RRP72 - Southern Financial
RRP72 - Southern Financial
Retrofit Finance Structures
The ESA-based strategy being pursued by the Partnership will compete
primarily with two existing models for retrofit projects: (i) building owners who
do the retrofits on their own ("Do it Yourself' or "DIY"); and (ii) energy service
companies or "ESCOs" which finance retrofit projects through third party debt'
Explanation
Financing Source
Guarantee of Savings Retrofit Finance Structures
Do it yourself (DIY)
The building owner manages
all aspects of their own energy
efficiency project
Equity or third party debt
No
Upfront Cost to Owner Full cost of retrofit
Difficulty of Execution for Building High
Owner
Ability for Tenanted Building Owner Possibly2
to Capture Energy Savings Energy Service Company (ESCO)
A third party is contracted to design,
build and source financing for all
aspects of an energy efficiency
project
Third party debt
Yes, but difficult to enforce. Owners
must oversee Measurement &
Verification ("M&V") to ensure they
are being paid for savings shortfalls
over full term of project.
Full cost of retrofit, but typically 100%
financed from annual savings via
third party debt
Low
Possibly2Energy Service Agreement (ESA)
A third party funds the cost of
energy efficiency equipment and
then operates the equipment to
provide "energy services" to the
building
Equity/Debt via third party
All risk borne by third party
None
Low
Possibly2
Another alternative is Property Assessed Clean Energy or "PACE,' which is an emerging structure in the marketplace for financing retrofit and dean energy projects. The Partnership may compete
with PACE financing for project opportursties and, in certain cases. may use PACE financing as part of an overall Partnership project. See Appendix F. Note 8 for additional important information
regarding PACE financing alternatives. Tit depends on specific lease terms and definitions In a typical triple Nat lease the tenard realizes the energy savings instead of the building owner New
"green lease' and other lease provisions can address this split incentive
Deutsche Asset RREEF Retrofit Partners. L.P. For U.S. Person Clients of the U.S./Americas Key Client Partners Desk Only
t Wealth Manage,- June 2014
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