Frequently Asked Questions
General Frequently Asked Questions
- What is GEMS?
The GEMS (Green Energy Market Securitization) Program is the State of Hawaii’s innovative green infrastructure financing program designed to make clean energy improvements affordable and accessible for a broader cross-section of Hawaii’s ratepayers. Act 211, Session Laws of Hawaii 2013, authorized the creation of GEMS. $150 million in revenue bonds have been issued by the Department of Business, Economic Development and Tourism to fund GEMS.
- Why GEMS?
The upfront costs of installing PV panels and other green infrastructure equipment are a barrier preventing a significant number of electric utility customers from participating in Hawaii’s clean energy transformation. While the state has seen early success in clean energy deployment, existing programs may not serve the entire spectrum of Hawaii’s communities. In particular, DBEDT has identified a group of underserved consumers that includes renters, non-profits, and homeowners who have been locked out of traditional financing for clean energy installations. GEMS was created to bridge that market gap and bring financing for clean energy into reach for a wider audience.
- How does GEMS work?
GEMS uses a market-based financing mechanism to make low-cost capital available for clean energy loans that might not otherwise be provided by traditional lenders. The ability of GEMS to tap a huge pool of institutional bond investors allows the program to reduce financing costs for clean energy installations by minimizing overhead expenses and taking advantage of economies of scale. Consumers who borrow from GEMS to make clean energy investments will benefit from electricity bill savings, with no money down.
- What kinds of clean energy installations can be financed with GEMS?
Initially, GEMS will provide financing for distributed solar equipment, including panels, inverters, mounting equipment, and monitoring devices. GEMS is closely watching the policy and technology issues surrounding additional grid-enabling technologies that have the potential to help mitigate interconnection issues, such as storage, and may provide financing for them in the future.
- In addition to financing up to 100% of the cost of the Solar PV system, what else can the GEMS consumer Loan be used for? Other financeable costs may include required electrical upgrades, permit fees, fees charged by the Utility related interconnection approval, and other hard cost and structural improvements, up to 20% of the cost of the solar PV system.
- What are some of the other potential uses for GEMS?
GEMS could eventually be used to support other proposed clean energy technologies such as energy storage, utility grid modernization, utility renewable integration, residential energy efficiency, technologies that incorporate a water-energy nexus, including sewage and waste water treatment.
- Will GEMS compete with conventional financing sources?
In addition to using traditional lending criteria, GEMS will use non-traditional methods to expand clean energy lending into markets that are not served by conventional lenders. Alternative lending criteria may include consideration of factors such as utility bill repayment history and the net bill savings expected from a specific clean energy technology. Traditional lending practices do not take into consideration energy savings from the clean energy installations, even if that installation results in positive cash flows or “income” for the borrower.
- Who pays for the bonds issued by GEMS?
Bond holders will be repaid by a PUC-approved Green Infrastructure Fee on utility bills that is estimated to be $1.29 a month for residential customers. By assessing the fee on all utility ratepayers, the bonds will achieve the highest possible credit rating, which in turn lowers the amount of the fee. The Green Infrastructure Fee is offset by a reduction on the Public Benefits Fee currently on electric bills, resulting in little or no impact to the vast majority of ratepayers.
- How does GEMS fit with on-bill financing?
GEMS provides the funding used to make clean energy loans. On-bill repayment is a separate program being created by the PUC that will allow GEMS borrowers and others to pay for their clean energy installations through their utility bills.
- How is GEMS groundbreaking?
What makes GEMS pioneering is that the program combines two financing methods, a traditional rate-reduction bond structure and on-bill repayment, in a synergistic model. This innovative structure can open the door for a whole new financing market in renewables and energy efficiency. Although the GEMS program was “invented in Hawaii” to serve Hawaii residents and businesses, the program has drawn national attention and could potentially serve as a model for other states.
- What’s next?
The GEMS bonds were sold in November 2014, providing the capital necessary to make the clean energy loans. The Hawaii Green Infrastructure Authority is currently authorized to make loans to consumers, small businesses, apartment building owners and investors to benefit nonprofits. The Authority is working on program modifications and new program proposals to expand its financing options to ensure that GEMS funding is deployed in a timely and responsible manner that serves the public interest and the mission of the HGIA.
- What are the interest rates and terms of the loans?
Interest rates are priced to make the GEMS loan economical and result in bill savings for the applicant. The APR rate for consumers is set at a flat rate of 5.99%. The 20-year term of the fixed-rate loans allows for a longer amortization than offered on most energy loans, thereby reducing the size of monthly payments. The interest rate for organizations start as low as 4.50% fixed for twenty years and is based on the projects debt service coverage ratio.
- What other lending criteria may be considered?
The GEMS lending criteria may also take into account factors, such as the consumer’s utility bill repayment history and positive cash flows resulting from energy savings.
Frequently Asked Questions for Installers
- What are some additional program details?
The GEMS loans feature a 20-year repayment term and economical interest rates. Solar PV systems interconnected within the HECO, HELCO and MECO utility service territories are eligible. Facilities on which the Solar PV system are sited must be owned or on a long-term lease to qualify.
- Is my company eligible to offer GEMS financing?
Contracting businesses must first enroll and be pre-screened in order to be eligible to offer GEMS financing to their residential customers. In order to qualify, installers must have valid licensing and business insurance, demonstrated business experience and financial stability, a good reputation in the marketplace, verified trade references and more. To view the detailed qualification requirements for installers, download the enrollment application here.
- How does my company become an approved installer?
Contracting businesses can enroll in the program by visiting here and then downloading and completing the enrollment package. Once completed, the enrollment form, installer agreement and all required documentation should be submitted to HGIA for approval. View the bottom of page 3 in the enrollment package for detailed submission instructions.
- Does this program cost me anything?
The only cost for installers is a one-time $100 enrollment fee. Additionally each loan has a 1% or $300 fee attached. whichever is greater/
- What training and marketing tools are available?
Installer training slides are available here. Additionally, a set of turn-key customer facing marketing materials, such as flyers, brochures and splash pages, have already been developed for approved installer’s immediate use. To access the materials, visit here, click on the program of your choice at the top of the page and then click on the marketing toolkit button below the program highlights.