retrofit financing

Toronto may extend reach of retrofit financing

Friday, July 13, 2018

Private landlords and condominium corporations in Toronto could gain access to a loan fund for energy upgrades if City Council agrees to open a longstanding retrofit financing scheme for municipal buildings to a larger pool of borrowers. A report to Toronto’s Parks and Environment Committee reiterates that such a move would have no budgetary impact since loan recipients fully cover the city’s borrowing costs.

Toronto Community Housing has been the largest beneficiary of the Sustainable Energy Plan Financing (SEPF) program thus far — receiving $35.2 million to put toward deep energy retrofits in nine buildings — as $53 million has been invested since 2013 in both the city’s portfolio and community-based, not-for-profit holdings. Toronto leverages debt financing for the upfront capital, which is then repaid as loan recipients realize their energy cost savings. To qualify, projected energy savings must be sufficient to offset a debt service schedule no greater than 20 years.

The city’s cost-neutral outlay would engender the greater projected benefit of curbing greenhouse gas (GHG) emissions in pursuit of Toronto’s targeted 80 per cent reduction of GHG emissions, relative to 1990 levels, by 2050. That’s also the rationale for the recommendation to expand the program to private commercial and multifamily buildings, the industrial sector, health care and educational facilities.

“Expanding eligibility requirements will allow building owners and managers to implement energy conservation, renewable energy and greenhouse gas reduction projects creating significant direct, indirect and induced employment, contributing the City’s TransformTO targets, reducing operating costs and creating revenue streams,” a report to Toronto’s Parks and Environment Committee states.

“Providing innovative financing to accelerate building retrofits is a key strategy in the TransformTO plan. Expanding SEPF eligibility to a broader range of building owners is a fast and effective way to begin delivering on this objective in a way that has no net financial impact on the City,” agrees Mary Pickering, vice president, program and partnerships with The Atmospheric Fund, in a letter of support.

Since the SEPF program’s forerunner, the Better Buildings Partnership, was launched in the early 1990s, the funding has enabled retrofits of more than 50 million square feet of space, calculated to have reduced cumulative carbon dioxide emissions by 400,000 tonnes. Since 2013, SEPH has funded projects delivering an estimated 115,000 equivalent megawatt-hours of electricity and natural gas savings.

The Atmospheric Fund urges a deeper pot of funds, beyond the $7.2 million allocated for 2018. “The cost of a deep retrofit of a single multi-residential building, based on TAF’s experience, is typically in the range of $2 to $5 million. With significant expansion of the program to more sectors, and an emphasis on deep retrofits, a much higher level of recoverable financing will be needed in future years,” Pickering’s letter notes.

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