Retrofit One is an innovative financing mechanism that utilizes guaranteed energy savings and private investors to fund energy efficiency upgrades to Chicago’s public infrastructure.
In Chicago, building energy use represents 71% of city-wide greenhouse gas emissions, and residents and businesses spend more than $3 billion per year to operate buildings. Retrofit One is the first of several CIT initiatives enabling Chicago to overhaul its aging infrastructure and undertake upgrades necessary for efficient energy use.
In 2012, the Chicago Infrastructure Trust (CIT), a financing vehicle used to secure private capital for innovative public infrastructure, inaugurated its pilot project, Retrofit One. It raised $13.7 million for 114 energy efficiency projects, including advanced lighting management and building automation systems, in 60 public buildings in 2015. An Energy Savings Agreement serves as the core financing structure for the project, and municipal cost savings accruing from saved energy are shared with private investors according to specific terms. The agreement also includes a conditional payment structure requiring participating energy service companies to guarantee minimum project savings over 14 years. To date, the scheme has generated $1.4 million in annual cost savings and profit for investors. By involving third party financing, the project will contribute to Chicago’s Climate Action Plan, which aims to reduce greenhouse gas emissions by 80% by 2050, while minimizing both energy project risk and the city’s financial responsibility.
Environmental Benefits - Retrofit One reduced the annual energy usage of municipal buildings by 18% since the program began.
Social Benefits - Retrofits took place in 35 of Chicago’s 77 neighborhoods to ensure program benefits were shared broadly among central business districts and residential neighborhoods.
Economic Benefits - Retrofit One upgrades to public buildings in Chicago created 144 new construction jobs.
In its second year, Cities100 – presented by C40 Cities Climate Leadership Group (C40), Sustainia and Realdania – showcases leading solutions to urban climate challenges in ten sectors, ranging from solid waste management to transportation. For the first time, this year’s publication features solutions that address the nexus of climate change and social equity.
Available online and in print, Cities100 provides stakeholders an accessible format to explore achievable solutions for climate action in cities, and will be a useful tool for relevant groups ranging from impact investors and development organizations, to mayors and city governments. You can access the full Cities100 2016 publication online here and read more about how mayors will deliver the aims of the Paris Agreement in a foreward by Anne Hidalgo, C40 Chair and Mayor of Paris, here.