Monday, December 21, 2015

U S DOE Highlights California Green Finance Programs

Innovative California green finance programs are praised in a new U S Department of Energy report on innovative "Energy Investment Partnerships" (EIPs).

The report, “Energy Investment Partnerships: How State and Local Governments Are Engaging Private Capital to Drive Clean Energy Investments," illustrates how states and entities are driving clean energy deployment through leveraging private capital.

DOE Report on Innovative Local/State Finance Programs

Programs of the California Alternative Energy and Advanced Transportation Financing Authority (CAEATFA) and the California Infrastructure and Economic Development Bank (IBank) were among those of eight states singled out as "mobilizing the public and private capital necessary to transition to a low carbon economy."

“By leveraging private dollars, states with EIPs can generate an impact well beyond what would be possible with public funds alone,” said Energy Secretary Ernest Moniz. “To reduce carbon emissions and address the impacts of climate change and extreme weather, we need innovative financing solutions that will increase energy efficiency, bring more low carbon generation on line, and make our infrastructure more resilient.”

"We need innovative financing solutions" Energy Secretary Ernest Moniz
(photo by Michael Paparian)
CAEATFA is described as "unique among California state agency clean energy participants, as it does not have the burdens of energy regulation functions and is able to be proactive and innovative with its financing approaches."  CAEATFA is chaired by state Treasurer John Chiang and led by Executive Director Deana Carrillo.

CAEATFA programs discussed include the PACE loss reserve program and the California Hub for Energy Efficiency Financing (CHEEF).  The PACE program provides support in the event of a default of a PACE loan.  So far, nearly 40,000 loans totaling over $800 million have been enrolled.  The CHEEF program was set up by the state Public Utilities Commission.  Under CHEEF, CAEATFA will oversee and coordinate a $65 million pilot program to deliver energy efficiency projects for homes and businesses through regulated utilities.

The IBank is described as "uniquely suited to help the state meet the GHG (greenhouse gas) reduction goals by offering practical and sustainable solutions via leveraged, risk adjusted, financial assistance for public clean energy, water, and environmental projects throughout California."  The IBank is chaired by retired banker Mike Rossi and led by Executive Director Tevia Barnes.

The recently established IBank California Lending for Energy and Environmental Needs (CLEEN) program is discussed in the DOE report.  CLEEN taps IBank financial resources, including loans and bond issuances, to assist local government agencies, schools (including charter schools), non-profits, universities and hospitals.  Loans can be used for a variety of energy conservation, renewable energy, transportation and related projects.  LED lighting is a technology the IBank is specifically targeting for assistance.  CLEEN and the first LED lighting loan issued under the program is discussed in a prior California Green Finance post here.

“With the ambitious mandate set by Governor Brown to reduce greenhouse gas emissions by 40 percent below 1990 levels by 2030, California applauds the U.S. Department of Energy’s efforts to highlight the state and local programs throughout California that advance clean energy by leveraging significant private capital.” said Panorea Avdis, Director of the Governor’s Office of Business and Economic Development.

“California has over 2-dozen state and local clean energy investment programs that reflect the diversity of our state’s efforts, including investments in state and local government, residential, commercial and transportation sectors," said Avdis. "The Report on Energy Investment Partnership vividly demonstrates the range of thoughtful and innovative approaches to financing the State's transition to low-carbon energy systems, which at the same time drive economic growth and create new jobs.”

In addition to the state and local programs, the report provide a summary of innovative financing approaches that can be enhanced with government agency involvement.  The report is available here.

Wednesday, December 16, 2015

Tesla: New $39 Million Benefit from California Sales Tax Exclusion

Tesla Motors is the latest company to benefit from a California program to allow renewable energy manufacturers to avoid paying sales tax on manufacturing equipment.  On Tuesday, December 16, the California Alternative Energy and Advanced Transportation Authority (CAEATFA) granted the benefit under their sales tax exclusion program for alternative energy, advanced transportation and advanced manufacturing facilities.

Tesla expects to purchase up to $463 million to expand manufacturing and related facilities in four California locations (Fremont, Hawthorne, Palo Alto and Lathrop).  The company will avoid paying about $39 million in sales taxes on the planned equipment purchases.

Tesla charging in Maastricht, Nethlerlands October, 2015
The funds will be used to ramp up manufacturing capacity from 77,000 to 195,000 Model S and Model X vehicles per year. According to CAETFA, Tesla is planning to use the new equipment to expand its body shop, stamping line, vehicle assembly, plastics shop, production control, tooling and prototyping.  As as result of the expanded manufacturing, 1,384 new jobs are expected to be created.

With the benefit approved this week, Tesla has received over $120 million in sales tax exclusions for manufacturing equipment under the CAEATFA program.  Many other companies, ranging from anaerobic digestion to landfill gas to photovoltaic manufacturing and others have successfully utilized the program (details on the program here).  CAEATFA is one of the financing authorities chaired by State Treasurer John Chiang.

Tesla expects to purchase equipment and tooling for components ranging from body tooling to plastics to paint.  Below is the anticipated cost of the various types of equipment.