3FOOD

Third Industrial Revolution Consulting Group
capitalized interest over the serialized maturity of the financing, were $110 million thus
generating a $38 million premium benefit for the program participants. 218
First year savings of the program are 3% above the guaranteed cost savings of 25%. 219 Annual
energy savings for the Delaware SEU projects delivers an annual emission reduction of 46.8
million pounds of carbon dioxide (CO 2 ). Additionally, research contrasting the Delaware SEU
with conventional energy utilities in the United States finds considerable SEU outperformance
in terms of realizing energy savings. 220 The serialized maturity schedule of the DE SEU bond
offering provides the opportunity of combining short-term and long-term retrofits: the average
simple payback of the bond offering is 14 years with maturities as long as 20 years. Serialization
additionally enables cash flow optimization resulting in lower overall interest rates: The
maturity schedule includes 1-year bond maturities at 0.65% borrowing rate all the way up to
20-year maturities (rate = 4.37%) for a 3.67% effective borrowing rate. Noting the strong
general credit quality of the State of Delaware, the contractual guarantee provisions which
include an absolute and unconditional payment provision upon annual appropriation, 221 and
annual payments that are date certain and not subject to acceptance, Standard & Poor’s rated
the sustainable energy bond at AA+.
218 The Delaware SEU example offers a guide to how the Sustainable Energy Finance (SEF) model can unlock
significant energy savings when applied in a comprehensive strategy: a national application of the model in the
U.S. along the same lines as described in this chapter would present a $25 billion energy investment market in the
public sector alone (i.e. applying the model in municipalities, universities, schools, and hospitals). When applied at
this level, approximately 300,000 additional green jobs and 225 million metric tons of greenhouse gas emission
reduction could be realized.
219 Chu, C., Bruner, A., Byrne, J. (2015). DESEU energy efficiency revenue bond series 2011: Project savings analysis.
Newark, DE: Center for Energy and Environmental Policy. Report prepared for the Delaware Sustainable Energy
Utility.
220 Byrne, J., Taminiau, J. (2016). A review of sustainable energy utility and energy service utility concepts and
applications: realizing ecological and social sustainability with a community utility. Wiley Interdisciplinary Reviews:
Energy and Environment, 5: 136-154. Doi: 10.1002/wene.171.
221 Please note that “absolute and unconditional” is not the same as a general obligation: “[…] neither the state nor
any political subdivision thereof shall be obligated to make payments on the bonds. Neither the faith and credit
nor the taxing power of the state or of any political subdivision thereof is pledged to the payment of the principal
or of the interest on bonds. The issuance of the bonds shall not directly or indirectly or contingently obligate the
state or any political subdivision thereof to levy or to pledge any form of taxation whatever therefor, or to make
any appropriation for their payment.” (see citi post pricing commentary: Citi Post Pricing Commentary on the
Delaware Sustainable Energy Utility. Of course, the U.S. case is meant to illustrate feasibility and not to be treated
as a blueprint. Any investment at scale must reflect and adapt to its context.).
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