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PACE proved itself in Boulder County through Phase 1 of the residential ClimateSmart Loan Program. The economic benefits that came, despite recessionary pressures throughout Colorado, were impressive and program administrators indicated willingness and strong capabilities to build the program through successive phases, thereby supporting even greater economic results.

Financing for Mainstream Solar Customers For Steve Schoo, marketing and communications director for Boulder-based solar integrator Independent Power Systems (IPS), the loss of Boulder County’s ClimateSmart residential loan program meant a return to old ways of doing business. “We’ve had a strong reputation in this community. We’ve had customers with name recognition, whose testimonials mean a lot,” Schoo said. On that basis, the 14-year-old company, which has been in Boulder for about four years, built a business mostly with customers that Schoo calls “serious solar supporters.” The promise of ClimateSmart was that IPS could reach a wider audience. As the program started to pick up, IPS heard from more people who were not just scientists, architects, community leaders, and the like. A new tier of customers had started to call, Schoo said. ClimateSmart brought in homeowners of ordinary means who wanted to add a few solar panels along with other energy-based improvements. “On average, we started doing smaller jobs, but there were more and more of them,” Schoo said. He also noticed a welcome change in his marketing pitch.

“It was a very positive message…ClimateSmart marketing was geared to helping individual homeowners make improvements, which in turn make Boulder a better, more sustainable place to live,” Schoo said.

IPS played a lead role in promoting the ClimateSmart loans. Schoo and other IPS staffers put in many volunteer hours to help pass the November 2008 bond measure that funded the program.

They attended forums; they put up yard signs and answered phones. Then, when the first round of funding was announced, they donned ClimateSmart T-shirts and helped run the workshops that customers were required to attend. That experience was rewarding, Schoo said, because until that time, different kinds of contractors—whether heating system installers, insulation contractors or solar companies—seldom came together. ClimateSmart encouraged them to discuss among themselves how to define a complete home energy improvement plan, which would eventually benefit all energy-related contractors.

The news that federal mortgage policymakers had stopped PACE programs including Boulder’s ClimateSmart loans) came abruptly in June, when IPS was just gearing up to promote solar improvements through another round of financing. Schoo said he expected the continuing recession to have some effect on this next round, but that the effect could be countered by the marketing inertia—such as word of mouth advertising—from the earlier rounds of the program.

At the time of this interview in July 2010, Schoo was rolling out an “old” marketing theme— promoting solar as a way to fight expected utility rate increases. Until that campaign took hold, he figured the company would stay busy through the summer converting “at least a dozen” remaining leads initiated during the CSLP into jobs using conventional financing. However, when asked for numbers, Schoo faced an awakening. He had not assessed his leads for a few weeks, so he called an assistant on the office phone. He waited for her to tally numbers, and then his face dropped. “Wow. It’s that bad?” he sighed. “So everyone else cancelled?” He confirmed that all but a few of his leads had already called to say they were reconsidering getting into solar, since the CSLP had been stalled.

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4 Summary Conclusions and Observations The preceding sections of this report, Economic Analysis and Qualitative Assessment, each offer conclusions. This section summarizes the conclusions and offers observations on overall program impacts and lessons learned.

Many aspects of the economic analysis described in this report also offer lessons for any local energy home-improvement campaign that spurs significant investments in energy efficiency and renewables. Strong interest in PACE financing, including Boulder County’s choice of that model, is based on its appeal to a wide and diverse audience. The workshops that were required for applicants to the CSLP drew a total attendance of more than 3,000 Boulder County residents.

Interviews with participating contractors confirmed that this level of public interest in saving energy and installing solar energy systems was previously unheard of in Boulder. Yet once a homeowner makes a decision to invest and secures the necessary financing, the spending creates economic benefits, whether financed through PACE or through another method of financing. For this reason, this study offers lessons for a range of local energy-retrofit programs.

4.1 Results of Input-Output Analysis The analysis of economic impacts in this report is based on a detailed assessment of CSLPrelated customer spending, using invoice data for 598 residential energy retrofits. The total CSLP-financed spending evaluated in this study added up to more than $9.0 million. Additional residential projects valued at $0.8 million were completed under the CSLP program, but documentation on these projects was not available, so they were not included in the analysis.

Additional program loan fees, substantial reserve account funding, and other costs were relatively high (approaching 30% of total program costs) in the first (start-up) phase of the program. Costs for the second round of Phase 1 financing were lower than costs for the first round, and CSLP staff believes that these costs would continue to decline. They were not included in the economic impact study.

Where documentation was available on participant spending that was alternatively financed (for example, project add-ons paid for with cash), it was included in the analysis. In addition, the CSLP triggered additional spending that was not well documented. This spending was not included in the economic analysis, though a qualitative assessment of additional spending is discussed below.

