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A Video Conversation with Claire Broido Johnson, President and CEO of CBJ Energy About C-PACE- Part 2

Click here for Part 1 Rethinking commercial building energy use claire_broido_johnsonClaire Broido Johnson is the President and CEO of CBJ Energy. Launched in May, CBJ Energy aims to help Maryland properties become more energy efficient while lowering their operating costs and increasing their value. The company arranges financing for property owners through the Commercial Property Assessed Clean Energy (C-PACE) program, a state initiative that allows owners to repay low-interest loans as property tax assessments. Claire’s previous career experience includes tenures at Constellation Power Source, Hannon Armstrong, Green Per Square Foot, and the US Department of Energy. She is also the co-founder of SunEdison, one of the largest solar energy providers in the world. Claire Broido Johnson spoke with citybizlist founder Edwin Warfield for this interview.   EDWIN WARFIELD: Why haven’t more companies taken advantage of the C-PACE loan program, do you think? CLAIRE BROIDO JOHNSON: It’s more of a tax assessment than a loan. It’s a surcharge on a tax bill. While Maryland is at its infancy with this, there have been lots of transactions, both in Connecticut and California. So, in the course of 18 months, there have been on the order of $100 million of commercial transactions structured in Connecticut and another $30 plus million structured in California. It’s very new in Maryland, so the administrators are still getting set up. There aren’t any real competitors right now that are functioning in Maryland, with a Maryland presence, trying to originate deals in Maryland, and that’s why I’m interested in doing it now. Could you describe your business model? Just as we had started SunEdison at a very early stage when people thought power purchase agreements were ridiculous, right now I’m interesting working as CBJ Energy in promoting commercial building retrofits using this very easy, very compelling financing product to try to get commercial building owners interested now. We are self-funded today. At some point in the near future, we’d like to do a small angel round, but, really, the way that CBJ Energy gets paid is a small percentage of whichever projects get done. So, the critical part of our transactions is just getting as many transactions done as possible. What are the tangible benefits for building owners? The financial advantages are many. First off, it’s a 20-year fixed rate product. Second off, there’s no capital required upfront. Third, it’s paid over time, and it’s paid via a surcharge on a tax bill. Therefore, because people typically pay their tax bills, the interest rates provided by financiers is incredibly low. It’s a financing structure that works for lots of entities, and it’s a very compelling offer. Really, it’s a no-brainer for most of the commercial building owners that I’ve spoken with. It’s really a no-brainer for commercial building owners. It’s good for business, and it’s good for the environment. So, in terms of a return on investment, basically, the way to think about it is a commercial building owner would put no capital down, would have a line item surcharge, voluntary surcharge, on their tax bill, and that voluntary surcharge, which will be spread over a 20-year term, would typically be less than the energy savings created from the retrofits produced. So, there is no real return on investment, because there’s no money down, in terms of payback times, that’s really not a consistent way of thinking about it, there’s no money down. Essentially, what you’re doing is you’re getting a decrease in your energy costs through time, and you’re paying, via this tax assessment, a surcharge to pay back the investment in the retrofits in your building. In terms of what someone could expect in terms of energy savings off their energy bills, it could be anywhere from 10% to 25% depending on the retrofits that are made to the building. The retrofits could be very, very broad. It could be anything from insulation to windows to solar to lots of forms of water efficiency, renewables, we could finance solar on rooftops. There is a huge multitude of different energy conservation measures and water efficiency measures that are incorporated in property assessed clean energy.


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