Retrofit One is an innovative financing mechanism that utilizes guaranteed energy savings to fund energy efficiency upgrades to the City of Chicago’s infrastructure.
In 2012, the Chicago Infrastructure Trust (CIT), a financing vehicle used to secure private capital for innovative public infrastructure, inaugurated their 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 is 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.
21,507 metric tons of greenhouse gas is avoided per year due to the improvements financed by Retrofit One
The challenge
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.
Co-benefits
Economic Retrofit One upgrades to public buildings in Chicago created 144 new construction jobs.
Environmental Retrofit One reduced the annual energy usage of municipal buildings by 18%.
Social Retrofits took place in 35 of Chicago’s 77 neighborhoods to ensure program benefits were shared broadly among central business districts and residential neighborhoods.
About Chicago
Chicago is the third-most populous city in the United States. With over 2.7 million residents, it is also the most populous city in both the state of Illinois and the Midwestern United States. The Chicago metropolitan area, often referred to as Chicagoland, has nearly 10 million people and is the third-largest in the U.S. The city is an international hub for finance, commerce, industry, technology, telecommunications, transportation and the O’Hare International Airport is the second-busiest airport in the world when measured by aircraft traffic.
