The AlabamaSAVES Participating Loan Program May 23, 2017
ALABAMA SAVES TM PROGRAM ADECA – Energy Division of Alabama – Program Sponsor Abundant Power – Program Administrator and Primary Originator Enabling Alabama businesses to achieve operational savings through energy efficiency • $65M revolving loan fund based on $25M SEP grant 101 • Industrial, commercial, and non-profit • Purchase and install energy efficiency equipment, renewable-energy systems and alternative fuel projects - 10 year or better simple payback or “ above and beyond ” building code - Loan Size: $100,000-$4,000,000 • Historically offered direct loans and subsidized loans • Transitioned effective July 2016 to participating loan program with same eligibility requirements www.abundantpower.com 1 May 23, 2017
ALABAMA SAVES TM RESULTS Key elements of success for the Program through 2016 • Funding commitments for 101 commercial, industrial and agricultural loans totaling $51.7MM • Average loan size to date of $546k • Energy efficiency in 172 commercial and industrial buildings representing 12.9MM SF • Private capital participation for 89 loans, resulting in 5:1 leverage of Program funds • Diverse project finance across all geographic areas of the state and all commercial sectors • Energy conservation measures financed – lighting, mechanical, industrial processes, solar • Estimated annual savings of 82.2MM kWh = 90MM lbs of coal avoided = reduction of 148k metric tons of CO2 = 17k cars off the road • Superior asset performance with only one default to date • Transparent and consistent Program processes and structured Program governance www.abundantpower.com 2 May 23, 2017
40+ FINANCING PARTIES – ALABAMA Increasing number of Alabama lenders participating in the Alabama SAVES program First National Bank Ag First Farm Credit First Southern Bank Alabama Farm Credit Gulf Coast Bank & Trust Ally Bank Iberia Bank AmeriFirst Bank LED Leasing Auburn Bank National Bank of Commerce Bank of America Noble Bank and Trust BBVA Compass Bank Oakworth Capital Bank Bryant Bank Peoples Bank of Alabama Central Leasing Peoples Independent Bank Chase/JP Morgan PNC Bank Charter Bank Progress Bank Citizens Bank and Trust Regions Cullman Savings ServisFirst DLL Trinity Bank Exchange Bank of Alabama Trustmark Bank Farmers Exchange Bank Vantage Bank First Bank of Boaz Webster Capital First Commercial Bank Wells Fargo First Community Bank Winsouth Credit Union First Federal Bank First Metro Bank www.abundantpower.com 3 May 23, 2017
ENERGY EFFICIENCY MEASURES Wide Range of Measures Which Can Be Considered as Energy Efficiency • Building Improvements: Interior and exterior lighting; HVAC systems and controls; steam boilers, chillers, cooling towers; power factor correction; sub-metering utilization; building management and controls systems; windows, doors, insulation and other building envelope measures; roofing. • New Manufacturing Equipment: where energy efficiency of new equipment provides operational savings that covers debt service on upfront cost of replacement. - E.g. ’s : Heat set tunnel; cold core processing equipment • Improved Industrial Processes: where energy savings from process improvement covers debt service associated with upfront cost of improvements. - E.g. ’s : Compressed air upgrades; variable motor and fan upgrades; heat and steam distribution; steam trap replacements; materials handling and tools; painting systems; stamping. • Renewable/Clean Energy: solar PV; wind; geothermal; battery storage; biomethane recovery; CHP • Water Conservation Measures www.abundantpower.com 4 May 23, 2017
THE PARTICIPATING LOAN PROGRAM Purchasing Participations of up to 25% of Qualifying Loans Made by Bank Partners at Below Market Interest Rate • Participate in loans made by Bank Partners to Eligible Borrowers for Eligible Measures/Projects under Program guidelines (the “Participating Program”). • Minimal changes to the governance and operating documents of the Program to pivot to the Participating Program. • $15 million in funds available for the Participating Program • Participation of up to 25% of total loan or up to 100% of Eligible Measures if measures are subset of a larger loan/project. • Interest rate on Program’s participation is at rate up to 2% below bank’s rate. • Range of participation - min of $25k (min loan $100k) and max of $1M (max loan $4M). • Program participates pro-rata in debt service payments on the loan. • Program’s participating position represents an undivided interest in the loan and is subordinate to the to the Bank Partner’s position. • Program Fee of greater of 2% or $1k paid at closing and capitalized in loan. www.abundantpower.com 5 May 23, 2017
THE PROCESS Loan Origination and Participation Process • Bank Partner enters into Master Participation Agreement with Program, with individual participating loans scheduled to the agreement. • Program and Bank Partner originate qualifying loans for the Participation Program. • Program underwrites measures/project as eligible for Participation Program. • Bank Partner then underwrites and approves loan and submits an Application for Participation to Program for approval along with internal underwriting package. • Upon approval, the Program issues a Commitment Letter stating the participation percentage, interest rate, and dollar amount and any specific terms/conditions and calculates subsidy. • At loan closing, Bank Partner, Borrower, and Program execute a Participation Certificate and the Program funds its participation and an IRB Subsidy Agreement. • APG is paid Program Fee at closing by Borrower. • Bank Partner services the loan and collects debt service and remits pro rata share of principal and interest payments to Program under Participation Certificate. • Bank provides regular specified reporting on loan to ALS Program. • APG confirms compliance with DBA requirements and NHPA and NEPA if applicable. www.abundantpower.com 6 May 23, 2017
ALABAMA SAVES – UNDERWRITING Process in Place for Origination, Underwriting, Closing and Funding Energy Credit Funding and Underwriting Underwriting Implementation • Bank/Developer/Contractor • Bank submits Application for • Program forwards Commitment submits: Participation Letter for Participating Interest - Project Cost: $100K-$4M • Bank provides underwriting • Bank/Borrower closes - Annual kWh Savings package to Program Participating Loan - Utility rates - Forwards closing package to • Borrower submits additional - Annual $$ savings Program information requested by - Simple payback Program • Program purchases Participating • Project deemed eligible based Interest • Program underwrites and on: approves of purchase of • Bank/Program execute - 10 yr. payback or better Participation Certificate Participating Interest - "Above and beyond" base code • Borrower executes Borrower • DBA, NHPA & NEPA compliance Certificate • Construction and DBA compliance • Bank services Participating Loan www.abundantpower.com 7 May 23, 2017
PROJECT VARIETY CASE STUDIES AlabamaSAVES has provided funding for 102 projects for buildings in a broad range of industries. The cross section of building types shown below highlights the versatility and potential of the program 200 West Side Square Medplex Outpatient Huntsville, AL Surgery Center Birmingham, AL INDUSTRY: Multi-tenant office building INDUSTRY: Medical Facility FUNDING: $1,542,000 FUNDING: $152, 540 EXPECTED SAVINGS: $128,574/ year EXPECTED SAVINGS: $31,600/ year USE OF PROCEEDS: widow replacement, USE OF PROCEEDS: LED Lighting, HVAC insulation and enveloping, improved HVAC control, building envelope improvements controls, water and lighting conservation measures St. Paul’s Episcopal Barber Motorsports School Parkway Mobile, AL Birmingham, AL INDUSTRY: School INDUSTRY: Museum FUNDING: $1,180,00 FUNDING:$716,000 EXPECTED SAVINGS: $120,844/year EXPECTED SAVINGS: $80,190/ year USE OF PROCEEDS: HVAC replacement USE OF PROCEEDS: Lighting retrofit, and controls improvement, dehumidifier HVAC controls upgrade to reduce energy installation consumption www.abundantpower.com 8 May 23, 2017
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