% interest.
And it's a 12-year note. We pay principal and interest.
So, by the time you get year six, year seven
you've already got half your money back
but that's how--
That's just the most responsible way
we could figure out to run that program.
- Thank you.
I just wanted to say I brought some hard copies
of the Solar Energy Financing Guide.
They're on the registration table in the back.
It's also available digitally right now on the--
On ERC's website at the university,
but it's usually on the Energy on Wisconsin website.
Right now the links broken but it will be up there.
So we have a question.
How do you see the new administration's solar tariff
affecting installations of new projects?
- [Jason] Trade tariffs.
- Oh, the trade tariff. - Oh, trade tariff.
Yeah, we've seen a 5% increase.
Probably not more than 10% increase in module prices.
And that makes up about 40% of the overall cost.
But installers kind of saw the writing on the wall
a year ago so they prepared and so it's negligible.
I'd say less than 5% affect.
- It's really gonna affect the larger utility scale solar
more than the individual ones,
and a lot of the people who did know that this--
A lot of our installers obviously knew what was coming
and they ordered Canadian panels to kind of avoid that,
'cause it's not on every solar panel that's manufactured.
Well thank you so much.
We're gonna move on to the next panel
and there is no break, so I want to invite the panel
on energy systems of the future
to come up please and thank you again for being part today.
(applauding)