Commercial property owners in California who are looking for a way to make savings financing energy efficiency upgrades will have a new option available to them under a pilot programme that is set to launch early next year.
The state’s Public Utilities Commission has approved an “on bill repayment” feature that will allow owners to avoid having to pay a large amount up front and will allow for financing the upgrades through regular installment payments on their utility bill instead.
The repayment provision is linked to the property, not the owner, and remains in place until it is paid in full. If the property is sold in the interim, the new owner would take over responsibility for paying the outstanding amount. The utility company would have the right to cut off services if the payments are not made as agreed.
Programmes in other states to finance upgrades rely on loans made through the utility or government grants. The California program is the first plan that would rely solely on private third-party money.
Investors, including Wall Street and regional banks, as well as leasing companies, have expressed interest in providing financing for the plan. They see this type of arrangement as less risky than other schemes where the lender would have had difficulty recovering the unpaid balance if the property owner defaulted or went into foreclosure.
Lower risk to the lender also means lower interest rates for the property owner. This plan will be available to help with financing projects of any size or type. For example a building owner could consider getting help with the cost of adding insulation or installing a high-efficiency lighting system. Other improvements might include solar panels on the rooftop, or replacing the heating or cooling system.
Following this pilot programme there are plans in place to extend the offer to residential customers at a later date.
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