The primary analytic tool used to evaluate the economic impacts was an I-O model, which identifies relevant interactions among all sectors of the local and statewide economies. Results of the analysis indicate that CSLP spending in Boulder County alone contributed to 85 short-term jobs, more than $5 million in earnings, and almost $14 million in economic activity in Boulder County. These results alone more than justify the county’s investment in the program. Program spending supported another 41 short-term jobs outside of Boulder County, $2 million in additional earnings, and almost $6 million in additional economic activity statewide. Viewed in the long term, analysis of an ongoing CSLP program with similar participation levels would result in increased total savings and sustained job impacts.

In addition, participant utility bill savings totaled about $125,000 for the current year. The longterm economic benefits of some measures—especially solar PV—are hardly reflected in this first-year energy savings, as they accumulate over the 20- or 30-year life of the measure and increase if (and this is not assumed in this analysis) energy costs increase year after year.

The relative strength of economic benefits in the statewide market is rather unusual. This occurred because more than 40% of contractors participating in this program were located outside Boulder County. Further, many of the in-county contractors in this study had employees that live and spend most of their earnings outside the county.

This effect is explained largely by a program-design decision to welcome all contractors who were licensed to operate in the communities they served. This made implementation simpler, and it also helped to achieve some noneconomic program goals. For example, it increased the likelihood that residents would install relatively uncommon measures for which there were limited numbers of in-county contractors. Administrators hoped this would help achieve greater greenhouse gas emissions reduction goals. They also hoped it would trigger new, competitive businesses, thereby gradually achieving local economic development goals, as well as spreading benefits throughout the Denver metro area and statewide.

For the state as a whole, program investments supported 126 jobs, more than 9 jobs per million dollars of investment. Wage and salary earnings increased by $5.1 million in Boulder County and $7.1 million for the state as a whole in the short term. If the CSLP were continued at the same level of participation and with the same profile of contractor participation for 5 or 10 years into the future, these benefits would clearly multiply.

A longer-term 10-year CSLP program could create a shift in the profile of participating contractors to yield more local benefits, as well as a shift in the industry profile of the state to include more manufacturing related to energy efficiency and renewable energy retrofits.

Currently, many of the high-value (and job-creating) products used in these retrofits, such as solar PV panels, are manufactured outside Boulder County—and, in fact, outside the state.

Colorado is one of several states that has an economic and energy policy commitment to establishing in-state clean energy industries. Arguably, programs like the CSLP “prime the pump,” establishing a market for energy efficiency and renewable energy products that could be manufactured profitably instate, creating much greater job impacts and economic benefits.

4.2 Qualitative Assessment The most significant theme is that CSLP spurred considerably more spending than the loanrelated project invoices suggest. As mentioned earlier, some invoices included charges for improvements that were not financed by CSLP. These were included in the economic analysis.

However, those invoices missed work that was done on CSLP homes by other contractors or done by the homeowners themselves for qualifying and nonqualifying improvements.

Additionally, some projects were inspired by effective program outreach, even though they used alternative financing. A survey of CSLP workshop registrants indicated that more than 20% did not use CSLP financing but went ahead with retrofit projects. They reported that they used cash and other types of financing, especially HELOC. A separate survey of CSLP contractors suggested that even greater additional spending came from alternatively financed, CSLP-inspired projects. Based on information from both surveys and interviews, we conclude that additional CSLP-inspired spending would likely increase total documented spending by 20% or more. This would, in turn, increase program economic impacts.

The general finding of additional non-PACE spending was confirmed anecdotally by other PACE programs nationwide. 16 It may be a measure of success of the PACE model, as homeowners seem well aware of the need to choose the most appropriate financing for their needs, once PACE has triggered an initial, serious interest in making energy improvements.

Other useful observations are included in the qualitative assessment, many related to the aspects of program design that affected economic impacts. Primary among these was the guideline that led to a high percentage of out-of-county contractors (discussed previously). It was also clear that the program was increasing in cost-effectiveness prior to its early suspension.

The benefits of continuing a program of this nature and building on its success were already clear to CSLP administrators, contractors, residents, and other supporters, when the program was suspended. This report finds strong evidence to support their belief. The Boulder County ClimateSmart program, based on the PACE financing model, yielded quantitative and qualitative economic benefits that would in all likelihood increase over time.

“Jumping on the PACE Financing Train,” Panel Session at ASES National Solar Conference, May 2010, Phoenix, Ariz., moderated by A. Heinemann, DSIRE, NC Solar Center.

Appendix 1 Boulder County ClimateSmart Loan Program in Context Of the first dozen PACE programs nationwide, six had funding rounds before federal mortgage regulators put all programs on hold. These were Babylon, New York; Berkeley, California;

Boulder County, Colorado; Milwaukee, Wisconsin (a small pilot); Palm Desert, California; and Sonoma County, California. Each of these offered a different program design that was suited to different goals and market conditions. As a result, the economic impacts of each program differ as well. Boulder County PACE administrators adapted some elements of other early PACE programs to their program design; they also created innovations to address their specific goals. It is important to consider program differences and similarities before attempting to apply economicimpact results from one program onto others, whether existing or planned.

Table A1 below summarizes some PACE programs and their innovations.

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