Pay As You Save (PAYS®) for Clean Transport

Prepared for C40 Cities Finance Facility

Berlin, Germany

Holmes Hummel, PhD Clean Energy Works

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Driving Transportation from Oil to Electricity

Howfastcanwemobilize$1billioninfinancingfortheincrementalupfrontcostof4,000EVbuses?

-andthenext$10billion?

Utilities can invest, and recover cost on the bill

BaCery

Solution: PAYS for Clean Transport

PAYS for Clean Transport reduces the upfront cost of EVs, starting with transit buses, by harnessing a utility’s capacity to invest in on-board batteries and recover its cost as a service charge.

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Impact and Potential for Scale

[Figures are for a 100-bus transaction in Santiago, Chile]

Based on results for 6 cities on 3 continents:

•  Reduced grant dependence by 1/3 up to 100%

•  High leverage of private capital for each grant from doubling to >70:1

•  Harness utility interest in new revenue over life of EV buses, $15-40M/100 buses

•  Cut pollution with global potential of 60 MtCO2/year in transit alone, before moving to more vehicles

Attributes Battery Lease Agreements PAYS®

•Noupfrontpar,cipantcost ü ü

•Par,cipantmustacceptaliabilityontheirbalancesheet ü

•Par,cipantacceptsanopt-inu,litytariff(NOTadebtoralong-termlease),edtoitsmeteredloca,on ü

•Es,matedsavingsmustexceedcostrecoverycharges ü

•Costrecoveryisthroughafixedchargeontheu,litybill ü

•Par,cipantacceptstariffwithdisconnec,onfornon-payment ü

•PaymentsendifbaEeryfailsandisnotrepairedorreplaced ü

PAYS vs Battery Lease Agreements

Recognition for Transformative Potential

Winner of 3 international competitions and a Design Funding award from Convergence Blended Finance.

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Endorsed by the Global Innovation Lab for Climate Finance

PAYS for Clean Transport met Lab criteria and displays transformative potential:

ü  INNOVATIVE: Applies proven model… with low-cost, low-risk secure repayment mechanism.

ü  FINANCIALLY SUSTAINABLE: Relies primarily on commercial capital today, improving over time as technology costs fall.

ü  CATALYTIC: Leverages many multiples of investment capital versus comparable approaches.

ü  ACTIONABLE: Commercially viable in many major markets with key stakeholders aligned to implement, scale, and replicate.

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Pathway to Market, with Initial Investments

* Estimates are for selected representative cities. Procurements may be many multiples of this figure, depending on fleet replacement timelines.

Capital Amount (USD) Role of Capital

Debt $20-30m per 100 buses*

Finances the utility’s investment in electric bus batteries and charger

Grant support to leverage

investment

$0.5-6m per 100 buses*

Covers costs remaining, if any, once utility has invested up to the

point of cost-effectiveness

Grant support for technical assistance

$1-1.5m for an initial project

Establish the PAYS model in-country, design the tariff, and catalyze scale-

up and replication

In collaboration with implementation partners, we will:

•  Complete in-country feasibility studies with leading utilities

•  Execute initial transactions with blended finance

•  Expand application to more vehicles and additional geographies

We welcome inquiries:

www.cleanenergyworks.org

@cleanenergywrks

Thank you